SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: September 8, 1998
(Date of the earliest event reported)
Home Products International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-17237 36-4147027
(State or other jurisdiction of (Commission (I.R.S. Employer
Incorporation or organization) File Number) Identification No.)
4501 West 47th Street Chicago, IL 60632
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (773) 890-1010
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Unless the context otherwise requires, references to (i) "HPI" or
the "Company" is to Home Products International, Inc. a Delaware
corporation, and its wholly owned subsidiaries, including Prestige
Plastics, Inc. (as defined), (ii) Prestige Plastics, Inc., ("Prestige"),a
Minnesota corporation, is to the wholly owned subsidiary of HPI created
to execute the acquisition of certain assets from Newell Co.
("Newell"), and (iii) the "Asset Acquisition" is to the acquisition by
HPI and the subsequent assignment to Prestige of substantially all of the
assets and certain liabilities of Newell's two operating units, Anchor
Hocking Plastics ("AHP") and Plastics Inc. ("PI"). AHP and PI are
collectively referred to herein as "Plastics".
On September 8, 1998 in accordance with the terms of an Asset
Purchase and Sale Agreement among, HPI, Plastics, and Newell, HPI
executed the Asset Acquisition with an all cash purchase price of
$78,000,000. The final purchase price is subject to a tangible net worth
adjustment.
In conjunction with the Asset Acquisition, HPI amended and restated
its $100,000,000 revolving credit agreement dated May 14, 1998, (the
"Prior Credit Agreement") among HPI, the several lenders from time to
time parties thereto and The Chase Manhattan Bank, as administrative
agent, to add, among other items, a $50,000,000 term loan, (the "Term
Loan"). The $150,000,000 Amended and Restated Credit Agreement, dated
September 8, 1998, (the "New Credit Agreement") among HPI, the several
lenders from time to time parties thereto and The Chase Manhattan Bank,
as administrative agent left the $100,000,000 revolving credit agreement
substantially the same as it was under the Prior Credit Agreement.
Financing for the Acquisition was obtained from the New Credit
Agreement. A portion of the total $78,000,000 cash consideration was
obtained from the Term Loan, and the remaining $28,000,000 was obtained
from the revolving credit facility portion of the New Credit Agreement.
Remaining availability under the New Credit Agreement after accounting
for the Acquisition was approximately $52,000,000.
AHP is a leading supplier of food storage containers sold through
mass-market chains, while PI is a leading supplier of upscale, disposable
plastic servingware distributed through institutional and retail markets.
It is HPI's intention to continue to utilize the assets acquired in the
same manor as they were used prior to the Asset Acquisition.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a) Financial statements of business acquired.
The following audited financial statements are filed herewith:
PRESTIGE PLASTICS, INC.(formerly Plastics, Inc.) - As of and For the
Years Ended December 31, 1997, 1996 and 1995
Report of Arthur Andersen LLP
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
The following unaudited financial statements are filed herewith:
PRESTIGE PLASTICS, INC.(formerly Plastics, Inc.) - Interim Financial
Statements
Condensed Consolidated Balance Sheet as of June 27,1998
Condensed Consolidated Statements of Operations for the
Six Months Ended June 27, 1998 and 1997
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 27, 1998 and 1997
Notes to Condensed Consolidated Financial Statements
b) Pro forma financial information.
The following unaudited pro forma financial statements are filed
herewith:
HOME PRODUCTS INTERNATIONAL, INC :
Unaudited Pro Forma Condensed Combined Balance Sheet as of
June 27, 1998
Unaudited Pro Forma Condensed Combined Statement of Operations
for the Six Months Ended June 27, 1998
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
Unaudited Pro Forma Condensed Combined Balance Sheet as
of December 27, 1997
Unaudited Pro Forma Condensed Combined Statement of
Operations for the Year Ended December 27, 1997
Notes to Unaudited Pro Forma Condensed Combined
Financial Statements
<PAGE>
c) Exhibits
Exhibit Index
2. Asset Purchase and Sale Agreement among Plastics, Inc
and Home Products International, Inc. and Newell Co.
dated as of July 31, 1998.
10.1 $150,000,000 Amended and Restated Credit Agreement
among Home Products International, Inc. as Borrower,
the Several Lenders from time to time parties hereto,
and The Chase Manhattan Bank, as Administrative Agent
dated September 8, 1998.
10.2 Assignment and Assumption Agreement by and between
Home Products International, Inc. and Prestige
Plastics, Inc.
23. Consent of Arthur Andersen L.L.P.
<PAGE>
PLASTICS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
AS OF DECEMBER 31, 1997, 1996 AND 1995
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Plastics, Inc.:
We have audited the accompanying consolidated balance sheets of Plastics,
Inc. (a Delaware corporation and wholly owned subsidiary of Newell Co.)
as of December 31, 1997, 1996 and 1995, and the related consolidated
statements of income, stockholder's equity and cash flows for each of the
three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Plastics, Inc. as of December 31, 1997, 1996 and 1995, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
July 23, 1998.
<PAGE>
<TABLE>
PLASTICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
AS OF DECEMBER 31, 1997, 1996 AND 1995
ASSETS 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ 2 $ 2 $ 2
Accounts receivable, net 9,146 8,188 10,070
Inventories, net 8,000 10,287 11,629
Prepaid expenses and other 345 1,745 689
Current deferred tax asset - 154 445
-------- -------- --------
Total current assets 17,493 20,376 22,835
PROPERTY, PLANT AND EQUIPMENT, NET 15,952 14,730 12,417
-------- -------- --------
Total assets $33,445 $35,106 $35,252
======== ======== ========
LIABILITIES AND STOCKHOLDER'S 1997 1996 1995
-------- -------- --------
CURRENT LIABILITIES:
Accounts payable $ 849 $ 1,041 $ 1,212
Accrued compensation 649 801 1,572
Other accrued liabilities 3,161 3,158 3,405
Deferred tax liabilities 637 - -
-------- -------- --------
Total current liabilities 5,296 5,000 6,189
NONCURRENT DEFERRED TAX LIABILITIES 1,216 1,418 1,110
STOCKHOLDER'S EQUITY:
Common stock 393 393 393
Parent division equity (27,735) (18,326) (11,064)
Retained earnings 54,275 46,621 38,624
-------- -------- --------
Total stockholder's equity 26,933 28,688 27,953
-------- -------- --------
Total liabilities and $33,445 $35,106 $35,252
stockholder's equity ======= ======= =======
The accompanying notes are an integral part of these balance sheets.
</TABLE>
<PAGE>
<TABLE>
PLASTICS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
NET SALES $73,243 $72,320 $73,362
COST OF PRODUCTS SOLD 46,345 45,167 44,371
------- ------- -------
Gross income 26,898 27,153 28,991
SELLING, GENERAL AND 14,366 14,036 14,234
ADMINISTRATIVE EXPENSES
------- ------- -------
Operating income 12,532 13,117 14,757
NONOPERATING EXPENSE:
Other, net 91 123 338
------- ------- -------
Income before income taxes 12,441 12,994 14,419
INCOME TAXES 4,787 4,997 5,545
------- ------- -------
Net income $7,654 $7,997 $8,874
======= ======= =======
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
PLASTICS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(In thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Parent
Common Division Retained
Stock Equity Earnings Total
----- -------- ------- -------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1994 $393 $ (5,932) $29,750 $24,211
Changes in parent division - (5,132) - (5,132)
equity
Net income - - 8,874 8,874
----- -------- ------- -------
BALANCE, December 31, 1995 393 (11,064) 38,624 27,953
Changes in parent division - (7,262) - (7,262)
equity
Net income - - 7,997 7,997
----- -------- ------- -------
BALANCE, December 31, 1996 393 (18,326) 46,621 28,688
Changes in parent division - (9,409) - (9,409)
equity
Net income - - 7,654 7,654
----- -------- ------- -------
BALANCE, December 31, 1997 $393 $(27,735) $54,275 $26,933
===== ======== ======= =======
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
PLASTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $7,654 $7,997 $8,874
Adjustments to reconcile net income to
net cash provided by operating
activities-
Depreciation and amortization 3,529 2,647 2,391
Deferred income taxes 589 599 684
(Gain) loss on sale of equipment - 4 (49)
Changes in current accounts-
Accounts receivable (958) 1,882 (1,603)
Receivable from/payable to parent, net (9,409) (7,262) (5,132)
Inventories 2,287 1,342 (1,390)
Prepaid expenses and other 1,400 (1,056) (681)
Accounts payable (192) (171) 618
Accrued expenses and other (149) (1,018) (541)
------- ------- -------
Net cash provided by operating activities 4,751 4,964 3,165
------- ------- -------
INVESTING ACTIVITIES:
Expenditures for property, plant and (4,751) (4,978) (3,277)
equipment
Proceeds from disposals of property, - 14 106
plant and equipment
------- ------- -------
Net cash used in investing activities (4,751) (4,964) (3,165)
------- ------- -------
Net change in cash - - -
CASH, beginning of year 2 2 2
------- ------- -------
CASH, end of year $ 2 $ 2 $ 2
======= ======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid during the year for-
Income taxes $4,779 $5,571 $4,888
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
(1) Description of the Business-
Plastics, Inc. (the "Company"), a wholly owned subsidiary of Newell
Co. ("Newell"), is a leading manufacturer and marketer of plastic
food storage and servingware products sold to the consumer and
commercial foodservice markets located in St. Paul, Minnesota. The
Company is comprised of two operating units, Anchor Hocking Plastics
("AHP") and Plastics Inc. ("PI").
(2) Significant Accounting Policies-
Principles of consolidation-
The consolidated results of the Company include the accounts of both
AHP and PI. All intercompany accounts between the two operating units
are eliminated in consolidation.
Use of estimates-
The preparation of these financial statements required the use of
certain estimates by management in determining the Company's assets,
liabilities, revenue and expenses and related disclosures.
Revenue recognition-
Sales of merchandise are recognized upon shipment to customers.
Allowances for doubtful accounts-
Historically, write-offs for the Company have been insignificant;
therefore, no bad debt expense or allowance for bad debt has been
recorded in the accompanying financial statements.
<PAGE>
Inventories-
Inventories are stated at the lower of cost or market value. Cost of
inventories was determined by the "last in, first-out" ("LIFO")
method. If the "first-in, first out" ("FIFO") inventory valuation
method had been used, inventories would have increased by $423,000,
$397,000 and $1,003,000 at December 31, 1997, 1996, and 1995,
respectively.
The components of inventories at December 31, net of the LIFO reserve,
were as follows:
1997 1996 1995
---------- ---------- ----------
Materials and supplies $1,896,000 $2,716,000 $2,202,000
Work in process 2,689,000 3,044,000 3,520,000
Finished products 3,415,000 4,527,000 5,907,000
---------- ---------- ----------
$8,000,000 $10,287,000 $11,629,000
========== =========== ===========
Inventory reserves at December 31, totaled $824,000 in 1997,
$1,064,000 in 1996, and $2,103,000 in 1995.
Property, plant and equipment-
Property, plant and equipment at December 31 consisted of the
following:
1997 1996 1995
------------ ------------ ------------
Land $232,000 $232,000 $232,000
Buildings and improvements 3,275,000 3,258,000 3,124,000
Machinery and equipment 40,134,000 36,316,000 34,914,000
Furniture and fixtures 1,065,000 1,055,000 924,000
Construction in process 3,912,000 3,488,000 199,000
Accumulated depreciation (32,666,000) (29,619,000) (26,976,000)
------------ ------------ ------------
$15,952,000 $14,730,000 $12,417,000
=========== =========== ===========
Replacements and improvements are capitalized. Expenditures for
maintenance and repairs are charged to expense. The components of
depreciation are provided by annual charges to income calculated to
amortize on the straight-line basis, the cost of the depreciable
assets over their depreciable lives. Estimated useful lives
determined by the Company are as follows:
Buildings and improvements 20-40 years
Machinery and equipment 5-12 years
<PAGE>
Accrued liabilities-
Other accrued liabilities at December 31 included the following:
1997 1996 1995
---------- ---------- ----------
Customer accruals $2,153,000 $1,795,000 $2,341,000
Other accruals 1,008,000 1,363,000 1,064,000
---------- ---------- ----------
$3,161,000 $3,158,000 $3,405,000
========== ========== ==========
Customer accruals are promotional allowances and rebates given to
customers in exchange for their selling efforts.
At December 31, the Company has minimum rental payments through the
year 2003 under noncancellable operating leases as follows:
Minimum
Year Payments
------------ ----------
1998 $916,000
1999 148,000
2000 6,000
2001 6,000
2002 6,000
Thereafter 1,000
----------
$1,083,000
==========
Total rental expense for all operating leases was approximately
$1,186,000, $1,215,000 and $1,250,000 in 1997, 1996 and 1995,
respectively.
(5) Retirement and Other Post-Retirement Benefit Plans-
Salaried and hourly employees that meet certain requirements are
eligible to participate in the Newell Pension Plan for Salaried and
Clerical Employees. The pension plan is administered by Newell.
Newell pays the Company's portion of the plans' costs and funding
requirements. The Company reimburses Newell for these costs. Total
expense under this plan was $497,000, $439,000 and $488,000 for 1997,
1996, and 1995.
The employees of the Company are also eligible to participate in the
Newell Co. Long-Term Savings and Investment Plan. The Company matches
a portion of the employees contribution. Profit sharing expense was
$242,000, $280,000 and $212,000 for 1997, 1996 and 1995.
Employees of the Company are eligible to receive other post-retirement
benefits, primarily health benefits, under the Newell Co. Health and
Welfare Plan. Newell Co. charges the Company an annual expense
calculated by Newell Co.'s actuaries. Expense related to this plan
was $93,000, $85,000 and $138,000 in 1997, 1996 and 1995,
respectively.
<PAGE>
(6) Income Taxes-
The Company accounts for income taxes as prescribed by SFAS No. 109,
"Accounting for Income Taxes." For U.S. income tax purposes, the
Company's income is included in Newell Co.'s consolidated Federal
income tax return. As a result, the Company records Federal taxes as
an intercompany transaction with Newell.
The provision for income taxes for the years ended December 31
consists of the following (computed on the basis of the Company as a
standalone entity for U.S. Federal income tax purposes):
1997 1996 1995
---------- ---------- ----------
Current-
Federal $3,932,000 $4,118,000 $4,504,000
State 266,000 280,000 357,000
---------- ---------- ----------
4,198,000 4,398,000 4,861,000
Deferred 589,000 599,000 684,000
---------- ---------- ----------
Total $4,787,000 $4,997,000 $5,545,000
========== ========== ==========
(7) Other Nonoperating Expense-
Total other nonoperating expense consists of the following expense
(income) items for the years ended December 31:
1997 1996 1995
-------- --------- ---------
Management bonuses $91,000 $134,000 $545,000
Gain on sale of machinery - (10,000) (57,000)
Sales and use tax refund - - (163,000)
Other - (1,000) 13,000
-------- --------- ---------
$91,000 $123,000 $338,000
======== ========= =========
(8) Significant Customer-
Sales to four customers accounted for 43%, 46% and 43% of net sales in
1997, 1996, and 1995. At December 31, 1997, 1996 and 1995,
receivables from these customers accounted for 43%, 38% and 46% of the
Company's net trade accounts receivable, respectively.
<PAGE>
(9) Transactions with Newell Co.-
Newell Co. provides centralized services to the Company including
treasury management, cash management, receivables processing, payables
processing, computer information services and payroll processing. No
costs related to these services have been allocated by Newell Co. to
the Company.
Newell Co. also maintains worker's compensation reserves at the
Corporate level. Newell Co. charges the Company an annual expense
representing the Company's share of the Newell Co. expense. Worker's
compensation expense of the Company was $190,000, $371,000 and
$310,000 for the years ended 1997, 1996 and 1997, respectively.
(10) Significant Event-
Subject to an order of condemnation by the City of St. Paul,
Minnesota, the Company will be forced to relocate its Ryan Avenue
facility. The Company is presently in the process of negotiating the
final terms for the relocation with the city.
<PAGE>
PRESTIGE PLASTICS, INC.
(formerly Plastics, Inc.)
Interim Financial Statements - Unaudited
Condensed Consolidated Balance Sheet as of June 27, 1998.....6
Condensed Consolidated Statements of Operations for the Six
Months Ended June 27, 1998 and 1997.........................7
Condensed Consolidated Statements of Cash Flows for the Six
Months Ended June 27, 1998 and 1997.........................8
Notes to Condensed Consolidated Financial Statements.........9
<PAGE>
<TABLE>
PRESTIGE PLASTICS, INC.
Condensed Consolidated Balance Sheet
As of June 27, 1998
(unaudited)
(in thousands)
Assets
<S> <C>
Current assets:
Cash and cash equivalents .................. $ 2
Accounts receivable, net ................... 7,272
Inventories, net ........................... 7,345
Prepaid expenses and other current assets .. 451
------
Total current assets ..................... $15,070
Property, plant and equipment, net............ 15,129
------
Total assets.................................. $30,199
======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable ........................... $ 1,409
Accrued liabilities ........................ 5,742
-----
Total current liabilities ................ 7,151
-----
Stockholders' equity:
Common Stock .............................. 393
Additional paid-in capital ................. 1,569
Retained earnings .......................... 21,086
------
Total stockholders' equity ............... 23,048
------
Total liabilities and stockholders' equity.... $30,199
======
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
PRESTIGE PLASTICS, INC.
Condensed Consolidated Statements of Operations
For the Six Months Ended June 27, 1998 and 1997
(unaudited)
(in thousands)
1998 1997
------ ------
<S> <C> <C>
Net sales .............................. $32,357 $37,355
Cost of goods sold ..................... 18,851 22,952
------ ------
Gross profit ........................ 13,506 14,403
Operating expenses ..................... 8,867 9,324
------ ------
Operating profit .................... 4,639 5,079
Other income, (expense) ................ (141) (154)
------ ------
Earnings before income taxes ........... 4,498 4,925
Income tax (expense) benefit ........... (1,508) (1,687)
------ ------
Net earnings $ 2,990 $ 3,238
====== ======
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
PRESTIGE PLASTICS, INC.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 27, 1998 and 1997
(unaudited)
(in thousands)
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net earnings .......................... $ 2,990 $ 3,238
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization ........ 1,549 2,049
Changes in assets and liabilities:
Decrease in accounts receivable .... 1,695 321
Decrease in inventories ............ 372 539
Decrease (increase )in prepaids and
other assets ....................... 73 (101)
Receivable from/ payable to parent,
net ................................ (6,875) (3,752)
Increase in accounts
payable and accrued liabilities .... 2,161 704
Other operating activities, net .... 585 (864)
------- -------
Net cash provided by operating activities 2,550 2,134
Cash flows from investing activities:
Capital expenditures, net (2,550) (2,134)
------- -------
Net increase in cash and cash equivalents $ - $ -
Cash and cash equivalents at beginning of
period ................................ 2 2
------- -------
Cash and cash equivalents at end of
period ................................ $ 2 $ 2
======= =======
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
PRESTIGE PLASTICS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in thousands)
Note Prestige Plastics, Inc. ("Prestige"), a wholly owned subsidiary
1. of Newell Co., prior to acquisition by Home Products
International, Inc. on September 8, 1998, was named Plastics, Inc.
and is a leading manufacturer and marketer of plastic food storage
and servingware products sold to the consumer and commercial
foodservice markets. Prestige is comprised of two operating units,
Anchor Hocking Plastics ("AHP") and Plastics Inc.("PI").
The consolidated results of Prestige include the accounts of
both AHP and PI. All intercompany accounts between the two
operating units have been eliminated in consolidation.
The unaudited condensed consolidated financial statements included
herein as of June 27, 1998 and 1997 reflect, in the opinion of
Prestige management, all adjustments (which include normal
recurring adjustments) necessary for the fair presentation of the
financial position, the results of operations and cash flows.
The results of the interim periods are not necessarily indicative
of the results to be expected for the full year.
Note Inventories are stated at the lower of cost or market. Costs of
2. inventories were determined by the "last-in-first-out" ("LIFO")
method. If the "first-in-first-out" method had been used,
inventories would have increased by $706 as of June 27, 1998.
Prestige maintains resrves for slow moving and obsolete inventory
which are adjusted throughout the year as determined necessary
by management.
Note The provision for income taxes is determined by applying an
3. estimated annual effective tax rate to income before income
taxes. The estimated annual effective tax rate is based upon
the most recent annualized forecast of pretax income and
permanent book/tax differences.
<PAGE>
HOME PRODUCTS INTERNATIONAL, INC
Unaudited Pro Forma Condensed Combined Financial Statements
Contents
Unaudited Pro Forma Condensed Combined Balance Sheet as of June 27, 1998
......................................................................11
Unaudited Pro Form Condensed Combined Statement of Operations for the
Six Months Ended June 27, 1998........................................12
Notes to Unaudited Pro Forma Condensed Combined Financial Statements.....13
<PAGE>
<TABLE>
HOME PRODUCTS INTERNATIONAL, INC.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 27, 1998
(in thousands)
HPI PRESTIGE Pro Forma Pro Forma
Historical Historical Adjustments Combined
--------- ---------- ------- -------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 3,832 $ 2 $ (2) (p) $ 3,832
Accounts receivable, net 36,444 7,272 - 43,716
Inventories, net ....... 27,554 7,345 706 (a) 35,605
Prepaid expenses and
other current assets... 1,377 451 - 1,828
------- ------ ------- -------
Total current assets 69,207 15,070 704 84,981
Property, plant and
equipment, net......... 40,719 15,129 (967) (p) 54,881
Intangible and other
assets................. 123,848 - 55,000 (b) 179,348
500 (c)
------- ------ ------- -------
Total assets............ $233,774 $30,199 $ 55,237 $319,210
======= ====== ======= =======
Liabilities and
Stockholders' Equity
Current liabilities:
Current maturities of
long-term obligations... $ 991 $ - $ 750 (d) $ 1,741
Accounts payable ....... 15,818 1,409 - 17,227
Accrued liabilities .... 20,624 5,742 285 (e) 26,651
------- ------ ------- -------
Total current liabilities 37,433 7,151 1,035 45,619
Long-term obligations -
net of current maturities 134,314 - 77,250 (f) 211,564
Other long-term
liabilities 6,273 - - 6,273
Stockholders' equity
Common Stock ........... 80 393 (393) (g) 80
Additional paid-in
capital................ 48,304 1,569 (1,569) (g) 48,304
Retained earnings ...... 7,784 21,086 (21,086) (g) 7,784
Common Stock held in
treasury - at cost..... (264) - - (264)
Currency translation
adjustments......... (150) - (150)
------- ------ ------- -------
Total stockholders' equity 55,754 23,048 (23,048) 55,754
------- ------ ------- -------
Total liabilities and
stockholders' equity...... $233,774 $30,199 $ 55,237 $319,210
======= ====== ======= =======
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
HOME PRODUCTS INTERNATIONAL, INC.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Six Months Ended June 27, 1998
(in thousands, except per share amounts)
HPI PRESTIGE Pro Forma Pro Forma
Historical Historical Adjustments Combined
------- ------- ------ -------
<S> <C> <C> <C> <C>
Net sales ........ $107,393 $ 32,357 $ (2,500) (h) $137,250
Cost of goods sold 72,561 18,851 (2,000) (h) 89,129
(283) (i)
------- ------- ------ -------
Gross profit .. 34,832 13,506 (217) 48,121
Operating expenses 21,298 8,867 (373) (j) 31,253
773 (k)
688 (l)
------- ------- ------ -------
Operating profit 13,534 4,639 (1,305) 16,868
Interest (expense)... (6,388) - (2,897) (m) (9,285)
Other income (expense) 107 (141) - (34)
------- ------- ------ -------
Earnings (loss) before 7,253 4,498 (4,202) 7,549
income taxes ...
Income tax (expense) (2,978) (1,508) 1,392 (n) (3,094)
Benefit ........
------- ------- ------ -------
$ 4,275 $ 2,990 $ (2,810) $ 4,455
Net earnings (loss) ======= ======= ====== =======
from continuing
operations .......
Net earnings from
continuing operations
per share - basic $ 0.54 (o) $ 0.56 (o)
======= ======
Net earnings from
continuing operations
per share - diluted $ 0.52 (o) $ 0.54 (o)
======= ======
Weighted average
common shares
outstanding - basic 7,938 7,938
diluted 8,300 8,300
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
HOME PRODUCTS INTERNATIONAL, INC.
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
(in thousands)
The accompanying Unaudited Pro Forma Condensed Combined Balance
Sheet as of June 27, 1998 gives effect to the Asset Acquisition and the
New Credit Agreement as if each had occurred on June 27, 1998. The
Unaudited Pro Forma Condensed Combined Statement of Operations for the
Six Months Ended June 27, 1998 gives effect to the Asset Acquisition and
the New Credit Agreement as if each occurred on December 28, 1997.
The pro forma data does not purport to represent what the Company's
actual results of operations or financial position would have been had
such transactions occurred on such dates. The pro forma statement of
operations also does not purport to project the results of operations of
the Company for the current year or for any other period.
Pro forma adjustments relating to the Asset Acquisition and the New
Credit Agreement are as follows:
(a) Reflects adjustment to inventories to record on a FIFO basis
rather than the LIFO basis used prior to the Asset
Acquisition.
(b) Reflects the Asset Acquisition at an all cash purchase price
of $78,000 as if it occurred on June 27, 1998. The Asset
Acquisition was accounted for as a purchase; therefore, the
purchase price will be allocated to the assets and liabilities
assumed based upon their fair values. Certain transaction
fees and expenses totaling $1,000 that were incurred in
connection with the Asset Acquisition are included in the
excess of purchase price over the fair value of the net assets
acquired (i.e., goodwill). The preliminary pro forma
calculation of the excess of the purchase price over the fair
value of the net assets acquired is $55,000 which will be
amortized over a period of forty years.
(c) Deferred financing fees related to the closing of the New
Credit Agreement were $500 and will be amortized over the life
of the Term Loan which is six years.
(d) Reflects the adjustment to long-term debt to report the
current maturity of the Term Loan entered into as a part of
the Asset Acquisition.
(e) Reflects accruals established for financing fees and expenses
incurred as a part of the Asset Acquisition, but not paid as
of such date, the elimination of liabilities not assumed as
part of the Asset Acquistion and certain immaterial items.
(f) Reflects the additional long-term debt incurred in connection
with the Asset Acquisition. A total of $750 of the Term Loan
was classified as current.
<PAGE>
(g) Reflects the elimination of Prestige's equity accounts.
(h) Reflects elimination of intercompany sales and cost of sales
between Prestige and Newell. It is anticipated that Newell
will no longer purchase these items from Prestige.
(i) Reflects elimination of the change in the LIFO reserve from
December 27, 1997 to June 27, 1998.
(j) Reflects elimination of administrative costs charged by Newell
for providing Prestige with the following services; (i)
treasury management, (ii) cash management, (iii) receivables
processing, (iv) payables processing, (v) computer services
and (vi) payroll processing.
(k) Reflects the additional costs to be incurred by Prestige to
replace the functions that were previously performed by Newell
(those items listed in footnote (j) above).
(l) Reflects increased goodwill amortization as a result of the
Asset Acquisition. Goodwill is amortized over forty years.
(m) Reflects the estimated increase in interest expense as if the
Asset Acquisition and the New Credit Agreement had occurred on
December 28, 1997. The components of pro forma interest
expense are as follows:
In Thousands
Six months of interest expense on $78,000
cash purchase price................................ $ 2,925
Six months of deferred financing fee
amortization on $500 of fees....................... 42
Reduction of Unused Commitment Fees as a
result of additional borrowings under the
New Credit Agreement............................... (70)
-------
Net pro forma adjustment to interest expense $ 2,897
=======
(n) The adjustment to pro forma income tax expense is to adjust the
Pro Forma Combined income tax expense to reflect HPI's estimated
combined statutory rate of 41%.
(o) Weighted average common shares outstanding used in the
calculation of earnings per share - basic were 7,938, and used
in the calculation of earnings per share - diluted were 8,300.
(p) Item was not acquired or assumed as a part of the Asset Acquisition.
<PAGE>
HOME PRODUCTS INTERNATIONAL, INC
Unaudited Pro Forma Condensed Combined Financial Statements
Contents
Unaudited Pro Forma Condensed Combined Balance Sheet as of
December 27, 1997........................................ 16
Unaudited Pro Forma Condensed Combined Statement of
Operations for the Year Ended December 27, 1997.......... 17
Notes to Unaudited Pro Forma Condensed Combined
Financial Statements..................................... 18
<PAGE>
<TABLE>
HOME PRODUCTS INTERNATIONAL, INC.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 27, 1997
(in thousands)
HPI Pro Forma PRESTIGE Pro Forma Pro Forma
Historical Seymour Historical Adjustments Combined
Assets ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents $ 583 $ 2,208 $ 2 $ (2) (p) $ 2,791
Accounts
receivable,net 20,882 12,386 9,146 - 42,414
Inventories, net 12,797 11,598 8,000 423 (a) 32,818
Prepaids and other
current assets 428 358 345 1,131
------- ------- ------ ------- -------
Total current assets 34,690 26,550 17,493 421 79,154
Property, plant and
equipment, net 28,380 12,121 15,952 (967) (p) 55,486
Intangible and other 55,000 (b)
assets 36,273 89,168 - 500 (c) 180,941
------- ------- ------ ------- -------
Total assets ..... $ 99,343 $127,839 $33,445 $ 54,954 $315,581
======= ======= ====== ======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of
long-term obligations $ 3,850 $ 2,737 $ - $ 750 (d) $7,337
Accounts payable 9,664 2,532 850 - 13,046
Accrued liabilities 12,913 10,333 5,662 3,887 (e) 32,795
------- ------- ------ ------- -------
Total current
liabilities 26,427 15,602 6,512 4,637 53,178
Long-term obligations
- net of current
maturities 30,700 96,987 - 77,250 (f) 204,937
Other long-term
liabilities - 6,270 - - 6,270
Stockholders' equity
Common Stock... 67 13 393 (393) (g) 80
Additional paid-in
capital 33,956 14,267 1,569 (1,569) (g) 48,223
Retained earnings... 8,616 (5,300) 24,971 (24,971) (g) 3,316
Common Stock held
in treasury-at cost (264) - - - (264)
Currency translation
adjustments ..... (159) - - (159)
------- ------- ------ ------- -------
Total stockholders'
equity 42,216 8,980 26,933 (26,933) 51,196
------- ------- ------ ------- -------
Total liabilities and
stockholders' equity $ 99,343 $127,839 $33,445 $ 54,954 $315,581
======= ======= ====== ======= =======
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
HOME PRODUCTS INTERNATIONAL, INC.
Unaudited Pro Forma Condensed Combined Statements of Operations
For the Year Ended December 27, 1997
(unaudited)
(in thousands, except per share amounts)
HPI Pro Forma PRESTIGE Pro Forma Pro Forma
Historical Seymour Historical Adjustments Combined
------- ------- ------- ------ -------
<S> <C> <C> <C> - <C> <C>
Net sales ....... $129,324 $ 92,963 $ 73,243 $(4,387) (h) $291,143
Cost of goods sold 88,888 68,900 46,345 (6,431) (h) 197,676
(26) (i)
------- ------- ------- ------ -------
Gross profit 40,436 24,063 26,898 2,070 93,467
Operating expenses 27,688 21,462 14,366 5,827 (j) 69,343
------- ------- ------- ------ -------
Operating profit 12,748 2,601 12,532 (3,757) 24,124
Interest (expense)... (5,152) (10,385) - (5,565) (k) (21,102)
Other income (expense) 70 (802) (91) - (823)
------- ------- ------- ------ -------
Earnings (loss)
before income taxes 7,666 (8,586) 12,441 (9,322) 2,199
------- ------- ------- ------ -------
Income tax (expense)
benefit before Change
in valuation allowance (3,489) 3,857 (4,787) 3,729 (l) (690)
Change in valuation
allowance ...... 3,143 - - - 3,143
------- ------- ------- ------ -------
Total income tax
expense (benefit) (346) 3,857 (4,787) 3,729 2,453
Net earnings (loss)
from continuing
operations ...... $ 7,320 $ (4,729) $ 7,654 $(5,593) $ 4,652
======= ======= ======= ====== =======
Net earnings from
continuing operations
per share - basic $ 1.35 (m) $ 0.69 (n)
Net earnings from
continuing operations
per share - diluted $ 1.29 (m) $ 0.66 (o)
Weighted average
common shares
outstanding -
basic 5,436 6,757
diluted 5,682 7,003
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
HOME PRODUCTS INTERNATIONAL, INC.
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
(in thousands)
The accompanying Unaudited Pro Forma Condensed Combined Balance
Sheet as of December 27, 1997 is based upon and should be read in
conjunction with the historical Consolidated Financial Statements of HPI,
Seymour Housewares Corporation,("Seymour") and Prestige and the notes
thereto included elsewhere in this form 8-k/a (historical financial
statements related to Seymour are hereby incorporated by reference from
the Form S-4 filed on June 10, 1998), and have been adjusted to give pro
forma effect to the Asset Acquisition and the New Credit Facility as if
each had occurred on December 27, 1997.
The Seymour historical Condensed Balance Sheet as of December 27,
1997 has been adjusted to reflect pro forma adjustments related to, (i)
the December 30, 1997 acquisition of all of the outstanding stock of
Seymour, (the "Seymour Acquisition"), (ii) the Prior Credit Agreement and
(iii) the May 14, 1998 issuance of $125,000 9.625% Senior Subordinated
Notes due 2008, (items (ii) and (iii) are collectively referred to herein
as the "Refinancing") as if each transaction had occurred on December 27,
1997. The Seymour Acquisition and the Refinancing are described in
further detail in the Form S-4 filed on June 10, 1998.
The Unaudited Pro Forma Condensed Combined Statement of Operations
for the year ended 1997 has been prepared by combining the Consolidated
Statements of Operations of HPI for the year ended December 27, 1997 with
the Pro forma Condensed Statement of Operations of Seymour for the year
ended December 27, 1997 (pro forma to include the impact of the Seymour
Acquisition and the Refinancing on Seymour's historical Statement of
Operations, as if each transaction occurred on December 29, 1996) and the
Consolidated Statements of Operations of Prestige for the year ended
December 31, 1997 as if the Asset Acquisition and the New Credit
Agreement each occurred on December 29, 1996.
The pro forma data does not purport to represent what the Company's
actual results of operations or financial position would have been had
such transactions occurred on such dates. The pro forma statement of
operations also does not purport to project the results of operations of
the Company for the current year or for any other period.
Pro forma adjustments relating to the Asset Acquisition and the New
Credit Agreement are as follows:
(a) Reflects adjustment to inventories to record on a FIFO basis
rather than the LIFO basis used prior to the Asset Acquisition.
<PAGE>
(b) Reflects the Asset Acquisition as if it occurred on December 27,
1997 at an all cash purchase price of $78,000. The Asset
Acquisition was accounted for as a purchase; therefore, the
purchase price will be allocated to the assets and liabilities
assumed based upon their fair values. Certain transaction fees
and expenses totaling $1,000 that were incurred in connection with
the Asset Acquisition are included in the excess of purchase price
over the fair value of the net assets acquired (i.e., goodwill).
The preliminary pro forma calculation of the excess of the
purchase price over the fair value of the net assets acquired is
$55,000 which will be amortized over a period of forty years.
(c) Deferred financing fees related to the closing of the New Credit
Agreement were $500 and will be amortized over the life of the
Term Loan which is six years.
(d) Reflects the adjustment to long-term debt to report the current
maturity of the Term Loan entered into as a part of the Asset
Acquisition.
(e) Reflects accruals established for financing fees and expenses
incurred as a part of the Asset Acquisition, but not paid as of
such date, the elimination of liabilities not assumed as a part of
the Asset Acquisition and certain immaterial items.
(f) Reflects the additional long-term debt incurred in connection with
the Asset Acquisition. A total of $750 of the Term Loan was
classified as current.
(g) Reflects the elimination of Prestige's equity accounts.
(h) Reflects elimination of intercompany sales and cost of sales
between Prestige and Newell. It is anticipated that Newell will
no longer purchase these items from Prestige.
Additionally, the pro forma adjustment to Net sales reflects a
reclassification of $3,652 of Freight expenses to operating
expenses in order to conform with HPI presentation.
(i) Reflects elimination of the change in the LIFO reserve from
December 29, 1996 to December 27, 1997.
(j) Reflects the following pro forma adjustments:
In Thousands
Reclass Freight expense from Net sales to Operating
expense to conform with HPI........................... $ 3,652
Eliminate administrative costs charged by Newell for
providing Plastics with the following services;
(i) treasury management, (ii) cash management, (iii)
receivables processing, (iv) payables processing,
(v) computer services and (vi) payroll processing..... (745)
Reflects the additional costs to be incurred by
Prestige to replace the functions that were
previously performed by Newell........................ 1,545
Reflects increased goodwill amortization as a result
of the Asset Acquisition. Goodwill is amortized
over forty years...................................... 1,375
------
Net Pro forma adjustment to Operating expenses $ 5,827
======
<PAGE>
(k) Reflects the estimated increase in interest expense as if the
Asset Acquisition and the New Credit Agreement had occurred on
December 29, 1996, the beginning of the period. The components of
pro forma interest expense are as follows:
In Thousands
Fifty-two weeks of interest expense on $78,000 cash
purchase price....................................... $ 5,850
Fifty-two weeks of deferred financing fee
amortization on $500 of fees incurred................ 83
Adjust rate applied to revolver borrowings to the
New Credit Agreement rate............................ (241)
Reduction of Unused Commitment Fees as a result of
additional borrowings under the New Credit Agreement. (127)
-----
Net pro forma adjustment to interest expense $ 5,565
=====
(l) The pro forma income tax expense is computed by applying an
estimated combined statutory rate of 40%.
(m) Weighted average common shares outstanding used in the calculation
of earnings per share - basic were 5,436, and used in the
calculation of earnings per share - diluted were 5,682.
(n) Weighted average common shares outstanding used in the calculation
of earnings per share - basic reflect the shares issued in the
Seymour Acquisition of 1,321. As such, 6,757 shares were used in
the calculation of earnings per share - basic.
(o) Weighted average common shares outstanding used in the calculation
of earnings per share - diluted reflect the shares issued in the
Seymour Acquisition of 1,321. As such, 7,003 shares were used in
the calculation of earnings per share - diluted.
(p) Item was not acquired or assumed as a part of the Asset Acquisition.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Home Products International, Inc.
By: /s/ James .Winslow
James E. Winslow
Executive Vice President and
Chief Financial Officer
Dated: November 6, 1998
EXHIBIT 2
ASSET PURCHASE AND SALE AGREEMENT
among
PLASTICS, INC.
and
HOME PRODUCTS INTERNATIONAL, INC.
and
NEWELL CO.
Dated as of July 31, 1998
<PAGE>
Page
ARTICLE I
TRANSFER OF ASSETS AND LIABILITIES ............... 1
1.1 Transfer of Assets .................... 1
(a) Inventory ...................... 1
(b) Materials ...................... 1
(c) Receivables ..................... 1
(d) Business Records ................... 1
(e) Tangible Personal Property .............. 2
(f) Contracts ...................... 2
(g) Permits ....................... 2
(h) Real Property .................... 2
(i) Intellectual Property ................ 2
(j) Claims ........................ 2
(k) Miscellaneous .................... 2
1.2 Excluded Assets ...................... 2
(a) Anchor[R], Anchor Hocking[R], Vitri[R] and Wearever[R]
Brand Names and Trademarks ............ 2
(b) Cash ......................... 2
(c) Non-Assigned Contracts ................ 3
(d) Tax Refunds ..................... 3
(e) Insurance ...................... 3
(f) Corporate Records .................. 3
(g) Employee Plans .................... 3
(h) Bank Accounts and Lock Boxes ............. 3
(i) Molds ........................ 3
(j) Central Operations .................. 3
(k) Eminent Domain/Relocation Cost Proceedings ...... 3
(l) Certain Off-Site Environmental Matters ........ 3
(m) Other ........................ 3
1.3 Assumption of Certain Liabilities ............. 3
1.4 Excluded Liabilities ................... 4
(a) Liabilities Related to Excluded Assets ........ 4
(b) Liabilities Related to Non-Assigned Contracts .... 4
(c) Liabilities Related to Debarment Notice ....... 4
(d) Liabilities Related to Antitrust Litigation ..... 4
(e) Liabilities Related to Certain Off-Site Environmental
Matters ....................... 4
(f) Liabilities Related to Newell Pension Plan ...... 4
(g) Liabilities Related to Eminent Domain/Relocation Cost
Proceeding ...................... 4
(h) Liabilities Related to Certain Management Bonuses .. 4
(i) Other ........................ 4
ARTICLE II
PURCHASE PRICE, ADJUSTMENT AND ALLOCATION ........... 4
2.1 Purchase Price and Assumption of Liabilities ....... 4
2.2 Adjustment of Purchase Price ............... 5
(a) Purchase Price Adjustment .............. 5
(b) Closing Statement of Tangible Net Worth ....... 5
(c) Buyer's Review of Preliminary Closing Statement ... 5
(d) Seller's Response to Buyer's Letter ......... 6
(e) Meeting to Resolve Proposed Adjustments ....... 6
(f) Arbitration of Disputed Purchase Price Adjustments .. 6
(g) Notices Relating to the Closing Statement ...... 7
(h) Payment and Interest ................. 7
2.3 Purchase Price Allocation ................. 7
<PAGE>
ARTICLE III
CLOSING; TRANSFER OF ASSETS .................. 8
3.1 Closing .......................... 8
3.2 Nonassignability of Assets ................ 8
3.3 Deliveries of Seller ................... 9
3.4 Buyer's Deliveries .................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES ................. 9
4.1 Representations and Warranties of Seller ......... 9
(a) Due Organization of Seller .............. 9
(b) Due Power and Authority ............... 9
(c) Authorization and Validity of Agreements ...... 10
(d) Good Title ..................... 10
(e) No Conflict .................... 10
(f) Financial Statements ................ 11
(g) Tax Matters .................... 11
(h) Title to Real and Personal Properties; Liens and
Encumbrances; No Other Interests ........ 11
(i) Business Contracts ................. 12
(j) Legal Proceedings ................. 12
(k) Government Licenses, Permits and Related Approvals . 12
(l) Conduct of Business in Compliance with Regulatory
Requirements .................... 12
(m) Labor Matters ................... 12
(n) Intellectual Property ............... 13
(o) Employee Benefit Plans ............... 13
(p) Brokers, Finders, etc. ............... 13
(q) Reserved ...................... 13
(r) Absence of Changes ................. 13
(s) Leased Real Property ................ 13
(t) Insurance ..................... 14
(u) Receivables. .................... 14
(v) Inventory ..................... 14
(w) Key Employees ................... 14
(x) Sufficiency of Assets ............... 14
(y) No Other Representations or Warranties ....... 14
4.2 Representations and Warranties of Buyer ......... 14
(a) Due Organization and Power ............. 15
(b) Authorization and Validity of Agreements ...... 15
(c) No Conflict .................... 15
(d) Brokers, Finders. etc. ............... 15
(e) Financial Capacity ................. 15
4.3 Supplements to Schedules ................ 16
<PAGE>
ARTICLE V
PRE-CLOSING COVENANTS .................... 16
5.1 Access to Information Concerning Properties and Records;
Confidentiality ..................... 16
5.2 Conduct of the Business Prior to the Closing Date .... 16
(a) Ordinary Course .................. 16
(b) Changes in Compensation .............. 16
(c) Assets ....................... 17
(d) Capital Expenditures ................ 17
(e) Liens ....................... 17
(f) Accounting Practices ................ 17
(g) Constituent Documents ............... 17
(h) Other ....................... 17
5.3 Preservation of Business ................ 17
5.4 Authorizations ..................... 17
5.5 Cash Management ..................... 18
5.6 Intercompany Services and Products ........... 18
5.7 Further Actions ..................... 18
5.8 No Negotiation ..................... 18
5.9 Environmental Matters .................. 19
5.10 Assistance with Key Employees .............. 20
ARTICLE VI
CONDITIONS PRECEDENT ..................... 20
6.1 Conditions Precedent to Obligations of Parties ..... 20
(a) Antitrust Laws ................... 20
(b) No Injunction ................... 20
(c) Consents ...................... 20
6.2 Conditions Precedent to Obligation of Buyer ....... 20
(a) Accuracy of Representations and Warranties ..... 20
(b) Performance of Agreements ............. 21
(c) Certificate .................... 21
(d) Ancillary Agreements ................ 21
(e) Additional Matters ................. 21
6.3 Conditions Precedent to the Obligation of Seller .... 21
(a) Accuracy of Representations and Warranties ..... 21
(b) Performance of Agreements ............. 21
(c) Certificate .................... 22
(d) Payment of Stay Bonuses .............. 22
(e) Ancillary Agreements ................ 22
ARTICLE VII
PROVISIONS AS TO TAX MATTERS ................. 22
7.1 Certain Tax Matters ................... 22
(a) Preparation and Filing of Tax Returns ....... 22
(b) Payment of Taxes .................. 22
(c) Refunds ...................... 22
(d) Straddle Periods .................. 22
7.2 Tax Indemnification ................... 23
(a) Seller Indemnification ............... 23
(b) Buyer Indemnification ............... 23
(c) Determining Liability for Taxes .......... 23
7.3 Cooperation ....................... 23
<PAGE>
ARTICLE VIII
LABOR MATTERS, EMPLOYEE RELATIONS AND BENEFITS ........ 23
8.1 Offers of Employment .................. 23
8.2 Collective Bargaining Agreements ............ 24
8.3 Participation in Buyer's Retirement Plans ........ 24
8.4 Transfer of Savings Plan Account Balances ........ 24
8.5 Health and Welfare Plans ................ 24
8.6 No Rights or Remedies .................. 25
8.7 Indemnification ..................... 25
ARTICLE IX
SURVIVAL AND INDEMNIFICATION ................. 25
9.1 Survival ........................ 25
9.2 Indemnification Provisions for the Benefit of Buyer ... 25
9.3 Indemnification Provisions for the Benefit of Seller .. 25
9.4 Matters Involving Third Parties ............. 26
9.5 Adjustments ....................... 26
9.6 Exclusive Remedy .................... 26
ARTICLE X
OTHER POST-CLOSING COVENANTS ................. 26
10.1 Post-Closing Accounting Cooperation ........... 26
10.2 Transfer Taxes ..................... 26
10.3 WARN .......................... 27
10.4 Further Actions ..................... 27
10.5 Subsequent Access .................... 27
10.6 Existing Insurance Coverage ............... 27
10.7 Payment of Remainder of Stay Bonuses .......... 27
10.8 Collection of Receivables ................ 27
10.9 Mail .......................... 28
10.10 Bulk Sales Laws .................. 28
10.11 Confidentiality .................. 28
(a) By Seller ..................... 28
(b) By Buyer. ..................... 28
(c) Exceptions ..................... 28
10.12 Noncompetition ................... 28
10.13 Reimbursement for Relocation Costs ......... 29
ARTICLE XI
MISCELLANEOUS ........................ 30
11.1 Termination ....................... 30
(a) General ...................... 30
(b) Procedure Upon Termination ............. 30
(c) Survival of Certain Provisions ........... 30
11.2 Fees and Expenses .................... 30
11.3 Notices ......................... 30
11.4 Entire Agreement .................... 31
11.5 Binding Effect; Benefit ................. 31
11.6 Assignability ...................... 32
11.7 Amendment and Modification; Waiver ........... 32
11.8 Public Announcements .................. 32
11.9 Interpretation ..................... 32
11.10 Counterparts .................... 33
11.11 Applicable Law ................... 33
11.12 Severability of Provisions ............. 33
11.13 Guarantor ..................... 33
<PAGE>
SCHEDULES
Schedule 1.2(l) Off-Site Environmental Matters
Schedule 4.1(d) Good Title
Schedule 4.1(e)(i) Seller's Knowledge
Schedule 4.1(e)(ii) Governmental Approvals (Seller)
Schedule 4.1(e)(iv) Third Party Consents (Seller)
Schedule 4.1(f) Financial Statements
Schedule 4.1(g) Tax Matters
Schedule 4.1(h)(i) Permitted Liens
Schedule 4.1(h)(ii) Owned Real Property
Schedule 4.1(i) Contracts
Schedule 4.1(j) Legal Proceedings
Schedule 4.1(k) Government Licenses
Schedule 4.1(l) Compliance With Laws
Schedule 4.1(m) Labor Matters
Schedule 4.1(n) Intellectual Property
Schedule 4.1(s) Leased Real Property
Schedule 4.1(w) Key Employees
Schedule 4.1(x) Sufficiency of Assets
Schedule 4.2(c)(i) Buyer's Knowledge
Schedule 4.2(c)(ii) Governmental Approvals (Buyer)
Schedule 4.2(c)(iv) Third Party Consents (Buyer)
Schedule 5.2 Conduct of the Business Prior to Closing
Schedule 6.1(c) Third Party Consents
Schedule 6.3(d) Stay Bonuses
Schedule 10.13(a) Relocation Costs of St. Paul Operation to Eagan
Facility
Schedule 10.13(b) Costs Not Constituting Relocation Costs of St. Paul
Operation to Eagan Facility
EXHIBITS
Exhibit A Form of Distribution Agreement
Exhibit B Form of Trademark License Agreement
Exhibit C Form of Transition Services Agreement
Exhibit D Form of Lid Supply Agreement
Exhibit E Form of Supply Agreement
<PAGE>
ASSET PURCHASE AND SALE AGREEMENT
This ASSET PURCHASE AND SALE AGREEMENT (this "Agreement"), is dated
as of July 31, 998, between HOME PRODUCTS INTERNATIONAL, INC., a
corporation organized and existing under the laws of the State of Delaware
("Buyer"), PLASTICS, INC., a corporation organized and existing under the
laws of the State of Delaware ("Seller"), and Newell Co., a corporation
organized and existing under the laws of the State of Delaware and
guarantor of the performance of Seller under this Agreement ("Guarantor").
WHEREAS, Seller is engaged in the design, manufacture, marketing and
sale of plastic products, consisting of upscale, plastic disposable
beverage and food servingware and reusable plastic food storage containers
and related products (the "Business"); and
WHEREAS, at the Closing (as defined below), Buyer desires to
purchase from Seller substantially all of the assets and assume
substantially all of the liabilities relating to the Business from Seller,
and Seller desires to sell to Buyer such assets, subject to such
liabilities, on the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
TRANSFER OF ASSETS AND LIABILITIES
1.1 Transfer of Assets. Upon the terms and subject to the
conditions and covenants of this Agreement, and except as set forth in
Section 1.2 Seller agrees to sell, assign, transfer and convey to Buyer at
the Closing, and Buyer agrees to acquire from Seller, the assets,
properties, business set forth on the unaudited consolidated balance sheet
of the Business as of June 30, 1998 included in the Financial Statements
(as defined in Section 4.1(f)) (the "Balance Sheet") (the "Assets"),
including:
(a) Inventory. All inventories of products and finished goods,
including any such items which are in transit as of the time of the
Closing (collectively, the "Inventory");
(b) Materials. All raw materials, packaging and packaging
materials;
(c) Receivables. All trade, accounts and notes receivable
("Receivables");
(d) Business Records. All books and records relating primarily
to the Business, including all business records, research material,
tangible data, documents, personnel records with respect to the Employees
(as defined in Section 8.1), invoices, customer lists, vendor lists,
service provider lists, promotional literature, catalogs and advertising
materials used for the marketing of products, if any (collectively, the
"Business Records"); provided, however, that Seller shall be entitled to
make and retain copies of such books and records to the extent that they
relate in any way to Excluded Assets pursuant to Section 1.2 or Excluded
Liabilities pursuant to Section 1.4;
<PAGE>
(e) Tangible Personal Property. All tangible personal
property, including all equipment, furniture, furnishings, machinery,
vehicles, tools, molds and other tangible personal property, and all
warranties and guarantees, if any, express or implied, existing for the
exclusive benefit of the Business or located on or at the real property of
the Business in connection with the foregoing, to the extent assignable;
(f) Contracts. All contracts, including contracts with
finished goods suppliers, maintenance and service agreements, purchase
orders, purchase commitments for raw materials, goods and other services,
advertising and promotional agreements, leases and other agreements;
(g) Permits. All licenses, permits and franchises issued by
any governmental authority, whether foreign, federal, state, local
or other political subdivision or agency of any of the foregoing
("Governmental Authority"), to the extent legally transferable;
(h) Real Property. All interests in real property, including
all buildings, structures, fixtures and other improvements situated
thereon, and all easements, privileges, rights-of-way, riparian and
other water rights, lands underlying any adjacent streets or roads,
appurtenances, licenses and permits pertaining to or accruing to the
benefit of such properties (the "Real Property");
(i) Intellectual Property. All rights, title and interest in
and to the brand names, product trademarks, registered trademarks,
technical information, blueprints, management information systems,
software, technology, processes, know-how, specifications, designs,
drawings, patents, patent applications, inventions, trade secrets,
copyrights, works of authorship, service marks and any other proprietary
rights (the "Intellectual Property");
(j) Claims. All claims, prepayments, refunds (other than Tax
refunds), deposits, prepaid assets, causes of action, choses in action and
rights of offset or recoupment (collectively, the "Claims"); and
(k) Miscellaneous. Other assets set forth on the Balance
Sheet, excluding any such assets disposed of in accordance with Section
5.2 and assets not legally transferable in accordance with Section 3.2,
and including any such assets acquired by Seller during the period
commencing on June 30, 1998 and ending at the Closing Date in the ordinary
course of and exclusively for use in the Business.
1.2 Excluded Assets. The parties agree that the "Excluded Assets"
will include all right, title and interest in any assets, properties and
business of Seller or any affiliate (as defined in Rule 405 under the
Securities Act of 1933, as amended; each, an "Affiliate") thereof not
constituting the Assets, including, but not limited to, the following:
(a) Anchor[R], Anchor Hocking[R], Vitri[R] and Wearever[R]
Brand Names and Trademarks. Except as provided herein, all rights of
Seller and its Affiliates in the Anchor[R], Anchor Hocking[R], Vitri[R]
and Wearever[R] brand names, trademarks and logos;
(b) Cash. All cash and cash equivalents or similar types of
investments of Seller and its Affiliates;
<PAGE>
(c) Non-Assigned Contracts. All of the rights and interests
in, under or pursuant to, any license, lease, contract, agreement,
commitment or undertaking, that do not constitute a part of the
Assets, including without limitation, the lease described as Item 1 on
Schedule 4.1(s) (collectively, the "Non-Assigned Contracts");
(d) Tax Refunds. All refunds of Taxes of any kind paid by
Seller or its Affiliates;
(e) Insurance. All insurance policies of Seller or its
Affiliates and all rights of Seller or its Affiliates of every nature and
description under or arising out of such insurance policies;
(f) Corporate Records. All minute books, stock books, share
certificates, stock ledger and corporate seals of Seller and its
Affiliates;
(g) Employee Plans. Except as provided in Section 8.4, any
interest of Seller or an Affiliate thereof in or to any funds or other
property held in connection with any employee benefit arrangement,
including the Newell Pension Plan (as defined below);
(h) Bank Accounts and Lock Boxes. All bank accounts and lock
boxes of Seller or its Affiliates;
(i) Molds. All molds used by the Business in the manufacturing
of products which are the subject of the Lid Supply Agreement referred to
in Section 6.2(d)(i);
(j) Central Operations. All centralized management information
systems, accounting systems and computer systems, including, without
limitation, system described in Annex A to the Transition Services
Agreement described in Section 6.1(d)(v);
(k) Eminent Domain/Relocation Cost Proceedings. All rights of
Seller or its Affiliates relating to Item 1 on Schedule 4.1(j) (the
"Eminent Domain Proceeding");
(l) Certain Off-Site Environmental Matters. All rights of
Seller or its Affiliates related to Items 1-4 on Schedule 1.2(l) (the
"Off-Site Environmental Matters"); and
(m) Other. All rights of Seller and its Affiliates under this
Agreement and the Ancillary Agreements.
<PAGE>
1.3 Assumption of Certain Liabilities. In further consideration of
the sale, conveyance, assignment and transfer of the Assets to Buyer,
effective at the Closing, Buyer will assume and agree (solely for the
benefit of Seller and not for the benefit of any other Person) to pay,
perform and discharge as and when due all Liabilities that arise out of or
relate to the Business as reflected on the Balance Sheet (including,
without limitation, all rights and obligations under the Collective
Bargaining Agreement (as defined in Section 8.2)), and Liabilities arising
after June 30, 1998 in the ordinary course of business, other than the
Excluded Liabilities set forth in Section 1.4 (the "Assumed Liabilities").
For purposes of this Agreement, (a) a "Liability" is any debt, claim,
liability, obligation, damage or expense (whether known or unknown, vested
or unvested, asserted or unasserted, absolute or contingent, accrued or
unaccrued, assessed or unassessed, liquidated or unliquidated, actual or
potential, and due to or become due), and (b) a "Person" is any
individual, trustee, corporation, general or limited partnership, joint
venture, joint stock company, bank, firm, Governmental Authority, trust,
association, organization or unincorporated entity of any kind.
1.4 Excluded Liabilities. Buyer will not assume the following
Liabilities of the Business:
(a) Liabilities Related to Excluded Assets. Liabilities of
Seller or its Affiliates related to the Excluded Assets;
(b) Liabilities Related to Non-Assigned Contracts. Liabilities
of Seller or its Affiliates under or pursuant to the Non-Assigned
Contracts;
(c) Liabilities Related to Debarment Notice. Liabilities
related to the Notice of Proposed Debarment dated May 15, 1996 issued by
the General Services Administration against Seller (the "Debarment
Notice");
(d) Liabilities Related to Antitrust Litigation. Liabilities
of Seller or its Affiliates related to antitrust litigation arising from
the same facts that gave rise to the Debarment Notice;
(e) Liabilities Related to Certain Off-Site Environmental
Matters. Liabilities of Seller or its Affiliates related to the Off-Site
Environmental Matters;
(f) Liabilities Related to Newell Pension Plan. Liabilities of
Seller or its Affiliates for Contributions to the Newell Pension Plan for
Factory and Distribution Hourly-Paid Employees (the "Newell Pension Plan")
accruing prior to the Closing Date;
(g) Liabilities Related to Eminent Domain/Relocation Cost
Proceeding. Liabilities relating to the Eminent Domain Proceeding;
(h) Liabilities Related to Certain Management Bonuses.
Liabilities relating to the Newell Co. Executive Bonus Plan (A/B
Bonuses); and
(i) Other. Liabilities for which Seller has expressly assumed
responsibility pursuant to this Agreement.
<PAGE>
ARTICLE II
PURCHASE PRICE, ADJUSTMENT AND ALLOCATION
2.1 Purchase Price and Assumption of Liabilities. In full
consideration of the sale, conveyance, assignment and transfer of the
Assets to Buyer, (a) Buyer will pay (in the manner to be specified by
Seller prior to the Closing) to Seller at the Closing a purchase price
(the "Purchase Price") in immediately available federal funds in an amount
equal to $78,000,000, such amount to be payable by wire transfer to a bank
account designated by Seller in writing prior to the Closing; and (b)
Buyer will assume the Assumed Liabilities as of the Closing Date. The
Purchase Price will be subject to adjustment, as described in Section 2.2.
2.2 Adjustment of Purchase Price.
(a) Purchase Price Adjustment. Any amounts payable under this
Section 2.2(a) will be paid within five Business Days following the date
on which the Final Closing Statement is finalized. The "Adjusted Purchase
Price" means the Purchase Price minus the amount, if any by which the
tangible net worth of the Business at June 30, 1998, $24,081,000, as
reflected in the Balance Sheet (the "Peg Tangible Net Worth"), exceeds the
tangible net worth of the Business as of the close of business on the
Closing Date (the "Closing Tangible Net Worth"), or plus the amount, if
any, by which the Closing Tangible Net Worth exceeds the Peg Tangible Net
Worth. If the Purchase Price is greater than the Adjusted Purchase Price,
Seller will pay the difference to Buyer. If the Adjusted Purchase Price
is greater than the Purchase Price, Buyer will pay the difference to
Seller. The statement of Closing Tangible Net Worth shall be prepared
using the same principles, practices, procedures, policies, computational
methods and assumptions, including United States Generally Accepted
Accounting Principles ("GAAP"), as those used in preparing the statement
of Peg Tangible Net Worth. The statement of Peg Tangible Net Worth is
reflected in the Balance Sheet.
(b) Closing Statement of Tangible Net Worth. Within 90 days
following the Closing Date, Seller will prepare and deliver to Buyer a
statement of Closing Tangible Net Worth (the "Preliminary Closing
Statement"). The Preliminary Closing Statement, as it may be modified
pursuant to Sections 2.2(c) - (g) to become the final statement of Closing
Tangible Net Worth (the "Final Closing Statement"), will set forth a
calculation of Closing Tangible Net Worth. Any dispute, controversy or
claim arising out of or relating to the Preliminary Closing Statement and
the Final Closing Statement (each, a "Dispute") will be resolved in
accordance with Sections 2.2(c) - (g). In connection with preparing the
Preliminary Closing Statement and the Final Closing Statement, Buyer, and
its Accountants, will give Seller and its representatives access to the
books, records and accounts of the Business that have been transferred to
Buyer. For purposes of this Agreement, "Accountants" means, in the case
of Buyer, Arthur Andersen LLP, Chicago, Illinois, and means, in the case
of Seller, Arthur Andersen LLP, Milwaukee, Wisconsin.
<PAGE>
(c) Buyer's Review of Preliminary Closing Statement. Buyer
will have 25 days following receipt to review and respond to the
Preliminary Closing Statement, during which period Seller will grant Buyer
and its Accountants reasonable access during normal business hours to
Seller's records and the accounting work papers of Seller's Accountants
relating to the preparation of the Financial Statements, including any
accounting working papers or schedules prepared by Seller or its
Accountants with respect to the Preliminary Closing Statement. Buyer and
its Accountants will sign a customary accountants letter required by
Seller's Accountants prior to a review of work papers. If, within such
25-day period, Buyer has not delivered to Seller a written letter
("Buyer's Letter") setting forth in reasonable detail any proposed
adjustment to the Preliminary Closing Statement and the basis for such
adjustment (including a specific dollar amount and accompanied by a
reasonably detailed explanation), the Preliminary Closing Statement will
be the Final Closing Statement. Any amount set forth in the Preliminary
Closing Statement as to which Buyer has not objected and proposed an
adjustment (in a specific dollar amount and accompanied by a reasonably
detailed explanation) in Buyer's Letter will be deemed to be accepted and
will become part of the Final Closing Statement.
(d) Seller's Response to Buyer's Letter. Seller will have 25
days following receipt to review and respond to Buyer's Letter. If,
within such 25-day period, Seller has not delivered to Buyer a written
letter ("Seller's Letter") setting forth in reasonable detail its
objection to any proposed adjustment in Buyer's Letter and the basis for
such objection, the proposed adjustment will be deemed to be accepted, and
any amount set forth in Buyer's Letter as to which Seller has not objected
and proposed an adjustment (in a specific dollar amount and accompanied by
a reasonably detailed explanation) in Seller's Letter will be deemed to be
accepted and will become part of the Final Closing Statement.
(e) Meeting to Resolve Proposed Adjustments. As soon as
reasonably practicable following the periods provided in Sections 2.2(c)
and (d), but in any event no later than 15 days after Seller's delivery of
Seller's Letter, the parties will meet and endeavor to resolve the
unaccepted adjustments in Buyer's Letter. If the parties reach agreement
on such adjustments, the Final Closing Statement will be the Preliminary
Closing Statement, modified to reflect the adjustments accepted pursuant
to Sections 2.2(c) and 2.2(d) and those otherwise mutually resolved by the
parties.
(f) Arbitration of Disputed Purchase Price Adjustments.
(i) If the parties do not resolve to their mutual satisfaction
all disputed adjustments relating to the Preliminary Closing
Statement described in Buyer's Letter and Seller's Letter within 25
days following the period provided in Sections 2.2(d), any remaining
disputed adjustments will be settled by arbitration by a three-member
arbitration panel (the "Panel") in accordance with the Center for
Public Resources ("CPR") Rules for Non-Administered Arbitration of
Business Disputes, as modified by the provisions set forth in clauses
(ii) - (vii) below. The parties will each separately appoint to the
Panel an arbitrator selected from a panel of CPR neutrals in Chicago,
Illinois with relevant experience in mergers and acquisitions and
such arbitrators shall jointly appoint a third arbitrator from the
accounting firm of Price Waterhouse LLP, Chicago, Illinois, provided
such accounting firm does not represent either Buyer or Seller.
<PAGE>
(ii) The parties will furnish the Panel with a copy of this
Agreement, the Peg Statement, the Preliminary Closing Statement,
Buyer's Letter, Seller's Letter and any other relevant correspondence
between them. Each party will also give the Panel access to the
Business Records, as well as any accounting work papers or other
schedules relating to the preparation of the Preliminary Closing
Statement, Buyer's Letter and Seller's Letter. There will be no
other discovery during the arbitration.
(iii) Within 25 days of submitting the disputed adjustments
to the Panel pursuant to Section 2.2(f)(i), Buyer and Seller will
provide to the Panel and to each other a copy of a written submission
setting forth its position with respect to each item in dispute that
is described in Buyer's Letter and Seller's Letter. Within 25 days
thereafter, each party may provide to the Panel and to each other a
written rebuttal, which will be limited to addressing the points
raised in the opposing party's initial written submission. No
additional written submission will be made to the Panel unless
specifically requested by the Panel. No party will be required to
disclose any information protected by the attorney-client privilege,
attorney work product doctrine or other applicable privilege.
(iv) After receiving the written submissions, rebuttal
responses, if any, and any other written information pursuant to
Section 2.2(f)(iii), the Panel will promptly schedule a date to
interview persons designated by each party to present that party s
position. Such interviews will take place in Chicago, Illinois. The
interviews will be held on at least seven days notice to each party,
and each party, its counsel and other advisors may be present and
participate in any questioning at such interviews. The interviewing
process will last no more than two days in the aggregate.
(v) The arbitration will be limited to (A) reviewing the
amounts properly placed in dispute by Buyer's Letter and Seller's
Letter pursuant to Sections 2.2(c) and (d); (B) reviewing the
parties written submissions described in Section 2.2(f)(iii); (C)
considering the interviews described in Section 2.2(f)(iv), (D)
applying GAAP on a basis consistent with the Peg Statement to
determine the proper amount for each disputed adjustment, provided
that such amount must fall within the range set by Seller's proposed
amount in the Preliminary Closing Statement and Buyer's proposed
adjustment in Buyer's Letter; (E) preparing the Final Closing
Statement showing the Net Working Capital, which will include those
amounts in the Preliminary Closing Statement accepted by Buyer
pursuant to Section 2.2(c), Buyer's proposed adjustments accepted by
Seller pursuant to Section 2.2(d) or otherwise mutually resolved by
the parties, and those amounts determined by the Panel pursuant to
subparagraph (D) hereof; and (F) calculating the Adjusted Purchase
Price. The Panel will be instructed to resolve issues in a manner
consistent with the provisions of this Agreement.
<PAGE>
(vi) The Panel will complete its preparation of the Final
Closing Statement and calculation of the Adjusted Purchase Price
within 25 days of the final interview conducted pursuant to Section
2.2(f)(iv) and will deliver a copy of the Final Closing Statement and
the Adjusted Purchase Price to Seller and Buyer, together with a
report setting forth each disputed adjustment, the Panel's
determination with respect thereto, and a statement of the Panel's
reasons for such determination. The Panel's determinations will be
conclusive and binding upon the parties.
(vii) The Panel's decision will be entered and enforced in
any court of competent jurisdiction. Each of Guarantor and Buyer
will pay 50% of the fees, costs and expenses of the arbitration.
(g) Notices Relating to the Closing Statement. Each party will
deliver all notices and other communications under this Section 2.2 in
accordance with Section 11.3.
(h) Payment and Interest. Any payment required to be made by
Seller or Buyer pursuant to Section 2.2(a) shall be (i) made by wire
transfer of immediately available funds pursuant to written instructions
provided by the party that is to receive payment pursuant to Section
2.2(a) and (ii) bear interest from the Closing Date through the date of
payment on the basis of the average daily rate of interest publicly
announced by The Northern Trust in Chicago, Illinois from time to time as
its base rate from the Closing Date to the date of such payment.
2.3 Purchase Price Allocation. The Purchase Price represents the
amount agreed upon by the parties to be the aggregate value of the Assets,
and will be allocated among the Assets, in accordance with an allocation
schedule to be provided no later than five business days prior to the
Closing Date. Each of the parties will report the purchase and sale of
the Assets, including, without limitation, in all Federal, foreign, state,
local and other tax returns and reports prepared and filed by or for
either of Seller (and its Affiliates) and Buyer, in accordance with the
basis of allocation described in this Section 2.3.
ARTICLE III
CLOSING; TRANSFER OF ASSETS
3.1 Closing. The consummation of the sale, conveyance, assignment
and transfer of the Assets contemplated by this Agreement, the assumption
of the Assumed Liabilities by Buyer and the payment of the Purchase Price
will take place at a closing (the "Closing") at the offices of Schiff
Hardin & Waite, 7300 Sears Tower, Chicago, Illinois 60606, at 10:00 a.m.
on September 1, 1998 (or as soon as practicable thereafter as all the
conditions to Closing set forth in Article VI are satisfied or waived) or
such other place, time and date as the parties may agree up to and
including October 15, 1998, time being of the essence as to such date.
The actual date of the Closing is herein referred to as the "Closing
Date." At the Closing, Seller will make the deliveries provided for in
Section 3.3 of this Agreement, and Buyer will make the deliveries provided
for in Section 3.4 of this Agreement.
<PAGE>
3.2 Nonassignability of Assets. Notwithstanding anything to the
contrary contained in this Agreement, to the extent that the sale,
assignment, transfer, conveyance or delivery or attempted sale,
assignment, transfer, conveyance or delivery to Buyer of any asset is
prohibited by any applicable law or would require any governmental or
third party authorizations, approvals, consents or waivers and such
authorizations, approvals, consents or waivers are not obtained prior to
the Closing, this Agreement shall not constitute a sale, assignment,
transfer, conveyance or delivery, or any attempted sale, assignment,
transfer, conveyance or delivery thereof. Following the Closing, the
parties will use reasonable efforts and cooperate with each other to
obtain promptly such authorizations, approvals, consents or waivers;
provided, however, that neither Seller nor Buyer will be required to pay
any consideration therefor. Pending such authorization, approval, consent
or waiver, the parties shall cooperate with each other in any reasonable
and lawful arrangements designed to provide to Buyer the benefits of use
of such Asset. Once authorization, approval, consent or waiver for the
sale, assignment, transfer, conveyance or delivery of an Asset not sold,
assigned, transferred, conveyed or delivered at the Closing is obtained or
made, Seller will or will cause an Affiliate to, assign, transfer, convey
and deliver such Asset to Buyer at no additional cost. To the extent that
any such Asset cannot be transferred or the full benefits of use of any
such Asset cannot be provided to Buyer following the Closing pursuant to
this Section 3.2, then Buyer and Seller will enter into such arrangements
(including subleasing or subcontracting if permitted) to provide to the
parties the economic (taking into account Tax costs and benefits) and
operational equivalent of obtaining such authorization, approval, consent
or waiver, and the performance by Buyer of the obligations thereunder;
provided that the determination as to whether such arrangements provide
the economic and operational equivalent shall be made by Buyer in its
reasonable discretion.
3.3 Deliveries of Seller. At the Closing, Seller will deliver to
Buyer:
(a) a bill of sale and other instruments of conveyance,
transfer and assignment, all in form and substance reasonably satisfactory
to Buyer as will be effective to vest in Buyer title to and ownership of
the Assets as contemplated by this Agreement;
(b) complete and correct copies of resolutions of Seller s
Board of Directors effecting authorization and approval of this Agreement
and the transactions contemplated herein, certified by the Secretary of
Seller; and
(c) all other documents required to be delivered by Seller
under Section 6.2
3.4 Buyer's Deliveries. At the Closing, Buyer will deliver to
Seller or as directed by Seller:
(a) the undertaking of Buyer, in form reasonably satisfactory
to Seller, whereby the Assumed Liabilities are assumed by Buyer;
<PAGE>
(b) complete and correct copies of resolutions of Buyer's Board
of Directors effecting authorization and approval of this Agreement and
the transactions contemplated herein, certified by the Secretary of Buyer;
(c) the Purchase Price; and
(d) all other documents required to be delivered by Buyer under
Section 6.3.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Seller. Seller (and, where
applicable, Guarantor) represents and warrants to Buyer as follows:
(a) Due Organization of Seller. Each of Guarantor and Seller
is a corporation duly organized, validly existing and in good standing,
under the laws of the jurisdiction of its organization. Seller (i) has
the requisite power and authority to own, lease and operate its properties
and assets and to conduct the Business as it is now being conducted and
(ii) to the extent that the concept of good standing exists in the
relevant jurisdiction, is in good standing and is duly qualified to
transact business in each jurisdiction in which the nature of property
owned, leased or operated by it or the conduct of its business requires it
to be so qualified, except, in each case, where the failure to be so
qualified or to be in good standing would not have a material adverse
affect on the Business. Complete and correct copies of the respective
constituent documents of Seller, as amended to date, have been made
available to Buyer. Seller has no subsidiaries.
(b) Due Power and Authority. Each of Guarantor and Seller has
all requisite corporate power and authority to enter into this Agreement
and the Ancillary Agreements (as defined in Section 6.2(d) and together
with this Agreement, the "Transaction Agreements") to which it is a party
and to consummate the transactions contemplated hereby and thereby and
perform its obligations hereunder and thereunder.
(c) Authorization and Validity of Agreements. The execution,
delivery and performance, as applicable, by each of Guarantor and Seller
of the Transaction Agreements and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate and shareholder action, and no other corporate
action on its part is necessary for the execution, delivery and
performance by it of the Transaction Agreements and the consummation by it
of the transactions contemplated hereby and thereby. This Agreement has
been duly executed and delivered by each of Guarantor and Seller, and at
the Closing each of the Ancillary Agreements will be duly executed and
delivered by Seller and Guarantor as applicable. This Agreement is the
legal, valid and binding obligation of each of Guarantor and Seller,
enforceable against each of Guarantor and Seller in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general equity principle. At the
Closing, each of the Ancillary Agreements will be the legal, valid and
binding obligation of Seller or an Affiliate thereof, enforceable against
such party in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general equity
principle.
<PAGE>
(d) Good Title. Upon consummation of the transactions
contemplated hereby at the Closing, Seller shall deliver or shall cause to
be delivered to Buyer, good and marketable title to the Assets, free and
clear of any liens, claims, pledges, charges, security interests,
restrictions or other legal or equitable encumbrances ("Liens"), except in
each case (i) as permitted or disclosed in Schedule 4.1(d) and (ii) all
Permitted Liens (as such term is defined in Section 4.1(h) below). To
Seller's knowledge, (as defined in Section 4.1(e)), the Assets are in
satisfactory operating condition and repair, normal wear and tear
excepted. To Seller's knowledge, the buildings, plants, structures and
equipment are adequate for the uses to which they are being put, and none
of such buildings, plants, structures or equipment is in need of material
maintenance or repair except ordinary, routine maintenance and repair that
are not material in nature or cost.
(e) No Conflict. The execution, delivery and performance by
Seller of the Transaction Agreements and the consummation by Seller of the
transactions contemplated hereby and thereby, do not and will not, (i) to
the actual knowledge of the officers of Seller set forth on Schedule
4.1(e)(i) ("Seller's Knowledge") violate any provision of Federal, state,
local or foreign law, rule, regulation, order, injunction, judgment or
decree (each, a "Law") applicable to Seller or to which the Business is
subject; (ii) except as set forth on Schedule 4.1(e)(ii), require any
consent or approval of, or filing with or notice to, any governmental
authority whether foreign, federal, state, local or other political
subdivision or agency of any of the foregoing ("Governmental Authority")
under any provision of Law applicable to Seller or the Business; (iii)
violate any provision of the charter or by-laws or other constituent
documents of Seller or Guarantor; or (iv) except as set forth on Schedule
4.1(e)(iv), require any consent, approval or notice under, or result in
the breach, lapse, cancellation or termination of, or constitute a default
under, or result in the acceleration of any right or obligation of or the
performance by Seller under any material indenture, lease, license,
agreement, or other material instrument to which Seller is a party or by
which Seller, or any of its material assets, is bound or encumbered, or
result in the creation of any Lien on the material Assets (other than
Permitted Liens); except, with respect to clauses (i) and (ii) above,
for such violations, consents, approvals, notices, breaches, lapses,
cancellations, terminations, defaults or accelerations that could not,
individually or in the aggregate, be reasonably expected to have a
material adverse effect on the Business.
(f) Financial Statements. Seller has delivered to Buyer the
audited consolidated balance sheets of the Business as at December 31,
1997, 1996 and 1995 and the Balance Sheet, and the audited consolidated
statement of income for the fiscal years ended December 31, 1997, 1996 and
1995 (the "Financial Statements", copies of which are included in Schedule
4.1(f)). Except as described in Schedule 4.1(f), the Financial Statements
were prepared on a basis consistent with GAAP and are complete and correct
in all material respects. To Seller's Knowledge, there are no material
Liabilities that are not reflected on the Balance Sheet. Except as set
forth in Schedule 4.1(f), the Business Records accurately and fairly
reflect, in reasonable detail, all material transactions and all material
items of income and expense, assets and liabilities and accruals relating
to the Business.
<PAGE>
(g) Tax Matters. Seller has filed all material Federal, state,
local and foreign tax returns ("Tax Returns"), including information
returns, required to be filed by Seller, and paid or made adequate
provision for the payment of all taxes shown on such returns to be owed by
Seller, including those with respect to income, withholding, social
security, unemployment, workers compensation, franchise, ad valorem,
premium, excise and sales taxes ("Taxes"). Except as set forth in
Schedule 4.1(g), Seller is not a party to any pending action or
proceeding, nor, to Seller's Knowledge, is any such action or proceeding
threatened, by any taxing authority for the assessment or collection of
material Taxes (including interest or penalties thereon). Schedule
4.1(g) sets forth a complete and accurate list of all audits of Tax
Returns for all taxable years subsequent to fiscal year 1992. All
interest and penalties proposed as a result of such audits have been paid.
Except as set forth in Schedule 4.1(g), Seller has not given or been
requested to give waivers or extensions (or is not or would not be subject
to a waiver or extension given by another Person of any statute of
limitations relating to the payment of any Tax for which Seller is or may
be liable. For each year not closed by the relevant statute of
limitations, Seller has not been a member of an affiliated group filing a
consolidated Federal income Tax Return other than a group the common
parent of which is Seller.
(h) Title to Real and Personal Properties; Liens and
Encumbrances; No Other Interests. Seller or an Affiliate thereof has, and
on Closing Date Seller will have, good and marketable title to all of the
material properties and assets, tangible or intangible, reflected in the
Financial Statements, free and clear of all Liens, except (i) as set forth
on Schedule 4.1(h)(i), (ii) Liens that are publicly disclosed or do not
affect the use thereof in any material respect, (iii) statutory Liens
securing payments not yet due and payable or due but not yet delinquent or
being contested in good faith by appropriate proceedings, (iv) mechanics',
carriers', workmen's, repairmen's or other like Liens arising or incurred
in the ordinary course of business, original purchase price conditional
sales contracts and equipment leases with third parties entered into in
the ordinary course of business, and (v) Liens that are not material
("Permitted Liens"). To the extent that such documents exist and are
readily available, Seller has or will deliver all deeds, title documents,
title policies and other material documents relating to such real
property. Schedule 4.1(h)(ii) lists all of Seller's owned real property.
<PAGE>
(i) Business Contracts. Schedule 4.1(i) sets forth, as of the
date hereof, each contract, maintenance and service agreement, purchase
order, and purchase commitment for raw materials, goods and other
services, advertising and promotional agreement, lease, license, shipping
agreement, agreement with a finished goods supplier, and collective
bargaining agreement (i) that relate to the Business, and (ii) to which
Seller or an Affiliate thereof is a party and by which the assets of the
Business are bound, which (A) require any party thereto to pay an amount
(whether in a lump sum or in a series of installments) in excess of
$250,000 annually, (B) provides for a surety, cosigner, endorser, guaranty
or indemnity by Seller (in connection with the Business) of any obligation
or liability in excess of $250,000, contingent or otherwise, or that
contains material covenants that restrict or purport to restrict the
Business or limit the freedom of Seller to engage in any line of business
or compete with any Person, (C) has a stated term in excess of one year,
requires any party thereto to pay an amount (whether in a lump sum or in a
series of installments) in excess of $250,000 annually, or (D) is
otherwise material to the conduct of the Business (each, a "Business
Contract"). Except as set forth in Schedule 4.1(i), Seller is in
substantial compliance with each Business Contract and, to Seller s
Knowledge, each other Person obligated under each Business Contract is in
substantial compliance thereunder. To Seller's Knowledge, no event has
occurred or circumstance exists that (with or without notice or lapse of
time) would contravene, conflict with, result in a material breach of,
violation or default under (a "Violation Event") any Business Contract.
All Business Contracts were entered into at arms-length, except as set
forth on Schedule 4.1(i).
(j) Legal Proceedings. As of the date of this Agreement,
except as set forth in Schedule 4.1(j), there are no material actions,
suits or proceedings instituted or pending, or to Seller's Knowledge,
threatened, against Seller or the Business. Except as set forth on
Schedule 4.1(j), neither Seller nor the Business is subject to any
material judgment, order, writ, injunction or decree.
(k) Government Licenses, Permits and Related Approvals.
Schedule 4.1(k) lists each material license, permit, consent, approval,
authorization, qualification and order of any Governmental Authority
(each, a "Permit") required to permit Seller to conduct the Business as
presently conducted. Each such Permit is valid and in full force and
effect. To Seller's Knowledge no Violation Event relating to any Permit
exists that could cause a revocation or suspension of such Permit.
(l) Conduct of Business in Compliance with Regulatory
Requirements. To Seller's Knowledge, except as set forth in Schedule
4.1(l), Seller is in material compliance with each Law, applicable to the
operation or conduct of, or ownership of the property relating to, the
Business. To Seller's Knowledge, no Violation Event under any such Law
exists that may give rise to any material obligation on the part of Seller
to undertake or bear the cost of any remedial action of any nature with
respect to the Business.
<PAGE>
(m) Labor Matters. Except as set forth in Schedule 4.1(m),
Seller is not a party to any collective bargaining agreement or other
contract or agreement with any labor organization or other representative
of any of the employees of the Business, and there is no labor strike,
slowdown, work stoppage or lockout in effect or, to Seller's Knowledge,
threatened or otherwise affecting Seller. To Seller's Knowledge, Seller
has complied in all material respects with, and continues to comply with
in all material respects, the terms of the collective bargaining
agreements set forth in Schedule 4.1(m), and all material laws relating to
employment, equal employment opportunity, non-discrimination, immigration,
wages, hours, benefits, payment of social security and similar taxes,
occupational safety and health and plant closing.
(n) Intellectual Property. Schedule 4.1(n) lists, as of the
date of this Agreement, all material (i) United States and foreign patents
and patent applications, (ii) United States and foreign trademark
registrations or any analogous rights and applications therefor, (iii)
United States and foreign copyright registrations and applications
therefor, (iv) registered designs and (v) utility models, in which Seller
has an interest and that relate to the Business and the nature of such
interest (collectively, the "Intellectual Property"). To Seller's
Knowledge, except as set forth on Schedule 4.1(n), no Intellectual
Property is infringed or has been challenged or threatened, in any way.
To Seller's knowledge, except as set forth on Schedule 4.1(n), no
Intellectual Property infringes or is alleged to infringe any intellectual
property of any other third party.
(o) Employee Benefit Plans. With respect to the Newell Long-
Term Savings and Investment Plan ("Newell's Savings Plan"), (i) Newell s
Savings Plan is intended to be qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and has received a
favorable IRS determination letter stating that it meets the requirements
of the Tax Reform Act of 1986; (ii) all contributions due to Newell s
Savings Plan have been made on a timely basis; and (iii) the
administration of Newell's Savings Plan has complied in all material
respects with its terms and all applicable laws, including, without
limitation, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code. Seller does not maintain any employee
benefit plan as defined in Section 3(3) of ERISA and does not contribute
to any multiemployer plan as defined in Section 3(37) of ERISA.
(p) Brokers, Finders, etc. Except for Robert W. Baird & Co.
Incorporated, whose fees are the sole responsibility of Seller, Seller has
not entered into any contract, arrangement or understanding with any
person or firm that may result in the obligation of Seller to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the transactions contemplated hereby or by the Ancillary
Agreements.
(q) Reserved.
(r) Absence of Changes. Except as set forth in Schedule
4.1(r), since June 30, 1998, there has not been any event or circumstance
that, individually or in the aggregate, has had or would have a material
adverse effect on the Business.
<PAGE>
(s) Leased Real Property. Schedule 4.1(s) lists all material
real property leased or subleased by Seller in connection with the
Business (the "Leased Real Property"). Seller has delivered to Buyer
correct and complete copies of the leases and subleases identified in
Schedule 4.1(s) (collectively, the "Leases"). Seller has not received
any written notice from any landlord, lessor or sublessor under any of the
Lease that it is in material default under any of the Leases, nor to
Seller's Knowledge, does any uncured default exist under any of the Leases
on the part of Seller or the landlord, lessor or sublessor.
(t) Insurance. Seller has casualty, general liability and
other insurance policies for the assets and properties of Seller that is
customary and adequate with respectable companies and in amounts and
coverage appropriate for the Business.
(u) Receivables. All Receivables of Seller that are reflected
on the Balance Sheet as of the Closing Date represent or will represent
valid obligations arising from sales actually made or services actually
performed in the ordinary course of business. Unless paid prior to the
Closing Date, such Receivables are or will be as of the Closing Date
current and collectible net of respective reserves shown on the Balance
Sheet as of the Closing Date (which reserves are adequate and calculated
consistent with past practice and, in the case of the reserve on the
Closing Date, will not represent a greater percentage of the Receivables
as of the Closing Date than the reserve reflected in the Balance Sheet).
Subject to such reserves, each of the Receivables either has been or will
be collected in full. To Seller's Knowledge, there is no contest, claim,
or right of setoff, other than returns in the ordinary course of business,
under any Business Contract with any obligor of a material Receivable
relating to the amount or validity of such Receivable.
(v) Inventory. All Inventory reflected in the Balance Sheet
consists of a quality and quantity usable and salable in the ordinary
course of business, except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net
realizable value in the Balance Sheet as of the Closing Date, as the case
may be. All Inventory written off has been priced at the lower of cost or
market. The quantities of each item of Inventory (whether raw materials,
work-in-process or finished goods) are not excessive, but are reasonable
in the present circumstances of Seller.
(w) Key Employees. Schedule 4.1(w) contains a complete and
accurate list of the following information for each employee of Seller
earning an annual salary of at least $75,000 (each, a "Key Employee")
(including any such employee on leave of absence or layoff status): name,
title, current compensation [and any change in compensation since January
1, 1998, vacation accrued, service credited for purposes of vesting and
eligibility to participate in any of Seller's employee benefit plans and
severance pay obligations]. None of any such Key Employees is a party to
an employment agreement with Seller nor, to Seller's Knowledge, is any
such Key Employee a party or otherwise bound by any agreement or
arrangement between such Key Employee and any other Person which
materially adversely affects the performance of his duties as an employee
or the ability of the Seller to conduct the Business.
(x) Sufficiency of Assets. Except as set forth on Schedule
4.1(x), the Assets represent all of the material Assets necessary to
conduct the Business as presently conducted.
<PAGE>
(y) No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 4.1 and in the
Ancillary Agreements, Seller makes no other express or implied warranty or
representation in the Transaction Documents.
4.2 Representations and Warranties of Buyer. Buyer represents and
warrants on behalf of itself and, as applicable, its Affiliates, to Seller
as follows:
(a) Due Organization and Power. Each of Buyer and its
Affiliates that is a party to an Ancillary Agreement is a corporation duly
organized, validly existing and in good standing, under the laws of the
jurisdiction or its organization and has the requisite corporate power and
authority to enter into the Transaction Agreements to which it is a party
and perform its obligations thereunder.
(b) Authorization and Validity of Agreements. The execution,
delivery and performance by each of Buyer and any Affiliate of Buyer of
the Transaction Agreements to which it is a party, and the consummation by
Buyer or its Affiliates, as applicable, of the applicable transactions
contemplated hereby and thereby, have been duly authorized by all
necessary corporate and shareholder action, and no other corporate action
on its part is necessary for the execution, delivery and performance by it
of the Transaction Agreements to which it is a party and the consummation
by it of the applicable transactions contemplated hereby and thereby.
This Agreement has been, and at the Closing the Ancillary Agreements will
be, duly executed and delivered by Buyer. This Agreement is, and at the
Closing the Ancillary Agreements will be, the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with their
respective terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general equity principles.
(c) No Conflict. The execution, delivery and performance by
each of Buyer and any Affiliate of Buyer of the Transaction Agreements to
which it is a party and the consummation by Buyer or its Affiliates, as
applicable, of the transactions contemplated thereby does not, and will
not (i) to the actual knowledge of the officers of Buyer set forth in
Schedule 4.2(c)(i) ("Buyer's Knowledge"), violate any provision of Law
applicable to Buyer or any of its Affiliates or to which their respective
properties are subject; (ii) except as set forth on Schedule 4.2(c)(ii),
require any consent or approval of, or filing with or notice to, any
Governmental Authority under any provision of Law applicable to Buyer or
any of its Affiliates; (iii) violate any provision of the charter or by-
laws or other constituent documents of Buyer or any of its Affiliates; or
(iv) except as set forth on Schedule 4.2(c)(iv), require any consent,
approval or notice under, or result in the breach, lapse, cancellation or
termination of, or constitute a default under, or result in the
acceleration of, any right or obligation of or the performance by Buyer or
any of its Affiliates under any material indenture, lease, franchise,
agreement, or other material instrument to which Buyer or any of its
Affiliates is a party or by which any of them or their material assets are
bound or encumbered, or result in the creation of any Lien; except, with
respect to clauses (i) and (ii) above, for such violations, consents,
approvals, notices, breaches, lapses, cancellations, terminations,
defaults or accelerations that could not, individually or in the
aggregate, be reasonably expected to have a material adverse effect.
<PAGE>
(d) Brokers, Finders. etc. Except for Bancamerica Robertson
Stephens, whose fees are the sole responsibility of Buyer, none of Buyer
or its Affiliates have entered into any contract, arrangement or
understanding with any person or firm that may result in the obligation of
any of them to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the transactions contemplated
hereby or by the Ancillary Agreements.
(e) Financial Capacity. Buyer has sufficient cash on hand, or
available under a committed credit facility or line of credit with
unutilized capacity (or other committed funded debt), in the aggregate
amount of not less than the Purchase Price, which cash on hand or
available as described above will be available at the Closing to pay the
Purchase Price.
4.3 Supplements to Schedules. From time to time prior to the
Closing, Seller will promptly supplement or amend the Schedules with
respect to any matter hereafter arising which, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in the Schedules provided, however, that any such supplement
shall not constitute a cure of any material breach of any representation
or warranty previously made unless Buyer consents thereto in writing
(such consent not to be unreasonably withheld).
ARTICLE V
PRE-CLOSING COVENANTS
5.1 Access to Information Concerning Properties and Records;
Confidentiality.
During the period commencing on the date hereof and ending on the
Closing Date, Seller shall, upon reasonable notice, afford to Buyer, its
counsel, accountants and other authorized representatives such access,
during normal business hours, to the facilities, properties, books,
records, Tax Returns, documents, personnel and auditors of the Business,
as Buyer shall reasonably request. Buyer agrees that its inspections
shall be undertaken in a manner so as not to cause unreasonable
interference with the operations of Seller. Seller shall cause its
officers, employees, accountants and other agents to furnish to Buyer such
additional financial and operating data and information relating to the
Business as Buyer may from time to time reasonably request. If this
Agreement is terminated pursuant to Section 11.1 prior to the Closing
Date, Buyer shall return to Seller all copies held by Buyer or its
representatives of such books, records, Tax Returns and documents and
results of such inspections, assessments, audits and tests. Buyer agrees
that it will continue to treat all information so obtained from Seller as
"Evaluation Material" under the Confidentiality Agreement, dated as of
March 23, 1998, between Newell Co. and Buyer (the "Confidentiality
Agreement"), and will continue to honor its obligations thereunder.
5.2 Conduct of the Business Prior to the Closing Date. Seller
agrees that, except as provided in this Agreement or consented to or
approved in writing by Buyer (which consent shall not be unreasonably
withheld) or set forth on Schedule 5.2, during the period commencing on
the date hereof and ending at the Closing Date, Seller shall not take any
of the following actions with respect to the Business or its employees:
<PAGE>
(a) Ordinary Course. Conduct the Business other than in the
ordinary course of business consistent with past practice
(b) Changes in Compensation. Grant any general increase in
compensation or benefits to its employees or to its officers, except in
the ordinary course of business or as required by law; pay any bonus
compensation except in the ordinary course of business or in accordance
with the provisions of any applicable program or plan adopted by the Board
of Directors of Seller or Seller prior to the date hereof; enter into or
amend the terms of any severance agreements with its officers; or effect
any change in retirement benefits for any Transferred Employees (as
defined herein) or officers (unless such change is required by applicable
law); provided, however, that nothing in this subsection (b) shall
prevent the payment or other performance of any award or grant made prior
to the date hereof and disclosed in the Schedules or pursuant to this
Agreement;
(c) Assets. Sell, lease or otherwise dispose of any of its
assets, other than inventory, or acquire any business or assets, in each
case except in the ordinary course of business, or for an amount not
exceeding $250,000;
(d) Capital Expenditures. Authorize or commit to, or make new
capital expenditures in any individual case in an amount exceeding
$300,000 or collectively, in a total amount exceeding $750,000;
(e) Liens. Mortgage or otherwise encumber or subject to any
Lien any Assets, except for such of the foregoing as are in the ordinary
course of business or Permitted Liens;
(f) Accounting Practices. Make any material change to the
accounting (including Tax accounting) methods, principles or practices of
the Business, except as may be required by GAAP;
(g) Constituent Documents. Make any material amendment to its
charter or by-laws; or
(h) Other. Agree to do any of the foregoing.
5.3 Preservation of Business. Seller will use its reasonable
efforts to preserve intact the business organization of the Business, to
keep available the services or their present officers and key employees,
and to preserve the good will of those having business relationships with
the Business.
<PAGE>
5.4 Authorizations. Subject to the terms and conditions herein
provided, Seller and Buyer shall (a) promptly make their respective
filings and thereafter make any other required submissions under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"); (b) use
their reasonable best efforts to cooperate with each other in (i)
determining which filings are required to be made prior to the Closing
Date with, and which consents, approvals, permits or authorizations are
required to be obtained prior to the Closing Date from any Governmental
Authority in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and (ii)
timely making all such filings and timely seeking all such consents,
approvals, permits or authorizations; and (c) use their reasonable best
efforts to, or cause to be taken, all other action and do, or cause to be
done, all other things necessary, proper or appropriate to consummate and
make effective the transactions contemplated by this Agreement. If, at
any time after the Closing Date, any further action is necessary or
desirable to carry out the purposes of this Agreement, the officers and
directors of the parties shall take all such necessary action.
5.5 Cash Management.
(a) Between the date of this Agreement and the Closing Date,
Seller shall continue to participate in the center cash management system
of its corporate parent (the "Cash Management System") in accordance with
prior practice prior to the Closing Date.
(b) Effective at the opening of business on the Closing Date,
Buyer shall be responsible for funding all disbursements of the Business,
but excluding the presentation for payment of all outstanding checks dated
prior to the Closing Date drawn on Seller's bank accounts.
(c) Effective as of the opening of business on the Closing
Date, the Business shall have the right to any funds received in any lock
box used by Seller or the Business, provided that Seller has received the
Purchase Price by wire transfer not later than 2:00 p.m. Chicago time on
the Closing Date.
5.6 Intercompany Services and Products. Any intercompany services
provided by Seller's Affiliates to the Business shall terminate as of the
Closing Date, except as set forth in this Agreement, and all amounts (but
without duplication of amounts included in accrued expenses) owing by
Seller or the Business with respect to such services as of the close of
business on the day preceding the Closing Date with respect to such
services shall be paid as soon as possible, but in no event later than 15
days after the Closing Date. Notwithstanding the foregoing, Seller or its
Affiliates shall provide transition services pursuant to the transition
services agreement (as defined in Section 5.2(d)) to the Business on such
terms and conditions and for such prices and duration as described in such
agreement (as further described herein).
<PAGE>
5.7 Further Actions. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use their reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions
contemplated by this Agreement and shall use its best efforts to satisfy
the conditions to the transactions contemplated hereby and to obtain all
waivers, permits, consents and approvals and to effect all registrations,
filings and notices with or to third parties or Governmental Authority
that are necessary or desirable in connection with the transactions
contemplated by this Agreement.
5.8 No Negotiation. None of Seller or any of its Affiliates,
representatives, officers, employees, directors or agents shall, directly
or indirectly, (a) submit, solicit, initiate, encourage, entertain,
negotiate, accept or discuss, directly or indirectly, any proposal or
offer from any Person or enter into any agreement or accept any
offer relating to any (i) reorganization, liquidation, dissolution or
recapitalization of the Business, (ii) merger or consolidation involving
the Business, (iii) purchase or sale of any assets or capital stock (other
than a purchase or sale of inventory in the ordinary course of business
consistent with past custom and practice) of the Business, or (iv) similar
transaction or business combination involving the Business (each of the
foregoing actions described in clauses (i) through (iv), a "Company
Transaction"), (b) furnish any information with respect to, assist or
participate in or facilitate in any other manner any effort or attempt by
any person to do or seek to do any of the foregoing or (c) enter into any
agreement, arrangement or understanding requiring Seller to abandon,
terminate or fail to consummate any of the transactions contemplated
hereby. Seller agrees to notify Buyer immediately if any Person makes any
proposal, offer, inquiry or contact with respect to a Company Transaction.
5.9 Environmental Matters.
(a) Within five business days of this Agreement, ENSR, on
behalf of Buyer, shall conduct a Phase I Environmental Assessments (the
"Phase I Assessments") of Seller's real properties located in Coon Rapids,
Minnesota and Eagan, Minnesota in accordance with the scope of work set
forth in that certain ENSR Proposal No. 4757-A03 dated July 24, 1998
previously provided by Buyer to Seller. Seller and its representatives
may participate in the Phase I Assessments.
(b) Within seven business days of having completed the Phase I
Assessments, Buyer shall deliver to Seller a preliminary finding from ENSR
stating whether further investigation is warranted and specifying with
sufficient detail any further sampling or investigation that is warranted.
If such further sampling or investigatory work ("Phase II Work") is to be
conducted, Buyer shall give reasonable written notice of the date on which
such Phase II Work shall begin sufficient to minimize any interruption of
the operation of the Business and to allow Seller and its representatives
to be present for the duration of any such Phase II Work. During and
after conducting the Phase II Work, Buyer shall maintain the real
properties in the same condition as it was prior to the commencement of
same.
(c) Within five business days after Buyer receives the
analytical results for any samples collected and analyzed, Buyer will
deliver, or cause to be delivered, to Seller the preliminary written
report of ENSR setting forth such analytical results.
<PAGE>
(d) Within 21 business days after completion of the work
described in paragraph (b) above, Buyer will deliver, or cause to be
delivered, to Seller the complete and definitive written report and any
other documentation or information prepared by ENSR relating to the Phase
II Work, including, without limitation, a description of any condition not
in compliance with any Environmental Law, identifying the Environmental
Law to which the alleged non-compliance relates and all documentation
relating to such sampling and investigation (each, a "Non-compliance
Item"), together with the actions that ENSR proposes be taken in
connection with each Non-compliance Item (collectively, the "Actions"), if
any. If ENSR's final report includes any Non-compliance Item, then Seller
agrees to implement the Actions, if any. Seller shall be responsible for
all costs and expenses associated with implementing any such Actions and
any Liabilities associated therewith, and shall indemnify Buyer and hold
Buyer harmless from all such costs, expenses and Liabilities for the
Actions.
(e) For purposes of this Agreement, "Environmental Law" means
Environmental Statutes and any common law (i) creating a cause of action
for Damages to person or property due to exposure to Hazardous Substances
or (ii) governing the contamination, pollution or protection of public
health or the environment or allocating liabilities in respect thereof;
"Environmental Statutes" means Federal, state, local and foreign statutes
and ordinances, and regulations promulgated thereunder, in effect prior to
Closing and intended to provide protection for public health or the
environment, including, without limitation, the Clean Air Act, the Federal
Water Pollution Control Act, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), the Emergency Planning and
Community Right to Know Act, the Solid Waste Disposal Act (including the
Resource Conservation and Recovery Act), the Toxic Substances Control Act,
the Safe Drinking Water Act and other substantially similar state statutes
and regulations, as amended from time to time; and "Hazardous Substance"
means any hazardous material, hazardous substance, toxic substance or
words of similar import under any Environmental Statute.
(f) Buyer shall provide to Seller "split samples" therefrom
upon Seller's request. All information and documentation relating to this
Section shall constitute Evaluation Material pursuant to this Agreement.
5.10 Assistance with Key Employees. Seller will use its reasonable
efforts to assist Buyer in its negotiation of new arrangements with
certain of the Key Employees, provided that (a) Buyer complies with
Sections 6.3(d) and 10.7 of this Agreement, and (b) such assistance (and
new arrangements) will be at no cost to Seller or its Affiliates.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent to Obligations of Parties. The respective
obligations of Buyer and Seller hereunder are subject to the satisfaction
or waiver, at or prior to the Closing of each of the following conditions:
(a) Antitrust Laws. The waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act
shall have expired or been terminated.
<PAGE>
(b) No Injunction. None of the parties hereto shall be subject
to any order or injunction of a court of competent jurisdiction that
prohibits the consummation of the transactions contemplated by this
Agreement. In the event any such order or injunction shall have been
issued, each party agrees to use its reasonable best efforts to have any
such order overturned or injunction lifted.
(c) Consents. All consents, authorizations, orders and
approvals of (or filings or registrations with) any Governmental Authority
or, to the extent listed on Schedule 6.1(c), other third Person required
in connection with the execution, delivery and performance of this
Agreement (including the transfer of the Assets to Buyer) shall have been
obtained or made.
6.2 Conditions Precedent to Obligation of Buyer. The obligation of
Buyer to consummate the transactions contemplated by this Agreement is
subject to the satisfaction or waiver by Buyer at or prior to the Closing
Date of each of the following additional conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Seller contained herein shall be true
and correct in all material respects as of the date of this Agreement and
as of the Closing Date, with the same force and effect as though made and
as of the Closing Date, except for changes permitted or contemplated by
this Agreement and except that to the extent any representations or
warranties made as of a specified date, which need be true only as of such
date.
(b) Performance of Agreements. Each of the agreements and
contracts of Seller to be performed and complied with by Seller prior to
or at the Closing shall have been performed and complied with in all
material respects.
(c) Certificate. Buyer shall have received a certificate of
Seller, dated the Closing Date, executed on behalf of Seller by its
President or any of its Vice Presidents, to the effect that the conditions
specified in paragraphs (a) and (b) above have been fulfilled.
(d) Ancillary Agreements. Seller or an Affiliate thereof shall
have executed and delivered the following agreements (together with the
agreements described in Sections 6.3(e)(i) and (ii), the "Ancillary
Agreements"):
(i) a Distribution Agreement substantially in the form of
Exhibit A attached hereto;
(ii) Trademark License Agreements substantially in the form of
Exhibit B attached hereto;
(iii) a Transition Services Agreement substantially in the
form of Exhibit C attached hereto; and
(iv) a St. Paul Sublease in form reasonably satisfactory to
Buyer.
<PAGE>
(e) Additional Matters. All corporate and other proceedings
and all documents, instruments and other legal matters in connection with
the transactions contemplated by the Transaction Agreements shall be
reasonably satisfactory to Buyer and Buyer shall have received such other
documents as it shall reasonably request.
6.3 Conditions Precedent to the Obligation of Seller. The obligation
of Seller to consummate the transactions contemplated by this Agreement is
subject to the satisfaction or waiver by Seller at or prior to the Closing
Date of each of the following additional conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained herein shall be true and
correct in all material respects as of the date of this Agreement and as
of the Closing Date, with the same force and effect as though made on and
as of the Closing Date, except for changes permitted or contemplated by
this Agreement and except that to the extent any representations or
warranties is made as of a specified date, which need be true only as of
such date.
(b) Performance of Agreements. Each of the agreements and
covenants of Buyer to be performed prior to or at the Closing shall have
been performed and complied with in all material respects.
(c) Certificate. Seller shall have received a certificate of
Buyer, dated the Closing Date, executed on behalf of Buyer by its
President or any of its Vice Presidents, to the effect that the conditions
specified in paragraphs (a) and (b) above have been fulfilled.
(d) Payment of Stay Bonuses. Buyer shall have paid to each
"Eligible Participant" 33% of his or her "Stay Bonus" as described in
Schedule 6.3(d), with the remaining 67% to be paid by Buyer pursuant to
Section 10.7.
(e) Ancillary Agreements. Buyer shall have executed and
delivered the following agreements:
(i) a Lid Supply Agreement substantially in the form of Exhibit
D attached hereto; and
(ii) a Supply Agreement substantially in the form of Exhibit E
attached hereto.
ARTICLE VII
PROVISIONS AS TO TAX MATTERS
<PAGE>
7.1 Certain Tax Matters.
(a) Preparation and Filing of Tax Returns. Seller shall
prepare and timely file (or shall cause to be prepared and timely filed)
all Tax Returns in respect of the Business and its assets and activities
(i) that are required to be filed on or before the Closing Date or (ii)
are required to be filed after the Closing Date and (A) are paid on a
consolidated, unitary, combined or similar basis with respect to Tax
Returns for any Tax period ending on or before the Closing Date
("Consolidated Tax Returns") or (B) are with respect to Taxes based upon,
measured by, or calculated with respect to gross or net income, receipts
or profits ("Income Taxes") and are required to be filed on a separate
return basis for any Tax period ending on or before the Closing Date.
Buyer shall prepare or cause to be prepared all other Tax Returns required
of the Business, its assets or activities.
(b) Payment of Taxes. Seller shall timely pay or cause to be
paid, (i) all Income Taxes and all Taxes other than Income Taxes due,
including all interest and penalties, with respect to Tax Returns that
Seller is obligated to prepare and file or cause to be prepared and filed
pursuant to Section 7.1(a) and (ii) all Taxes due on or before the Closing
Date for which no Tax Return is required to be filed. Buyer shall pay or
cause to be paid for all operations of the Business after the Closing Date
(i) all Income Taxes due with respect to Tax Returns that Buyer is
obligated to prepare and file or cause to be prepared and filed pursuant
to Section 7.1(a) and (ii) all other Taxes owed by Seller and assumed by
Buyer pursuant to Section 3.1 hereof.
(c) Refunds. Seller shall be entitled to retain (or receive
immediate payment from Buyer or any of its subsidiaries or Affiliates
equal to any refund or credit for Taxes with respect to any Tax period
ending on or before the Closing Date relating to Seller ("Seller s
Refunds").
(d) Straddle Periods. Any Taxes of Seller relating to the
Business attributable to a Tax period which begins before and ends after
the Closing Date (a "Straddle Period") shall be apportioned between Seller
and Buyer based on the actual operations and transactions of the Business
during the period ending on the day prior to the Closing Date, and the
portion of such period beginning on the Closing Date, respectively,
calculated as though the taxable year of the Business terminated at the
close of business on the day prior to the Closing Date.
7.2 Tax Indemnification.
(a) Seller Indemnification. Guarantor hereby agrees to
indemnify Buyer and hold it harmless from all liability for Taxes imposed
on the Business (including without limitation liability under Treas. Reg.
[A]1.1502-6 or any comparable provision of state law) for any taxable year
or period ending on or before the Closing Date and Seller's portion of the
Straddle Period Taxes.
(b) Buyer Indemnification. Buyer hereby agrees to indemnify
Seller and its Affiliates and hold them harmless from all liability for
Taxes imposed on the Business for any taxable year or period beginning
after the Closing Date and Buyer's portion of the Straddle Period Taxes.
<PAGE>
(c) Determining Liability for Taxes. Whenever it is necessary
to determine liability for Straddle Period Taxes, the determination shall
be made assuming that there was a closing of the books at 11:59 p.m.
(local time) on the day prior to the Closing Date, except that Taxes other
than Income Taxes, as well as exemptions, allowances or deductions that
are calculated on an annual basis, shall be apportioned ratably on a daily
basis between the periods in question.
7.3 Cooperation. After the Closing, Buyer and Seller shall promptly
make available or cause to be made available to the other, as reasonably
requested, and to any taxing authority, all information, records or
documents relating to Tax liabilities, potential Tax liabilities, or
refunds of or relating to the Business for all periods prior to or
including the Closing Date and shall preserve all such information,
records and documents until the expiration of any applicable statute of
limitations or extensions thereof. Buyer and Seller shall otherwise
cooperate with respect to any Tax Matter or other claim for Seller's
Refunds, including by provision of appropriate powers of attorney. Buyer
shall reasonably prepare and provide to Seller any Federal, state, local
and foreign Tax information packages reasonably requested by Seller for
Seller's use in preparing its Tax Returns. Guarantor and Seller shall
prepare and provide to Buyer any Federal, state, local and foreign Tax
information packages reasonably requested by Buyer for Buyer's use in
preparing its Tax Returns. Seller shall prepare and provide to Buyer any
Federal, state, local and foreign Tax information packages reasonable
requested by Buyer for Buyer's use in preparing its Tax Returns. Such Tax
information packages shall be completed by such parties and provided to
the other party within 45 days after such party's request therefor. Buyer
shall bear its own expense, and Guarantor shall bear Seller's expense, in
complying with the foregoing provisions.
ARTICLE VIII
LABOR MATTERS, EMPLOYEE RELATIONS AND BENEFITS
8.1 Offers of Employment. Effective as of the Closing, Buyer shall
continue to employ any and all individuals who are employed by Seller for
the Business as of the Closing, including such individuals on short-term
disability, long-term disability or other leave of absence (each such
individual being referred to as an "Employee"); provided, however, that
this Section shall not require Buyer to continue the employment of any
Employee for a specified period of time after the Closing. Buyer shall
assume all liability for wages and payroll deductions with respect to
Employees for the period ending on the day preceding the Closing Date.
8.2 Collective Bargaining Agreements. Effective as of the Closing,
Buyer shall assume all of the Seller's rights and obligations under all
collective bargaining agreements to which Seller is a party, as set forth
in Schedule 4.1(m) (each, a "Collective Bargaining Agreement"), including
without limitation all pension plan, health and welfare and other benefit
plan obligations, for the remaining terms of the Collective Bargaining
Agreements. Buyer shall honor all recall rights former employees of
Seller may have under the Collective Bargaining Agreements.
<PAGE>
8.3 Participation in Buyer's Retirement Plans. As of the Closing
Date, Buyer shall offer Employees not covered by a Collective Bargaining
Agreement the right to participate in the qualified retirement plans
sponsored by or contributed to by Buyer, on the terms and conditions set
forth in the applicable plans. Buyer's retirement plans shall credit such
Employees with all service credited to the Employees under Seller s
retirement plans for purposes of determining the Employees eligibility to
participate in and vesting under Buyer's retirement plans. Buyer shall
cause the Business to continue to honor all of its pension plan
obligations described in the Collective Bargaining Agreements for the
remaining terms of the Collective Bargaining Agreements.
8.4 Transfer of Savings Plan Account Balances. As promptly as
practicable after the Closing, Seller, the sponsor of Newell's Savings
Plan and Buyer shall arrange for the transfer of the vested portion of the
account balances (the "Accounts") of the Employees participating in
Newell's Savings Plan (as defined in Section 4.1(o)) to a defined
contribution plan maintained by Buyer ("Buyer's Savings Plan"). The
assets of Newell's Savings Plan to be transferred to Buyer's Savings Plan
shall be the total of the vested portion of all Accounts of the Employees
as of the date of such transfer and shall reflect all contributions earned
under Newell's Savings Plan by such Employees as of the Closing and
earnings on such Accounts through the date of such transfer. In
transferring the Accounts, Seller and Buyer shall comply with all
applicable requirements of Sections 411(d)(6), 414(l) and 401(a)(12) of
the Code. Buyer represents and warrants that Buyer's Savings Plan has (i)
been maintained in material compliance with its terms and with the
requirements prescribed by any applicable statute and regulations
including ERISA and the Code; and (ii) received a copy of a favorable
Internal Revenue Service ("IRS") determination letter stating that it
meets the requirements of the Tax Reform Act of 1986. The transfer of
assets from Newell's Savings Plan to Buyer's Savings Plan shall be made in
cash and, to the extent Employees have any outstanding loans from Newell s
Savings Plan as of the Closing, promissory notes evidencing such loans.
8.5 Health and Welfare Plans. As of the Closing, Buyer shall
provide Employees with coverage under Buyer's health and welfare plans on
terms substantially similar to those applicable to other similarly
situated employees of Buyer. Coverage under Buyer's health and welfare
plans that is provided to Employees who are covered by a Collective
Bargaining Agreement shall meet all of Seller's obligations under such
Collective Bargaining Agreement. Buyer's health and welfare plans shall
credit Employees with all service credited to the Employees under the
health and welfare plans provided by Seller for purposes of determining
eligibility to participate in Buyer's health and welfare plans. To the
extent permitted by Buyer's insurance carrier, Buyer shall waive any
waiting periods, pre-existing condition exclusions and actively-at-work
requirements and provide that any expenses incurred on or before the
Closing Date by an Employee or an Employee's covered dependents shall be
taken into account for purposes of satisfying applicable deductible,
coinsurance and maximum out-of-pocket provisions of Buyer's health and
welfare plans.
8.6 No Rights or Remedies. Nothing in this Article shall confer
upon any Employee or legal representative thereof any rights or remedies,
including any right to employment, or continued employment for any
specified period, of any nature or kind whatsoever under or by reason of
this Agreement.
<PAGE>
8.7 Indemnification. Buyer shall indemnify Seller and its
Affiliates and hold each of them harmless and against any liabilities
which may be incurred or suffered by any of them in connection with any
claim made by any Employee by reason of Buyer's failure to comply with any
provision of this Article. Guarantor shall indemnify Buyer and hold it
harmless and against any Liabilities which may be incurred or suffered by
any of them in connection with any claim made by any employee by reason of
Seller's failure to comply with any provision of this Article.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 Survival. All of the representations and warranties contained
in Sections 4.1 and 4.2 will survive the Closing and continue in full
force and effect until 12 months after the Closing, except for the
representations and warranties contained in Sections 4(d) and 4(h) which
shall survive for a period of three years, and the representations and
warranties contained in Sections 4(g) and 4(j) which shall survive for the
applicable statute of limitations period. All of the covenants contained
in this Agreement will survive the Closing and continue in full force and
effect in accordance with their terms.
9.2 Indemnification Provisions for the Benefit of Buyer. In the
event Seller breaches any of its representations, warranties, covenants or
agreements contained in this Agreement and provided that Buyer makes a
written claim for indemnification against Seller within the applicable
survival period, then Seller agrees to indemnify, defend and hold harmless
Buyer from and against all losses, liabilities, damages and expenses
(including reasonable attorneys fees and expenses) (collectively,
"Damages") Buyer suffers caused by such event; provided, however, that
Seller will not have any obligation to indemnify Buyer from and against
such Damages (a) until Buyer has suffered aggregate Damages, by reason of
all such breaches, in excess of $1,000,000 (after which point Seller will
be obligated only to indemnify Buyer from and against aggregate Damages in
excess of $1,000,000) and (b) to the extent the aggregate Damages Buyer
has suffered by reason of all of such breaches exceeds $15,000,000.
Notwithstanding the foregoing, if the amount of any claim or series of
related claims for Damages suffered by Buyer does not exceed $10,000, then
the amount of such claim or series of claims will be excluded from the
calculation of the aggregate amount of Damages for purposes of Section
9.2(a).
9.3 Indemnification Provisions for the Benefit of Seller. In the
event Buyer breaches any of its representations, warranties, covenants or
agreements contained in this Agreement and provided that Seller makes a
written claim for indemnification against Buyer, then Buyer agrees to
indemnify, defend and hold harmless Seller from and against any Damages
Seller suffers caused by such event, provided, however, that Buyer will
not have any obligation to indemnify Seller from and against all such
Damages until Seller has suffered aggregate Damages, by reason of such
breaches, in excess of $100,000.
<PAGE>
9.4 Matters Involving Third Parties. If any third party notifies
any party hereto (the "Indemnified Party") with respect to any matter
which may give rise to a claim for indemnification against the other party
hereto (the "Indemnifying Party") under this Article IX, then the
Indemnified Party will notify the Indemnifying Party thereof promptly, but
in no event later than ten Business Days, after receiving such notice.
Once the Indemnified Party has given notice of the matter to the
Indemnifying Party, the Indemnifying Party may defend against the matter
in any manner it reasonably may deem appropriate. The Indemnified Party
will provide any assistance reasonably requested by the Indemnifying
Party. Neither the Indemnifying Party nor the Indemnified Party will
consent to the entry of a judgment or enter into any settlement with
respect to such matter without the written consent of the other (which
consent will not be withheld unreasonably). If the Indemnifying Party
does not notify the Indemnified Party within 30 days after the Indemnified
Party has given notice of the matter that the Indemnifying Party is
assuming all responsibility therefor, the Indemnified Party may defend
against, consent to the entry of any judgment or enter into any settlement
with respect to the matter in any manner the Indemnified Party reasonably
deems appropriate without waiving any right to indemnity therefor from the
Indemnifying Party.
9.5 Adjustments. Any Damages recovered pursuant to this Article IX
shall be reduced by any insurance coverage proceeds relating thereto
received by the Indemnified Party. Seller and Buyer agree to make
reasonable best efforts to receive or collect such benefits or proceeds
promptly. All indemnification payments made pursuant to this Article IX
shall be deemed to be adjustments to the Purchase Price.
9.6 Exclusive Remedy. Except as provided in this Agreement,
indemnification in accordance with the terms of this Article IX shall
constitute the sole and exclusive remedy for any claims relating to or
arising under this Agreement or the subject matter of any representations
and warranties contained herein for which Damages are available. The
parties agree that indemnification in accordance with the terms of this
Article IX shall not preclude any available equitable remedies.
ARTICLE X
OTHER POST-CLOSING COVENANTS
10.1 Post-Closing Accounting Cooperation. Each of Seller and Buyer
agree that the other party and/or its independent auditors shall have
reasonable access during normal business hours, provided such access shall
not interfere with the normal operations of the Business, to the books,
records and accounts applicable to the period the Business was directly or
indirectly owned by Seller or Buyer and have the reasonable assistance and
cooperation of the appropriate personnel of Buyer or Seller in the review
of such books and records consistent with assistance and cooperation
furnished during the period the Business was directly or indirectly owned
by such party.
10.2 Transfer Taxes. Buyer and Guarantor shall each pay one half of
all transfer, documentary, stamp, excise or similar Taxes (including,
without limitation, any real estate transfer or value-added Taxes)
incurred in connection with the transactions contemplated by this
Agreement, whether such Taxes are imposed on Buyer, Buyer's Affiliates,
Seller, or Seller's Affiliates.
<PAGE>
10.3 WARN. Except as precluded by any Governmental Authority, Buyer
shall not on, or at any time prior to 90 days after the Closing Date,
effectuate a "plant closing" or "mass layoff," as those terms are defined
in the Worker Adjustment and Retraining Notification Act of 1988 ("WARN")
, affecting in whole or in part any site of employment of the Business, in
advance and without complying with the notice requirements and other
provisions of WARN.
10.4 Further Actions. Subject to the terms and conditions of this
Agreement, from and after the Closing, each of the parties hereto will use
their reasonable best efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
10.5 Subsequent Access. Following the Closing, Buyer shall provide
Seller and its representatives reasonable access to personnel and records
of Buyer relating to the Business when it was directly or indirectly owned
by Seller to the extent Seller reasonably requests such access.
10.6 Existing Insurance Coverage. As of the Closing Date, Seller
will cancel insurance coverage applicable to Seller occurrences (as such
term "occurrence" policies) or claims made (with respect to any "claims-
made" policies) after the Closing Date (other than insurance policies in
the name of Seller or an Affiliate thereof; provided, however, that the
remaining insurance coverage will be available to Buyer with respect to
insured occurrences or series of occurrences relating to the Business or
claims made on or prior to the Closing Date to the extent that Buyer has
retained, assumed or paid the loss or liability attributed to such
occurrence or series of occurrences or claims made. If after the Closing,
Seller receives cash proceeds (excluding any return of premium or
reimbursed attorneys or investigation or other fees) from an insurer that
are attributable to such insurance coverage with respect to any insured
occurrences or any series of occurrences on or prior to the Closing Date
or any claims that were made on or prior to the Closing Date, then such
cash proceeds will be paid to Buyer to the extent that Buyer has assumed
or paid the loss or liability attributed to such occurrence or series of
occurrences or claims made. Seller shall use its reasonable efforts to
cooperate with Buyer to ensure that there are no gaps in insurance
coverage with respect to the Business as a result of this Agreement.
10.7 Payment of Remainder of Stay Bonuses. Within 90 days following
the Closing, Buyer shall pay to each Eligible Participant the remaining
67% of his or her Stay Bonus described in Schedule 6.3(d).
10.8 Collection of Receivables. Seller agrees that Buyer will have
the right and authority to collect for its own account or the account of
its Affiliates all Receivables which are transferred and assigned to Buyer
as provided herein, and Buyer and its Affiliates have the right to endorse
with the name of Seller any checks received on account of any such
Receivable. Seller agrees that it will promptly transfer and deliver to
Buyer any cash or other property which Seller may receive in respect of
the Receivables.
10.9 Mail. Seller agrees that Buyer and its Affiliates will have the
right and authority to open all mail and other communications received by
the Business, even if addressed to Seller, for processing and forwarding
to Seller, as appropriate.
<PAGE>
10.10 Bulk Sales Laws. Notwithstanding Section 10.2, Buyer
hereby waives any requirement that Seller comply with any bulk sales laws
applicable to the transactions contemplated hereby, and in exchange
therefor Seller agrees to pay, honor and discharge when due any claims of
creditors asserted against Buyer by reason of such noncompliance.
10.11 Confidentiality. After the Closing, the following
provisions shall apply.
(a) By Seller. Seller and its Affiliates will not disclose any
information which is confidential, proprietary or otherwise not publicly
available, some of which may constitute trade secrets ("Confidential
Information"), about (i) the Business, or (ii) Buyer and its Affiliates
obtained while in the performance of this Agreement for a period of three
(3) years following the Closing Date.
(b) By Buyer. Buyer and its Affiliates will not disclose any
Confidential Information about Seller and its Affiliates obtained in the
performance of the Agreement (other than with respect to the Business) for
a period of three (3) years following the Closing Date.
(c) Exceptions. The obligations provided for in this Section
11.13 will not apply to information which: (i) can be reasonably shown to
have been in the possession of the party receiving the information as of
the date of receipt; (ii) is disclosed to the receiving party by a third
party which has a legal right to make such disclosure; (iii) was in the
public domain or generally available as of the date of disclosure through
no fault of the receiving party or; (iv) which is required by law to be
disclosed.
10.12 Noncompetition.
(a) Seller and Guarantor agree that, for a period of three (3)
years from the Closing Date, none of Seller, Guarantor or any of their
Affiliates will engage, create, form, own, manage, operate, control,
participate or be connected in any manner, either directly or indirectly,
solely or jointly with others, in the United States, Canada or Mexico, in
the ownership, management, operation or control of any business that is
engaged in the design, manufacture, importation, marketing, distribution
or sale of (i) any product currently sold by the Business, or (ii) any
product similar to, of the same appearance as, any product currently sold
by the Business; provided, however, the restrictions set forth in this
Section 10.12(a) will not apply to Seller, Guarantor and its Affiliates if
any such party purchases or acquires the assets or stock of an individual
third party Person, the activities of which compete with the Business, if
such Person is not an Affiliate of Seller or Guarantor prior to the
consummation of such a purchase or acquisition..
<PAGE>
(b) While the restrictions set forth in Section 10.12(a) are
considered by the parties to be reasonable in all the circumstances, it is
recognized that restrictions of the nature in question may fail for
technical reasons unforeseen, and accordingly it is hereby agreed and
declared that if any of such restrictions will be adjudged to be void as
going beyond what is reasonable in all the circumstances for the
protection of the Business or for any other reason but would be valid if
part of the wording thereof were deleted or the periods (if any) thereof
reduced or the range of activities or area dealt with thereby reduced in
scope, it is the parties intention that such restrictions will apply with
such modifications as may be necessary to make them valid and effective,
to the maximum extent permitted by applicable law.
(c) The parties acknowledge and agree that Section 10.12(a),
and the restrictions contemplated hereby, are included in this Agreement
in order to induce Buyer to enter into the Agreement and to acquire the
Assets and the Business, and have been required by the Business in part to
preserve the goodwill associated with the Business.
10.13 Reimbursement for Relocation Costs.
(a) Seller will reimburse Buyer for (i) 100% of Buyer's
Relocation Costs up to and including $5,000,000 and (ii) 50% of Buyer's
Relocation Costs between $5,000,000 and $5,500,000. The parties agree
that any Relocation Costs paid by Seller or an Affiliate of Seller prior
to the Closing Date shall be credited against both of the dollar
thresholds referenced in the first sentence of this Section 10.13(a). For
purposes of this Agreement, "Relocation Costs" means the costs and
expenses specifically described in Schedule 10.13(a) that are incurred (A)
in the course of moving the operations of the Business located in its St.
Paul facility to the facility in Eagan and (B) in accordance with the
plans for the move developed by management of the Business prior to the
Closing Date. All other cost or expense items, including those
specifically listed in Schedule 10.13(b), will not constitute Relocation
Costs.
(b) Seller will review and accept or reject each cost submitted
to Seller as a Relocation Cost within 10 days after receiving a valid
notice of payment and invoice from Buyer (plus any additional support
documentation reasonably requested by Seller) describing such cost in
reasonable detail, and Seller agrees to be reasonable in its review of
such costs. Seller will then reimburse Buyer for each cost so submitted
within 10 business days of Seller's acceptance of such cost as a
Relocation Cost. Unless Buyer otherwise advises Seller in writing, Seller
will make all payments under this Section 10.13 to the address for Buyer
set forth in Section 11.3(b). Neither Seller nor any of its Affiliates
will reimburse Buyer for Relocation Costs described in any notice of
payment and invoice submitted after the date that is two months after the
expiration or termination date (whichever is earlier) of the St. Paul
facility lease included as Item 2 in Schedule 4.1(s).
(c) Buyer agrees to cooperate fully with Seller and its
Affiliates in any proceedings with the City of St. Paul, including,
without limitation, the Eminent Domain Proceeding. Such cooperation will
include, without limitation, providing evidentiary support in connection
with Seller's efforts to recover relocation costs and expenses from the
City of St. Paul.
<PAGE>
ARTICLE XI
MISCELLANEOUS
11.1 Termination.
(a) General. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time, but not
later than the Closing Date:
(i) by mutual written consent of Buyer and Seller;
(ii) by Seller or Buyer after October 15, 1998 if, through no
fault of the party seeking to terminate, the Closing shall not have
occurred; or
(iii) by Seller or Buyer, upon written notice to the other
party, if any Governmental Authority of competent jurisdiction shall
have issued an injunction, order or decree enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement, and such injunction, order or decree shall have become
final and non-appealable; provided, however, that the party seeking
to terminate this Agreement pursuant to this clause (iii) has used
its reasonable best efforts to remove such injunction, order or
decree.
(b) Procedure Upon Termination. In the event of the
termination and abandonment of this Agreement, written notice thereof
shall promptly be given to the other party hereto and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned
without further action by any of the parties hereto.
(c) Survival of Certain Provisions. The respective obligations
of the parties hereto pursuant to Sections 11.2, 11.3, 11.11 and 11.13
shall survive any termination of this Agreement.
11.2 Fees and Expenses. Whether or not the transactions contemplated
hereby are consummated, each of Buyer and Guarantor shall pay its own
respective fees and expenses of itself and its Affiliates incident to the
negotiation, preparation and execution of this Agreement, including
attorneys', accountants' and other advisors' fees.
<PAGE>
11.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if
delivered personally or by overnight courier with delivery charges
prepaid, or sent by telecopy, as follows:
(a) if to Seller:
c/o Newell Co.
One Millington Road
Beloit, Wisconsin 53511
Attention: William T. Alldredge
Facsimile No.: (608) 365-3453
with copies to:
Newell Co.
4000 Auburn Street
Rockford, Illinois 61101
Attention: Dale L. Matschullat
Facsimile No.: (815) 969-6106
and
Schiff Hardin & Waite
7300 Sears Tower
Chicago, Illinois 60606
Attention: Andrea L. Horne
Facsimile No.: (312) 258-5600
(b) if to Buyer:
Home Products International, Inc.
4501 W. 47th Street
Chicago, IL 60632
Attention: James R. Tennant
Facsimile No.: (773) 890-0523
with a copy to:
Much Shelist Freed Denenberg Ament Bell &
Rubenstein, P.C.
Suite 2100
200 N. LaSalle Street
Chicago, IL 60601
Attention: Jeffrey C. Rubenstein
Facsimile No.: (312) 621-1750
or to such other person or address as either party shall specify by notice
in writing to the other party. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the
date of delivery.
11.4 Entire Agreement. This Agreement (including the Exhibits and
Schedules, which are hereby fully incorporated into this Agreement),
together with the Ancillary Agreements and the Confidentiality Agreement,
constitutes the entire agreement between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect
to the subject matter hereof.
<PAGE>
11.5 Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto
or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
11.6 Assignability. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns and shall not be assigned by either of the parties hereto without
the prior written consent of the other party; provided, however, that
Seller or Buyer may, at its election, assign this Agreement and its
rights, interests and obligations hereunder to one or more of its
Affiliates without the prior written approval of the other party in which
case the assigning party will continue to be liable for the performance of
its obligations under this Agreement.
11.7 Amendment and Modification; Waiver. Subject to applicable law,
this Agreement and any Schedule or Exhibit attached hereto may be amended,
modified and supplemented by a written instrument expressly identified as
an amendment hereto authorized and executed on behalf of Buyer and Seller
at any time prior to the Closing Date with respect to any of the terms
contained herein. No waiver by any party of any of the provisions hereof
shall be effective unless explicitly set forth in writing and executed by
the party so waiving. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver
of any other or subsequent breach. No failure on the part of either party
hereto to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof. The remedies herein are cumulative and not
exclusive of any remedies provided by law.
11.8 Public Announcements. Unless otherwise required by law, prior
to the Closing Date, no news release or other public announcement
pertaining to the transactions contemplated by this Agreement will be made
by or on behalf, of any party without the prior approval of the other
party (which approval shall not be unreasonably withheld).
11.9 Interpretation.
(a) Any reference to any Federal, state or local statute or
law will be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. When a reference is
made in this Agreement to an Article, Section, Schedule or Exhibit, such
reference is to an Article, Section, Schedule or Exhibit of this
Agreement, unless otherwise indicated. The table of contents contained in
this Agreement is for reference purposes only and will not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they will
be understood be followed by the words "without limitation." Words
(including defined terms) in the singular will be held to include the
plural and vice versa words of one gender will be held to include the
other genders as the context requires.
<PAGE>
(b) Notwithstanding anything to the contrary contained in this
Agreement or in any Schedule, any information disclosed in one of such
Schedules shall be deemed to be disclosed in all of such Schedules.
Certain information set forth in the Schedules is included solely for
informational purposes and may not be required to be disclosed pursuant to
this Agreement. The disclosure of any information in the Schedules shall
not be deemed to constitute an acknowledgment that such information is
required to be disclosed in connection with the representations and
warranties made by Seller in this Agreement or that it is material, nor
shall such information be deemed to establish a standard of materiality.
11.10 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all
of which together shall be deemed to be one and the same instrument.
11.11 Applicable Law. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in
accordance with the laws of the State of Illinois without regard to
conflict of laws principles thereof, except that the Federal Arbitration
Act, 9 U.S.C. Sections 1-16 will govern all questions relating to the
arbitrability of any claim or dispute in connection with Section 2.2, and
to the enforcement of the arbitration provisions contained in Section 2.2.
All actions and proceedings arising out of or relating to this Agreement
shall be heard and determined in any Illinois state or Federal court
sitting in the Northern District of Illinois, and the parties hereby
consent to the jurisdiction of such courts in any such action or
proceeding.
11.12 Severability of Provisions. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent and only for the duration of
such prohibition or enforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction. If any provision of this Agreement
is so broad as to be unenforceable, the provision shall be interpreted to
be only so broad as is enforceable.
11.13 Guarantor. Guarantor hereby guarantees to Buyer the full
discharge by Seller of its obligations under this Agreement.
[Signature page to follow.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
PLASTICS, INC.
By:
Name:
Title:
HOME PRODUCTS INTERNATIONAL, INC.
By:
Name:
Title:
NEWELL CO.
as guarantor for Plastics, Inc.
By:
Name:
Title:
EXHIBIT 10. 1
$150,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
among
HOME PRODUCTS INTERNATIONAL, INC.,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of September 8, 1998
____________________________
CHASE SECURITIES INC.,
as Arranger
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS....................................... 1
1.1 Defined Terms....................................... 1
1.2 Other Definitional Provisions....................... 22
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS................... 23
2.1 Term Commitments.................................... 23
2.2 Procedure for Term Loan Borrowing................... 23
2.3 Repayment of Term Loans............................. 23
2.4 Revolving Commitments............................... 24
2.5 Procedure for Revolving Loan Borrowing.............. 25
2.6 Swingline Commitment................................ 25
2.7 Procedure for Swingline Borrowing; Refunding of
Swingline Loans.............................................. 26
2.8 Commitment Fees, etc. .............................. 27
2.9 Termination or Reduction of Revolving Commitments... 27
2.10 Optional Prepayments............................... 28
2.11 Mandatory Prepayments and Commitment Reductions.... 28
2.12 Conversion and Continuation Options................ 29
2.13 Limitations on Eurodollar Tranches................. 30
2.14 Interest Rates and Payment Dates................... 30
2.15 Computation of Interest and Fees................... 30
2.16 Inability to Determine Interest Rate............... 31
2.17 Pro Rata Treatment and Payments.................... 31
2.18 Requirements of Law................................ 33
2.19 Taxes.............................................. 34
2.20 Indemnity.......................................... 35
2.21 Change of Lending Office........................... 36
2.22 Replacement of Lenders............................. 36
2.23 Reporting Requirements of Issuing Lenders.......... 37
SECTION 3. LETTERS OF CREDIT................................. 37
3.1 L/C Commitment...................................... 37
3.2 Procedure for Issuance of Letter of Credit.......... 37
3.3 Fees and Other Charges.............................. 38
3.4 L/C Participations.................................. 38
3.5 Reimbursement Obligation of the Borrower............ 39
3.6 Obligations Absolute................................ 39
3.7 Letter of Credit Payments........................... 40
3.8 Applications........................................ 40
<PAGE>
SECTION 4. REPRESENTATIONS AND WARRANTIES.................... 40
4.1 Financial Condition................................. 40
4.2 No Change........................................... 41
4.3 Corporate Existence; Compliance with Law............ 41
4.4 Corporate Power; Authorization; Enforceable
Obligations......................................... 41
4.5 No Legal Bar........................................ 42
4.6 Litigation.......................................... 42
4.7 No Default.......................................... 42
4.8 Ownership of Property; Liens........................ 42
4.9 Intellectual Property............................... 42
4.10 Taxes.............................................. 42
4.11 Federal Regulations................................ 43
4.12 Labor Matters...................................... 43
4.13 ERISA.............................................. 43
4.14 Investment Company Act; Other Regulations.......... 44
4.15 Subsidiaries....................................... 44
4.16 Use of Proceeds.................................... 44
4.17 Environmental Matters.............................. 44
4.18 Accuracy of Information, etc....................... 45
4.19 Security Documents................................. 45
4.20 Solvency........................................... 46
4.21 Senior Indebtedness................................ 46
4.22 Year 2000 Matters.................................. 46
4.23 Regulation H....................................... 46
SECTION 5. CONDITIONS PRECEDENT.............................. 47
5.1 Conditions to Initial Extension of Credit........... 47
5.2 Conditions to Each Extension of Credit.............. 50
SECTION 6. AFFIRMATIVE COVENANTS............................. 51
6.1 Financial Statements................................ 51
6.2 Certificates; Other Information..................... 52
6.3 Payment of Obligations.............................. 53
6.4 Maintenance of Existence; Compliance. .............. 53
6.5 Maintenance of Property; Insurance.................. 53
6.6 Inspection of Property; Books and Records;
Discussions......................................... 53
6.7 Notices............................................. 54
6.8 Environmental Laws.................................. 55
6.9 Additional Collateral, etc.......................... 55
SECTION 7. NEGATIVE COVENANTS................................ 57
7.1 Financial Condition Covenants....................... 57
7.2 Indebtedness........................................ 58
7.3 Liens............................................... 59
7.4 Fundamental Changes................................. 60
7.5 Disposition of Property............................. 61
7.6 Restricted Payments................................. 61
7.7 Capital Expenditures................................ 62
7.8 Investments......................................... 62
7.9 Optional Payments and Modifications of Debt
Instruments, etc. .................................. 63
7.10 Transactions with Affiliates....................... 64
7.11 Changes in Fiscal Periods.......................... 64
7.12 Negative Pledge Clauses............................ 64
7.13 Clauses Restricting Subsidiary Distributions....... 64
7.14 Lines of Business.................................. 65
7.15 Amendments to Purchase Agreements.................. 65
<PAGE>
SECTION 8. EVENTS OF DEFAULT................................. 65
SECTION 9. THE ADMINISTRATIVE AGENT.......................... 69
9.1 Appointment......................................... 69
9.2 Delegation of Duties................................ 69
9.3 Exculpatory Provisions.............................. 69
9.4 Reliance by Administrative Agent.................... 69
9.5 Notice of Default................................... 70
9.6 Non-Reliance on Administrative Agent and Other
Lenders............................................. 70
9.7 Indemnification..................................... 71
9.8 Administrative Agent in Its Individual Capacity..... 71
9.9 Successor Administrative Agent...................... 71
9.10 Authorization to Release Liens..................... 72
SECTION 10. MISCELLANEOUS.................................... 72
10.1 Amendments and Waivers............................. 72
10.2 Notices............................................ 73
10.3 No Waiver; Cumulative Remedies..................... 74
10.4 Survival of Representations and Warranties......... 74
10.5 Payment of Expenses and Taxes...................... 74
10.6 Successors and Assigns; Participations and
Assignments........................................ 75
10.7 Adjustments; Set-off............................... 77
10.8 Counterparts....................................... 78
10.9 Severability....................................... 78
10.10 Integration....................................... 78
10.11 GOVERNING LAW..................................... 78
10.12 Submission To Jurisdiction; Waivers............... 78
10.13 Acknowledgements.................................. 79
10.14 WAIVERS OF JURY TRIAL............................. 79
10.15 Confidentiality................................... 80
<PAGE>
ANNEX:
A Pricing Grid
SCHEDULES:
1.1A Commitments
1.1B Mortgaged Properties
4.1(b) Contingent Liabilities
4.4 Consents, Authorizations, Filings and Notices
4.6 Litigation
4.13 ERISA Matters
4.15 Subsidiaries
4.17 Environmental Matters
4.19(a) UCC Filing Jurisdictions
4.19(b) Mortgage Filing Jurisdictions
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
7.5 Planned Dispositions
EXHIBITS:
A-1 Form of Guarantee and Collateral Agreement
A-2 Form of Guarantee
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F Form of Legal Opinion of Sonnenschein Nath & Rosenthal
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of September 8,
1998, among HOME PRODUCTS INTERNATIONAL, INC., a Delaware corporation
(the "Borrower"), the several banks and other financial institutions or
entities from time to time parties to this Agreement (the "Lenders"), and
THE CHASE MANHATTAN BANK, as administrative agent.
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and The Chase Manhattan
Bank, as administrative agent, are parties to a Credit Agreement, dated
as of May 14, 1998 (the "Existing Credit Agreement");
WHEREAS, the Borrower has requested that the Lenders and the
Administrative Agent amend and restate the Existing Credit Agreement to,
among other things, provide for $50,000,000 of term loans, the proceeds
of which would be used to finance a portion of the Newell Acquisition (as
hereinafter defined) and to pay related fees and expenses; and
WHEREAS, the Lenders and the Administrative Agent are willing
to so amend and restate the Existing Credit Agreement upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, the parties hereto hereby agree to amend and
restate the Existing Credit Agreement as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms
listed in this Section 1.1 shall have the respective meanings set forth
in this Section 1.1.
<PAGE>
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate
of interest per annum publicly announced from time to time by the
Reference Lender as its prime rate in effect at its principal office in
New York City (the Prime Rate not being intended to be the lowest rate of
interest charged by the Reference Lender in connection with extensions of
credit to debtors); "Base CD Rate" shall mean the sum of (a) the product
of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the
numerator of which is one and the denominator of which is one minus the
C/D Reserve Percentage and (b) the C/D Assessment Rate; and "Three-Month
Secondary CD Rate" shall mean, for any day, the secondary market rate for
three-month certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line
of the Federal Reserve Bank of New York (which rate will, under the
current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if
such rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New
York City received at approximately 10:00 A.M., New York City time, on
such day (or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Reference Lender from three New York City
negotiable certificate of deposit dealers of recognized standing selected
by it. Any change in the ABR due to a change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall
be effective as of the opening of business on the effective day of such
change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is
based upon the ABR.
"Acquisition": any acquisition, whether in a single
transaction or series of related transactions, by the Borrower or any one
or more of its Subsidiaries of (a) all or a substantial majority of the
assets, or of a business, unit or division, of any Person, whether
through purchase of assets or securities, by merger or otherwise; (b) any
Person that becomes a Subsidiary after giving effect to such acquisition;
or (c) control (as defined in clause (b) of the definition of
"Affiliate") of a partnership, joint venture or other Person.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": The Chase Manhattan Bank, together
with its affiliates, as the arranger of the Commitments and as the
administrative agent for the Lenders under this Agreement and the other
Loan Documents, together with any of its successors.
<PAGE>
"Affiliate": as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" of
a Person means the power, directly or indirectly, either to (a) vote 10%
or more of the securities having ordinary voting power for the election
of directors (or persons performing similar functions) of such Person or
(b) direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.
"Aggregate Exposure": with respect to any Lender at any time,
an amount equal to the sum of (i) the aggregate then unpaid principal
amount of such Lender's Term Loans and (ii) the amount of such Lender's
Revolving Commitment then in effect or, if the Revolving Commitments have
been terminated, the amount of such Lender's Revolving Extensions of
Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at
any time, the ratio (expressed as a percentage) of such Lender's
Aggregate Exposure at such time to the Aggregate Exposure of all Lenders
at such time.
"Agreement": this Amended and Restated Credit Agreement, as
amended, supplemented or otherwise modified from time to time.
"Applicable Margin": for each Type of Loan, the rate per annum
set forth under the relevant column heading below:
ABR Loans Eurodollar Loans
Term Loans 0.75% 1.75%
Revolving Loans 0.75% 1.75%
Swingline Loans 0.75% Not applicable
; provided, that on and after the first Adjustment Date occurring after
the Closing Date, the Applicable Margin with respect to Term Loans,
Revolving Loans and Swingline Loans will be determined pursuant to the
Pricing Grid.
"Application": an application, in such form as the applicable
Issuing Lender may specify from time to time, requesting the Issuing
Lender to open a Letter of Credit.
"Asset Sale": any Disposition of property or series of related
Dispositions of property (excluding any such Disposition permitted by
clause (a), (b), (c) or (d) of Section 7.5) that yields gross proceeds to
the Borrower or any of its Subsidiaries (valued at the initial principal
amount thereof in the case of non-cash proceeds consisting of notes or
other debt securities and valued at fair market value in the case of
other non-cash proceeds) in excess of $250,000.
"Assignee": as defined in Section 10.6(c).
"Assignor": as defined in Section 10.6(c).
<PAGE>
"Available Revolving Commitment": as to any Revolving Lender
at any time, an amount equal to the excess, if any, of (a) such Lender's
Revolving Commitment over (b) such Lender's Revolving Extensions of
Credit; provided, that in calculating any Lender's Revolving Extensions
of Credit for the purpose of determining such Lender's Available
Revolving Commitment pursuant to Section 2.8(a), the aggregate principal
amount of Swingline Loans then outstanding shall be deemed to be zero.
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrowing Date": any Business Day specified by the Borrower
as a date on which the Borrower requests the relevant Lenders to make
Loans hereunder.
"Business": as defined in Section 4.17.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City or Chicago, Illinois are
authorized or required by law to close, provided, that with respect to
notices and determinations in connection with, and payments of principal
and interest on, Eurodollar Loans, such day is also a day for trading by
and between banks in Dollar deposits in the interbank eurodollar market.
"Capital Expenditures": for any period, with respect to any
Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a capital lease)
of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period)
that are required to be capitalized under GAAP on a consolidated balance
sheet of such Person and its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants, rights or options to
purchase any of the foregoing.
<PAGE>
"Cash Equivalents": (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of
the United States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time
deposits or overnight bank deposits having maturities of one year or less
from the date of acquisition issued by any Lender or by any commercial
bank organized under the laws of the United States of America or any
state thereof having combined capital and surplus of not less than
$500,000,000; (c) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Ratings Group ("S&P") or P-1 by Moody's Investors
Service, Inc. ("Moody's"), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating
agencies cease publishing ratings of commercial paper issuers generally,
and maturing within one year from the date of acquisition; and (d)
securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States or by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the
case may be) carry the highest possible rating from S&P or Moody's.
"C/D Assessment Rate": for any day as applied to any ABR Loan,
the annual assessment rate in effect on such day that is payable by a
member of the Bank Insurance Fund maintained by the Federal Deposit
Insurance Corporation (the "FDIC") classified as well-capitalized and
within supervisory subgroup "B" (or a comparable successor assessment
risk classification) within the meaning of 12 C.F.R. ' 327.4 (or any
successor provision) to the FDIC (or any successor) for the FDIC's (or
such successor's) insuring time deposits at offices of such institution
in the United States.
"C/D Reserve Percentage": for any day as applied to any ABR
Loan, that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board, for determining the maximum reserve
requirement for a Depositary Institution (as defined in Regulation D of
the Board as in effect from time to time) in respect of new non-personal
time deposits in Dollars having a maturity of 30 days or more.
"Closing Date": the date on which the conditions precedent set
forth in Section 5.1 shall have been satisfied, which date is September
8, 1998.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment": as to any Lender, the sum of the Term Commitment
and the Revolving Commitment of such Lender.
"Commitment Fee Rate": 1/2 of 1% per annum; provided, that on
and after the first Adjustment Date occurring after the Closing Date, the
Commitment Fee Rate will be determined pursuant to the Pricing Grid.
<PAGE>
"Commonly Controlled Entity": an entity, whether or not
incorporated, that is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group that includes the
Borrower and that is treated as a single employer under Section 414(b) or
(c) of the Code or, for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 (m), (n),
(o) or (p) of the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit B.
"Confidential Information Memorandum": the Confidential
Information Memorandum dated July 1998 and furnished to the Lenders.
"Consolidated Current Assets": at any date, all amounts (other
than cash and Cash Equivalents) that would, in conformity with GAAP, be
set forth opposite the caption "total current assets" (or any like
caption) on a consolidated balance sheet of the Borrower and its
Subsidiaries at such date.
"Consolidated Current Liabilities": at any date, all amounts
that would, in conformity with GAAP, be set forth opposite the caption
"total current liabilities" (or any like caption) on a consolidated
balance sheet of the Borrower and its Subsidiaries at such date, but
excluding (a) the current portion of any Funded Debt of the Borrower and
its Subsidiaries and (b) without duplication of clause (a) above, all
Indebtedness consisting of Revolving Loans or Swingline Loans to the
extent otherwise included therein.
<PAGE>
"Consolidated EBITDA": for any period, Consolidated Net Income
for such period plus, without duplication and to the extent reflected as
a charge in the statement of such Consolidated Net Income for such
period, the sum of (a) income tax expense, (b) interest expense,
amortization or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation and amortization
expense, (d) amortization of intangibles (including, but not limited to,
goodwill) and organization costs, (e) any extraordinary, unusual or non-
recurring expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net
Income for such period, non-cash losses on sales of assets outside of the
ordinary course of business), (f) any other non-cash charges (including,
without limitation, the amount of any non-cash deduction to Consolidated
Net Income as a result of any grant to members of management of any
Capital Stock of the Borrower) and (g) the prepayment costs associated
with the termination of the GE Credit Agreement, not to exceed an
aggregate amount of $3,100,000, and minus, to the extent included in the
statement of such Consolidated Net Income for such period, the sum of (a)
any extraordinary, unusual or non-recurring income or gains (including,
whether or not otherwise includable as a separate item in the statement
of such Consolidated Net Income for such period, gains on the sales of
assets outside of the ordinary course of business) and (b) any other non-
cash income, all as determined on a consolidated basis; provided, that
for purposes of calculating Consolidated EBITDA pursuant to any
determination of the Consolidated Senior Leverage Ratio and the
Consolidated Total Leverage Ratio for the four quarter period ending on
or about (i) September 30, 1998, there shall be added to Consolidated
EBITDA for such period the amount of $18,500,000, (ii) December 31, 1998,
there shall be added to Consolidated EBITDA for such period the amount of
$13,875,000, (iii) March 31, 1999, there shall be added to Consolidated
EBITDA for such period the amount of $9,250,000 and (iv) June 30, 1999,
there shall be added to Consolidated EBITDA for such period the amount of
$4,625,000.
"Consolidated Interest Coverage Ratio": for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated
Interest Expense for such period.
"Consolidated Interest Expense": for any period, total cash
interest expense (including that attributable to Capital Lease
Obligations) of the Borrower and its Subsidiaries for such period with
respect to all outstanding Indebtedness of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
<PAGE>
"Consolidated Net Income": for any period, the consolidated
net income (or loss) of the Borrower and its Subsidiaries, determined on
a consolidated basis in accordance with GAAP; provided that there shall
be excluded (a) the income (or deficit) of any Person accrued prior to
the date it becomes a Subsidiary of the Borrower or is merged into or
consolidated with the Borrower or any of its Subsidiaries, (b) the income
(or deficit) of any Person (other than a Subsidiary of the Borrower) in
which the Borrower or any of its Subsidiaries has an ownership interest,
except to the extent that any such income is actually received by the
Borrower or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of the
Borrower to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by
the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.
"Consolidated Net Worth": as of the date of determination, all
items which in conformity with GAAP would be included under shareholders'
equity on a consolidated balance sheet of the Borrower at such date.
"Consolidated Senior Debt": at any date, the aggregate
principal amount of all Indebtedness of the Borrower and its Subsidiaries
(including the Loans) which is not by its terms subordinated to any other
Indebtedness of the Borrower or any such Subsidiary at such date,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Senior Leverage Ratio": as at the last day of
any period, the ratio of (a) Consolidated Senior Debt on such day to (b)
Consolidated EBITDA for such period.
"Consolidated Total Debt": at any date, the aggregate
principal amount of all Indebtedness of the Borrower and its Subsidiaries
at such date, determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Leverage Ratio": as at the last day of any
period, the ratio of (a) Consolidated Total Debt on such day to (b)
Consolidated EBITDA for such period.
"Consolidated Working Capital": at any date, the excess of
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Continuing Directors": the directors of the Borrower on the
Closing Date, after giving effect to the Newell Acquisition and the other
transactions contemplated hereby, and each other director, if, in each
case, such other director's nomination for election to the board of
directors of the Borrower is recommended by at least a majority of the
then Continuing Directors.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
<PAGE>
"Disposition": with respect to any property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "Dispose" and "Disposed of" shall have correlative
meanings.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United States of
America.
"ECF Percentage": 50%; provided, that, the ECF Percentage with
respect to any fiscal year shall be reduced to 0% if the Consolidated
Leverage Ratio as of the last day of such fiscal year is not greater than
3.75 to 1.0.
"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority or
other Requirements of Law (including common law) regulating, relating to
or imposing liability or standards of conduct concerning protection of
human health or the environment, as now or may at any time hereafter be
in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the maximum
rates (expressed as a decimal fraction) of reserve requirements in effect
on such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto) dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board)
maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
determined on the basis of the rate for deposits in Dollars for a period
equal to such Interest Period appearing on Page 3750 of the Dow Jones
Markets screen as of 11:00 A.M., London time, two Business Days prior to
the beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Dow Jones Markets screen (or otherwise on
such screen), the "Eurodollar Base Rate" shall be determined by reference
to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the Administrative Agent or, in
the absence of such availability, by reference to the rate at which the
Administrative Agent is offered Dollar deposits at or about 11:00 A.M.,
New York City time, two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where its eurodollar
and foreign currency and exchange operations are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
<PAGE>
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula (rounded
upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar
Loans the then current Interest Periods with respect to all of which
begin on the same date and end on the same later date (whether or not
such Loans shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the
excess, if any, of (a) the sum, without duplication, of (i) Consolidated
Net Income for such fiscal year, (ii) an amount equal to the amount of
all non-cash charges (including depreciation and amortization) deducted
in arriving at such Consolidated Net Income, (iii) decreases in
Consolidated Working Capital for such fiscal year, (iv) an amount equal
to the aggregate net non-cash loss on the Disposition of property by the
Borrower and its Subsidiaries during such fiscal year (other than sales
of inventory in the ordinary course of business), to the extent deducted
in arriving at such Consolidated Net Income and (v) the amount of any
Newell Facility Reimbursements during such fiscal year, over (b) the sum,
without duplication, of (i) an amount equal to the amount of all non-cash
credits included in arriving at such Consolidated Net Income, (ii) the
aggregate amount actually paid by the Borrower and its Subsidiaries in
cash during such fiscal year on account of Capital Expenditures
(excluding the principal amount of Indebtedness Incurred in connection
with such expenditures and any such expenditures financed with the
proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount
of all prepayments of Revolving Loans and Swingline Loans during such
fiscal year to the extent accompanying permanent optional reductions of
the Revolving Commitments and all optional prepayments of the Term Loans
during such fiscal year, (iv) the aggregate amount of all regularly
scheduled principal payments of Funded Debt (including, without
limitation, the Term Loans) of the Borrower and its Subsidiaries made
during such fiscal year (other than in respect of any revolving credit
facility to the extent there is not an equivalent permanent reduction in
commitments thereunder), (v) increases in Consolidated Working Capital
for such fiscal year, (vi) the amount of any cash taxes paid during such
fiscal year to the extent not included as a charge or expense in arriving
at such Consolidated Net Income (provided, that to the extent such cash
taxes are included as a charge or expense in arriving at Consolidated Net
Income for a later fiscal year, such amount shall be added to
Consolidated Net Income for such later fiscal year) and (vii) an amount
equal to the aggregate net non-cash gain on the Disposition of property
by the Borrower and its Subsidiaries during such fiscal year (other than
sales of inventory in the ordinary course of business), to the extent
included in arriving at such Consolidated Net Income.
"Excess Cash Flow Application Date": as defined in Section
2.11(c).
<PAGE>
"Excluded Foreign Subsidiary": any Foreign Subsidiary in
respect of which either (a) the pledge of all of the Capital Stock of
such Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary
of the Obligations, would, in the good faith judgment of the Borrower,
result in adverse tax consequences to the Borrower.
"Excluded Taxes": as defined in Section 2.19(a).
"Existing Credit Agreement": as defined in the recitals
hereto.
"Facility": each of (a) the Term Commitments and the Term
Loans made thereunder (the "Term Facility") and (b) the Revolving
Commitments and the extensions of credit made thereunder (the "Revolving
Facility").
"Federal Funds Effective Rate": for any day, the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for the day of such
transactions received by the Reference Lender from three federal funds
brokers of recognized standing selected by it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is
not a Domestic Subsidiary.
"Funded Debt": as to any Person, all Indebtedness of such
Person that matures more than one year from the date of its creation or
matures within one year from such date but is renewable or extendible, at
the option of such Person, to a date more than one year from such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
from such date, including, without limitation, all current maturities and
current sinking fund payments in respect of such Indebtedness whether or
not required to be paid within one year from the date of its creation
and, in the case of the Borrower, Indebtedness in respect of the Loans.
"Funding Office": the office of the Administrative Agent
specified in Section 10.2.
<PAGE>
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board and the rules
and regulations of the Securities and Exchange Commission, or in such
other statements by such other entity as may be in general use by
significant segments of the accounting profession, that are applicable to
the circumstances of the Borrower as of the date of determination, except
that for purposes of Section 7.1, GAAP shall be determined on the basis
of such principles in effect on the date hereof and consistent with those
used in the preparation of the most recent audited financial statements
delivered pursuant to Section 4.1(b). In the event that any "Accounting
Change" (as defined below) shall occur and such change results in a
change in the method of calculation of financial covenants, standards or
terms in this Agreement, then the Borrower and the Administrative Agent
agree to enter into negotiations in order to amend such provisions of
this Agreement so as to equitably reflect such Accounting Changes with
the desired result that the criteria for evaluating the Borrower's
financial condition shall be the same after such Accounting Changes as if
such Accounting Changes had not been made. Until such time as such an
amendment shall have been executed and delivered by the Borrower, the
Administrative Agent and the Required Lenders, all financial covenants,
standards and terms in this Agreement shall continue to be calculated or
construed as if such Accounting Changes had not occurred. "Accounting
Changes" refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board of the American Institute of
Certified Public Accountants or, if applicable, the Securities and
Exchange Commission (or successors thereto or agencies with similar
functions).
"GE Credit Agreement": the Amended and Restated Credit
Agreement, dated as of December 30, 1997, among Selfix, Inc., Tamor
Corporation, Shutters, Inc. and Seymour Housewares Corporation, as
borrowers, the other credit parties signatory thereto, the lenders from
time to time signatory thereto and General Electric Capital Corporation,
as agent.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government (including, without limitation, the
National Association of Insurance Commissioners).
"Guarantee and Collateral Agreement": the Amended and Restated
Guarantee and Collateral Agreement to be executed and delivered by the
Borrower and each Subsidiary Guarantor, substantially in the form of
Exhibit A-1, as the same may be amended, supplemented or otherwise
modified from time to time.
"Guarantee": the Guarantee to be executed and delivered by
Prestige Plastics, Inc., substantially in the form of Exhibit A-2, as the
same may be amended, supplemented or otherwise modified from time to
time.
<PAGE>
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit), as to which, to induce the creation of such obligation, the
guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends or other obligations (the "primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (1) for
the purchase or payment of any such primary obligation or (2) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount
of any Guarantee Obligation of any guaranteeing person shall be deemed to
be the lesser of (a) an amount equal to the stated or determinable amount
of the primary obligation in respect of which such Guarantee Obligation
is made and (b) the maximum amount for which such guaranteeing person may
be liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum
amount for which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation shall
be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"Incur": as defined in Section 7.2; and the terms "Incurred"
and "Incurrence" shall have correlative meanings.
<PAGE>
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money, (b)
all obligations of such Person for the deferred purchase price of
property or services (other than current trade payables incurred in the
ordinary course of such Person's business), (c) all obligations of such
Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e) all Capital Lease
Obligations of such Person, (f) all obligations of such Person,
contingent or otherwise, as an account party under acceptance, letter of
credit or similar facilities, (g) all obligations of such Person,
contingent or otherwise, to purchase, redeem, retire or otherwise acquire
for value any Capital Stock of such Person, (h) all Guarantee Obligations
of such Person in respect of obligations of the kind referred to in
clauses (a) through (g) above; (i) all obligations of the kind referred
to in clauses (a) through (h) above secured by (or for which the holder
of such obligation has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including, without limitation, accounts
and contract rights) owned by such Person, whether or not such Person has
assumed or become liable for the payment of such obligation; and (j) for
the purposes of Section 8(e) only, all obligations of such Person in
respect of Interest Rate Protection Agreements.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245(b) of ERISA and any section incorporated by reference therein.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all
rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including, without limitation, copyrights, copyright licenses,
patents, patent licenses, trademarks, trademark licenses, technology,
know-how and processes, and all rights to sue at law or in equity for any
infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.
"Interest Payment Date": (a) as to any ABR Loan, the last day
of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the
last day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day that is three months,
or a whole multiple thereof, after the first day of such Interest Period
and the last day of such Interest Period and (d) as to any Eurodollar
Loan, the date of any repayment or prepayment made in respect thereof.
<PAGE>
"Interest Period": as to any Eurodollar Loan, (a) initially,
the period commencing on the borrowing or conversion date, as the case
may be, with respect to such Eurodollar Loan and ending one, two, three
or six months thereafter, as selected by the Borrower in its notice of
borrowing or notice of conversion, as the case may be, given with respect
thereto; and (b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less than
three Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that, all of the foregoing
provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend
beyond the Revolving Termination Date (in the case of Revolving
Loans) or beyond the date final payment is due on the Term Loans (in
the case of Term Loans) shall end on the Revolving Termination Date
or such due date, as applicable;
(iii) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a
calendar month; and
(iv) the Borrower shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Interest Rate Protection Agreement": any interest rate
protection agreement, interest rate futures contract, interest rate
option, interest rate cap or other interest rate hedge arrangement, to or
under which the Borrower or any of its Subsidiaries is a party or a
beneficiary on the date hereof or becomes a party or a beneficiary after
the date hereof.
"Investments": as defined in Section 7.8.
"Issuing Lender": The Chase Manhattan Bank (or any of its
Affiliates, including, without limitation, Chase Manhattan Bank
Delaware), LaSalle National Bank or any other Lender (or any of their
respective Affiliates), in its capacity as issuer of any Letter of
Credit, as determined by the Borrower for the applicable Letter of
Credit.
"L/C Commitment": $15,000,000.
"L/C Fee Payment Date": the last day of each March, June,
September and December and the last day of the Revolving Commitment
Period.
<PAGE>
"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of drawings
under Letters of Credit that have not then been reimbursed pursuant to
Section 3.5.
"L/C Participants": the collective reference to all the
Revolving Lenders other than the Issuing Lender.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the same
economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this
Agreement.
"Loan Documents": this Agreement, the Security Documents and
the Notes.
"Loan Parties": the Borrower and each Subsidiary of the
Borrower that is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the
Term Loans or the Total Revolving Extensions of Credit, as the case may
be, outstanding under such Facility (or, in the case of the Revolving
Facility, prior to any termination of the Revolving Commitments, the
holders of more than 50% of the Total Revolving Commitments).
"Majority Revolving Facility Lenders": the Majority Facility
Lenders in respect of the Revolving Facility.
"Material Adverse Effect": a material adverse effect on (a)
the Newell Acquisition or the Tenex Acquisition, (b) the business,
property, assets, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole or (c) the validity or
enforceability of this Agreement or any of the other Loan Documents or
the rights or remedies of the Administrative Agent or the Lenders
hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Mortgaged Properties": the real properties listed on Schedule
1.1B, as to which the Administrative Agent for the benefit of the Lenders
shall be granted a Lien pursuant to the Mortgages.
<PAGE>
"Mortgages": each of the mortgages and deeds of trust made by
any Loan Party in favor of, or for the benefit of, the Administrative
Agent for the benefit of the Lenders, substantially in the form of
Exhibit D (with such changes thereto as shall be advisable under the law
of the jurisdiction in which such mortgage or deed of trust is to be
recorded), as the same may be amended, supplemented or otherwise modified
from time to time.
"Multiemployer Plan": a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or
any Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be
applied to the repayment of Indebtedness secured by a Lien expressly
permitted hereunder on any asset that is the subject of such Asset Sale
or Recovery Event (other than any Lien pursuant to a Security Document)
and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as
a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (b) in connection with
any issuance or sale of equity securities or debt securities or
instruments or the incurrence of loans, the cash proceeds received from
such issuance or incurrence, net of attorneys' fees, investment banking
fees, accountants' fees, underwriting discounts and commissions and other
customary fees and expenses actually incurred in connection therewith.
"Newell Acquisition": the Acquisition by the Borrower of
substantially all of the assets of Plastics, Inc pursuant to the Newell
Purchase Agreement.
"Newell Facility CapEx": Capital Expenditures by the Borrower
or any of its Subsidiaries associated with the relocation of the
facilities and operations acquired in the Newell Acquisition from St.
Paul, Minnesota to Eagan, Minnesota, to the extent constituting
"Relocation Costs" (as defined in the Newell Purchase Agreement).
"Newell Facility Reimbursements": the amount of any cash
payments made by Plastics Inc. or Newell Co. with respect to the
reimbursement of any Newell Facility CapEx, as provided in Section
10.13(a) of the Newell Purchase Agreement.
"Non-Excluded Taxes": as defined in Section 2.19(a).
"Non-U.S. Lender": as defined in Section 2.19(b).
"Notes": the collective reference to any promissory note
evidencing Loans.
<PAGE>
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of
the Loans and Reimbursement Obligations and interest accruing after the
filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender
(or, in the case of Interest Rate Protection Agreements, any affiliate of
any Lender), whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, this Agreement, any other Loan
Document, the Letters of Credit, any Interest Rate Protection Agreement
entered into with any Lender or any affiliate of any Lender or any other
document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses (including, without limitation, all
fees, charges and disbursements of counsel to the Administrative Agent or
to any Lender that are required to be paid by the Borrower pursuant
hereto) or otherwise.
"Participant": as defined in Section 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Acquisition": as defined in Section 7.8(g).
"Permitted Investors": the collective reference to officers
and directors of the Borrower on the date hereof and any holder of more
than 15% of the outstanding common stock of the Borrower on the date
hereof.
"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan that
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Preferred Stock": any Capital Stock entitled by its terms to
a preference (a) as to dividends or (b) upon a distribution of assets.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Projections": as defined in Section 6.2(c).
"Properties": as defined in Section 4.17.
<PAGE>
"Purchase Agreements": the collective reference to (a) the
Asset Purchase Agreement, dated as of July 24, 1998 (the "Tenex Purchase
Agreement"), between Tenex Corporation and the Borrower and (b) the Asset
Purchase and Sale Agreement, dated as of July 31, 1998 (the "Newell
Purchase Agreement"), among Plastics, Inc., Newell Co. and the Borrower,
as each are amended, supplemented or otherwise modified from time to time
in accordance with the terms hereof and thereof.
"Purchase Price": with respect to any Acquisition, the sum
(without duplication) of (a) the amount of cash paid by the Borrower and
its Subsidiaries in connection with such Acquisition, (b) the value (as
determined for purposes of such Acquisition in accordance with the
applicable acquisition agreement) of all Capital Stock of the Borrower
issued or given as consideration in connection with such Acquisition, (c)
the principal amount (or, if less, the accreted value) at the time of
such Acquisition of all Indebtedness incurred, assumed or acquired by
Borrower and its Subsidiaries in connection with such Acquisition, (d)
all additional purchase price amounts in connection with such Acquisition
in the form of earnouts, deferred purchase price and other contingent
obligations that should be recorded as a liability on the balance sheet
of the Borrower and its Subsidiaries in accordance with GAAP, Regulation
S-X under the Securities Act of 1933, as amended, or any other rule or
regulation of the United States Securities and Exchange Commission, (e)
all amounts paid by the Borrower and its Subsidiaries in respect of
covenants not to compete, consulting agreements and other affiliated
contracts in connection with such Acquisition, and (f) the aggregate fair
market value of all other consideration given by the Borrower and its
Subsidiaries in connection with such Acquisition.
"Recovery Event": any settlement of or payment in respect of
any property or casualty insurance claim or any condemnation proceeding
relating to any asset of the Borrower or any of its Subsidiaries.
"Reference Lender": The Chase Manhattan Bank.
"Reference Period": with respect to any date, means the period
of four consecutive fiscal quarters of the Borrower immediately preceding
such date or, if such date is the last day of a fiscal quarter, ending on
such date.
"Refunded Swingline Loans": as defined in Section 2.7.
"Refunding Date": as defined in Section 2.7.
"Register": as defined in Section 10.6(d).
"Regulation U": Regulation U of the Board as in effect from
time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Reinvestment Deferred Amount": with respect to any
Reinvestment Event, the aggregate Net Cash Proceeds received by the
Borrower or any of its Subsidiaries in connection therewith that are not
applied to prepay the Term Loans or reduce the Revolving Commitments
pursuant to Section 2.11(b) as a result of the delivery of a Reinvestment
Notice.
<PAGE>
"Reinvestment Event": any Asset Sale or Recovery Event in
respect of which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a
Responsible Officer stating that no Event of Default has occurred and is
continuing and that the Borrower (directly or indirectly through a
Subsidiary) intends and expects to use all or a specified portion of the
Net Cash Proceeds of an Asset Sale or Recovery Event to acquire assets
useful in its business.
"Reinvestment Prepayment Amount": with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto
less any amount expended prior to the relevant Reinvestment Prepayment
Date to acquire assets useful in the Borrower's business.
"Reinvestment Prepayment Date": with respect to any
Reinvestment Event, the earlier of (a) the date occurring six months
after such Reinvestment Event and (b) the date on which the Borrower
shall have determined not to, or shall have otherwise ceased to, acquire
assets useful in the Borrower's business with all or any portion of the
relevant Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .22, .23, .27, .28, .29, .30,
.31, .32, .34 or .35 of PBGC Reg. ' 4043.
"Required Lenders": the holders of more than 50% of the sum of
(i) the aggregate unpaid principal amount of the Term Loans and (ii) the
Total Revolving Commitments or, if the Revolving Commitments have been
terminated, the Total Revolving Extensions of Credit.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer, president
or chief financial officer of the Borrower, but in any event, with
respect to financial matters, the chief financial officer of the
Borrower.
"Restricted Payments": as defined in Section 7.6.
"Revolving Commitment": as to any Lender, the obligation of
such Lender, if any, to make Revolving Loans and participate in Swingline
Loans and Letters of Credit, in an aggregate principal and/or face amount
not to exceed the amount set forth under the heading "Revolving
Commitment" opposite such Lender's name on Schedule 1.1A, as the same may
be changed from time to time pursuant to the terms hereof. The original
amount of the Total Revolving Commitments is $100,000,000.
<PAGE>
"Revolving Commitment Period": the period from and including
the Closing Date to the Revolving Termination Date.
"Revolving Extensions of Credit": as to any Revolving Lender
at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Loans made by such Lender then outstanding, (b)
such Lender's Revolving Percentage of the L/C Obligations then
outstanding and (c) such Lender's Revolving Percentage of the aggregate
principal amount of Swingline Loans then outstanding.
"Revolving Lender": each Lender that has a Revolving
Commitment or that holds Revolving Loans.
"Revolving Loans": as defined in Section 2.4.
"Revolving Percentage": as to any Revolving Lender at any
time, the percentage which such Lender's Revolving Commitment then
constitutes of the Total Revolving Commitments (or, at any time after the
Revolving Commitments shall have expired or terminated, the percentage
which the aggregate principal amount of such Lender's Revolving Loans
then outstanding constitutes of the aggregate principal amount of the
Revolving Loans then outstanding).
"Revolving Termination Date": May 13, 2003.
"Security Documents": the collective reference to the
Guarantee and Collateral Agreement, the Guarantee, the Mortgages and all
other security documents hereafter delivered to the Administrative Agent
granting a Lien on any property of any Person to secure the obligations
and liabilities of any Loan Party under any Loan Document.
"Senior Subordinated Note Indenture": the Indenture, dated as
of May 14, 1998, between the Borrower, certain of its Subsidiaries and
LaSalle National Bank, as Trustee, in connection with the issuance of the
Senior Subordinated Notes, together with all instruments and other
agreements entered into by the Borrower or such Subsidiaries in
connection therewith, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with Section 7.9.
"Senior Subordinated Notes": the subordinated notes of the
Borrower issued on May 14, 1998 pursuant to the Senior Subordinated Note
Indenture.
"Single Employer Plan": any Plan that is covered by Title IV
of ERISA, but that is not a Multiemployer Plan.
<PAGE>
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person will, as of such date,
exceed the amount of all "liabilities of such Person, contingent or
otherwise", as of such date, as such quoted terms are determined in
accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be
greater than the amount that will be required to pay the probable
liability of such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an unreasonably
small amount of capital with which to conduct its business, and (d) such
Person will be able to pay its debts as they mature. For purposes of
this definition, (i) "debt" means liability on a "claim", and (ii)
"claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured or (y) right to an equitable remedy for breach of performance
if such breach gives rise to a right to payment, whether or not such
right to an equitable remedy is reduced to judgment, fixed, contingent,
matured or unmatured, disputed, undisputed, secured or unsecured.
"Specified Change of Control": a "Change of Control" as
defined in the Senior Subordinated Note Indenture.
"Subsidiary": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or
other ownership interests having ordinary voting power (other than stock
or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation, partnership or other entity are at
the time owned, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall
refer to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary of the Borrower other
than any Excluded Foreign Subsidiary.
"Swingline Commitment": the obligation of the Swingline Lender
to make Swingline Loans pursuant to Section 2.6 in an aggregate principal
amount at any one time outstanding not to exceed $5,000,000.
"Swingline Lender": The Chase Manhattan Bank, in its capacity
as the lender of Swingline Loans.
"Swingline Loans": as defined in Section 2.6.
"Swingline Participation Amount": as defined in Section 2.7.
"Target": either of Plastics, Inc. or the Consumer Plastic
Storage Product Lines of Tenex Corporation, collectively, the "Targets".
"Tenex Acquisition": the Acquisition by the Borrower of the
Consumer Plastic Storage Product Lines of Tenex Corporation pursuant to
the Tenex Purchase Agreement.
<PAGE>
"Term Commitment": as to any Lender, the obligation of such
Lender, if any, to make a Term Loan to the Borrower hereunder on the
Closing Date in a principal amount not to exceed the amount set forth
under the heading "Term Commitment" opposite such Lender's name on
Schedule 1.1A. The original aggregate amount of the Term Commitments is
$50,000,000.
"Term Lender": each Lender that has a Term Commitment or is
the holder of a Term Loan.
"Term Loan": as defined in Section 2.1.
"Term Percentage": as to any Term Lender at any time, the
percentage which such Lender's Term Commitment then constitutes of the
aggregate Term Commitments (or, at any time after the Closing Date, the
percentage which the aggregate principal amount of such Lender's Term
Loans then outstanding constitutes of the aggregate principal amount of
the Term Loans then outstanding).
"Total Revolving Commitments": at any time, the aggregate
amount of the Revolving Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the
aggregate amount of the Revolving Extensions of Credit of the Revolving
Lenders outstanding at such time.
"Transferee": any Assignee or Participant.
"Type": as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"U.S. Taxes": as defined in Section 10.6(d).
"Wholly Owned Subsidiary": as to any Person, any other Person
all of the Capital Stock of which (other than directors' qualifying
shares required by law) is owned by such Person directly and/or through
other Wholly Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor
that is a Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Loan Documents or any certificate
or other document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or
thereto, (i) accounting terms relating to the Borrower and its
Subsidiaries not defined in Section 1.1 and accounting terms partly
defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP and (ii) the words "asset"
and "property" shall be construed to have the same meaning and effect and
to refer to any and all tangible and intangible assets and properties,
including cash, Capital Stock, securities, accounts and contract rights.
<PAGE>
(c) For the purposes of calculating Consolidated EBITDA for
any Reference Period pursuant to any determination of the Consolidated
Senior Leverage Ratio and the Consolidated Total Leverage Ratio, (i) if
at any time during such Reference Period the Borrower or any Subsidiary
shall have made any Material Disposition, the Consolidated EBITDA for
such Reference Period shall be reduced by an amount equal to the
Consolidated EBITDA (if positive) attributable to the property that is
the subject of such Material Disposition for such Reference Period or
increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Reference Period and (ii) if during such
Reference Period the Borrower or any Subsidiary shall have made a
Material Acquisition, Consolidated EBITDA for such Reference Period shall
be calculated after giving pro forma effect thereto as if such Material
Acquisition occurred on the first day of such Reference Period. As used
in this paragraph, "Material Acquisition" means any acquisition (other
than the Newell Acquisition and the Tenex Acquisition) of property or
series of related acquisitions of property that (a) constitutes assets
comprising all or substantially all of an operating unit of a business or
constitutes all or substantially all of the common stock of a Person and
(b) involves the payment of consideration by the Borrower and its
Subsidiaries in excess of $10,000,000 (including any Indebtedness assumed
or incurred in connection therewith); and "Material Disposition" means
any Disposition of property or series of related Dispositions of property
that yields gross proceeds to the Borrower or any of its Subsidiaries in
excess of $10,000,000.
(d) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and
Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(e) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Commitments. Subject to the terms and conditions
hereof, each Term Lender severally agrees to make a term loan (a "Term
Loan") to the Borrower on the Closing Date in an amount not to exceed the
amount of the Term Commitment of such Lender. The Term Loans may from
time to time be Eurodollar Loans or ABR Loans, as determined by the
Borrower and notified to the Administrative Agent in accordance with
Sections 2.2 and 2.12.
<PAGE>
2.2 Procedure for Term Loan Borrowing. The Borrower shall
give the Administrative Agent irrevocable notice (which notice must be
received by the Administrative Agent prior to 12:00 Noon, New York City
time, on the Closing Date) requesting that the Term Lenders make the Term
Loans on the Closing Date and specifying the amount to be borrowed. The
Term Loans made on the Closing Date shall initially be ABR Loans. Upon
receipt of such notice the Administrative Agent shall promptly notify
each Term Lender thereof. Not later than 12:00 Noon, New York City time,
on the Closing Date each Term Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately
available funds equal to the Term Loan to be made by such Lender. The
Administrative Agent shall credit the account of the Borrower on the
books of such office of the Administrative Agent with the aggregate of
the amounts made available to the Administrative Agent by the Term
Lenders in immediately available funds or deposit such amounts in such
other account as shall be directed by the Borrower.
2.3 Repayment of Term Loans. The Term Loan of each Term
Lender shall mature in 24 consecutive quarterly installments, commencing
on December 31, 1998, each of which shall be in an amount equal to such
Lender's Term Percentage multiplied by the amount set forth below
opposite such installment:
Installment Principal Amount
December 31, 1998 $750,000
March 31, 1999 $750,000
June 30, 1999 $750,000
September 30, 1999 $750,000
December 31, 1999 $1,250,000
March 31, 2000 $1,250,000
June 30, 2000 $1,250,000
September 30, 2000 $1,250,000
December 31, 2000 $1,500,000
March 31, 2001 $1,500,000
June 30, 2001 $1,500,000
September 30, 2001 $1,500,000
December 31, 2001 $1,750,000
March 31, 2002 $1,750,000
June 30, 2002 $1,750,000
September 30, 2002 $1,750,000
December 31, 2002 $2,250,000
March 31, 2003 $2,250,000
June 30, 2003 $2,250,000
September 30, 2003 $2,250,000
December 31, 2003 $2,250,000
March 31, 2004 $2,250,000
June 30, 2004 $2,250,000
September 30, 2004 $13,250,000
<PAGE>
2.4 Revolving Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Lender severally agrees to make
revolving credit loans ("Revolving Loans") to the Borrower from time to
time during the Revolving Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Lender's
Revolving Percentage of the sum of (i) the L/C Obligations then
outstanding and (ii) the aggregate principal amount of the Swingline
Loans then outstanding, does not exceed the amount of such Lender's
Revolving Commitment. During the Revolving Commitment Period the
Borrower may use the Revolving Commitments by borrowing, prepaying the
Revolving Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof. The Revolving Loans may from time
to time be Eurodollar Loans or ABR Loans, as determined by the Borrower
and notified to the Administrative Agent in accordance with Sections 2.5
and 2.12, provided that no Revolving Loan shall be made as a Eurodollar
Loan after the day that is one month prior to the Revolving Termination
Date. Notwithstanding the foregoing, each of the revolving credit loans
made under the Existing Credit Agreement shall, from and after the
Closing Date, be deemed to have been made pursuant to this Section 2.4.
(b) The Borrower shall repay all outstanding Revolving Loans
on the Revolving Termination Date.
2.5 Procedure for Revolving Loan Borrowing. The Borrower may
borrow under the Revolving Commitments during the Revolving Commitment
Period on any Business Day, provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to 12:00 Noon, New York City time, (a)
three Business Days prior to the requested Borrowing Date, in the case of
Eurodollar Loans, or (b) on the requested Borrowing Date, in the case of
ABR Loans), specifying (i) the amount and Type of Revolving Loans to be
borrowed, (ii) the requested Borrowing Date and (iii) in the case of
Eurodollar Loans, the respective amounts of each such Type of Loan and
the respective lengths of the initial Interest Period therefor. Any
Revolving Loans made on the Closing Date shall initially be ABR Loans.
Each borrowing under the Revolving Commitments shall be in an amount
equal to (x) in the case of ABR Loans, $500,000 or a whole multiple of
$250,000 in excess thereof (or, if the then aggregate Available Revolving
Commitments are less than $500,000, such lesser amount) and (y) in the
case of Eurodollar Loans, $1,000,000 or a whole multiple of $500,000 in
excess thereof; provided, that the Swingline Lender may request, on
behalf of the Borrower, borrowings under the Revolving Commitments that
are ABR Loans in other amounts pursuant to Section 2.7. Upon receipt of
any such notice from the Borrower, the Administrative Agent shall
promptly notify each Revolving Lender thereof. Each Revolving Lender
will make the amount of its pro rata share of each borrowing available to
the Administrative Agent for the account of the Borrower at the Funding
Office prior to 2:00 P.M., New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the
Borrower by the Administrative Agent crediting the account of the
Borrower on the books of such office with the aggregate of the amounts
made available to the Administrative Agent by the Revolving Lenders and
in like funds as received by the Administrative Agent or by depositing
such amounts in such other account as shall be directed by the Borrower.
<PAGE>
2.6 Swingline Commitment. (a) Subject to the terms and
conditions hereof, the Swingline Lender agrees to make a portion of the
credit otherwise available to the Borrower under the Revolving
Commitments from time to time during the Revolving Commitment Period by
making swing line loans ("Swingline Loans") to the Borrower; provided
that (i) the aggregate principal amount of Swingline Loans outstanding at
any time shall not exceed the Swingline Commitment then in effect
(notwithstanding that the Swingline Loans outstanding at any time, when
aggregated with the Swingline Lender's other outstanding Revolving Loans
hereunder, may exceed the Swingline Commitment or such Lender's Revolving
Commitment then in effect) and (ii) the Borrower shall not request, and
the Swingline Lender shall not make, any Swingline Loan if, after giving
effect to the making of such Swingline Loan, the aggregate amount of the
Available Revolving Commitments would be less than zero. During the
Revolving Commitment Period, the Borrower may use the Swingline
Commitment by borrowing, repaying and reborrowing, all in accordance with
the terms and conditions hereof. Swingline Loans shall be ABR Loans
only.
(b) The Borrower shall repay all outstanding Swingline Loans
on the Revolving Termination Date.
2.7 Procedure for Swingline Borrowing; Refunding of Swingline
Loans. (a) Whenever the Borrower desires that the Swingline Lender make
Swingline Loans it shall give the Swingline Lender irrevocable telephonic
notice confirmed promptly in writing (which telephonic notice must be
received by the Swingline Lender not later than 1:00 P.M., New York City
time, on the proposed Borrowing Date), specifying (i) the amount to be
borrowed and (ii) the requested Borrowing Date (which shall be a Business
Day during the Revolving Commitment Period). Each borrowing under the
Swingline Commitment shall be in an amount equal to $250,000 or a whole
multiple of $100,000 in excess thereof. Not later than 3:00 P.M., New
York City time, on the Borrowing Date specified in a notice in respect of
Swingline Loans, the Swingline Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately
available funds equal to the amount of the Swingline Loan to be made by
the Swingline Lender. The Administrative Agent shall make the proceeds
of such Swingline Loan available to the Borrower on such Borrowing Date
by depositing such proceeds in the account of the Borrower with the
Administrative Agent or such other account as shall be directed by the
Borrower on such Borrowing Date in immediately available funds.
<PAGE>
(b) The Swingline Lender, at any time and from time to time in
its sole and absolute discretion may, on behalf of the Borrower (which
hereby irrevocably directs the Swingline Lender to act on its behalf), on
one Business Day's notice given by the Swingline Lender no later than
12:00 Noon, New York City time, request each Revolving Lender to make,
and each Revolving Lender hereby agrees to make, a Revolving Loan, in an
amount equal to such Revolving Lender's Revolving Percentage of the
aggregate amount of the Swingline Loans (the "Refunded Swingline Loans")
outstanding on the date of such notice, to repay the Swingline Lender.
Each Revolving Lender shall make the amount of such Revolving Loan
available to the Administrative Agent at the Funding Office in
immediately available funds, not later than 10:00 A.M., New York City
time, one Business Day after the date of such notice. The proceeds of
such Revolving Loans shall be immediately made available by the
Administrative Agent to the Swingline Lender for application by the
Swingline Lender to the repayment of the Refunded Swingline Loans. The
Borrower irrevocably authorizes the Swingline Lender to charge the
Borrower's accounts with the Administrative Agent (up to the amount
available in each such account) in order to immediately pay the amount of
such Refunded Swingline Loans to the extent amounts received from the
Revolving Lenders are not sufficient to repay in full such Refunded
Swingline Loans.
(c) If prior to the time a Revolving Loan would have otherwise
been made pursuant to Section 2.7(b), one of the events described in
Section 8(f) shall have occurred and be continuing with respect to the
Borrower or if for any other reason, as determined by the Swingline
Lender in its sole discretion, Revolving Loans may not be made as
contemplated by Section 2.7(b), each Revolving Lender shall, on the date
such Revolving Loan was to have been made pursuant to the notice referred
to in Section 2.7(b) (the "Refunding Date"), purchase for cash an
undivided participating interest in the then outstanding Swingline Loans
by paying to the Swingline Lender an amount (the "Swingline Participation
Amount") equal to (i) such Revolving Lender's Revolving Percentage times
(ii) the sum of the aggregate principal amount of Swingline Loans then
outstanding that were to have been repaid with such Revolving Loans.
(d) Whenever, at any time after the Swingline Lender has
received from any Revolving Lender such Lender's Swingline Participation
Amount, the Swingline Lender receives any payment on account of the
Swingline Loans, the Swingline Lender will distribute to such Lender its
Swingline Participation Amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such
Lender's participating interest was outstanding and funded and, in the
case of principal and interest payments, to reflect such Lender's pro
rata portion of such payment if such payment is not sufficient to pay the
principal of and interest on all Swingline Loans then due); provided,
however, that in the event that such payment received by the Swingline
Lender is required to be returned, such Revolving Lender will return to
the Swingline Lender any portion thereof previously distributed to it by
the Swingline Lender.
<PAGE>
(e) Each Revolving Lender's obligation to make the Revolving
Loans referred to in Section 2.7(b) and to purchase participating
interests pursuant to Section 2.7(c) shall be absolute and unconditional
and shall not be affected by any circumstance, including, without
limitation, (i) any setoff, counterclaim, recoupment, defense or other
right that such Revolving Lender or the Borrower may have against the
Swingline Lender, the Borrower or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default or an Event
of Default or the failure to satisfy any of the other conditions
specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this
Agreement or any other Loan Document by the Borrower, any other Loan
Party or any other Revolving Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the
foregoing.
2.8 Commitment Fees, etc. (a) The Borrower agrees to pay to
the Administrative Agent for the account of each Revolving Lender a
commitment fee for the period from and including the Closing Date to the
last day of the Revolving Commitment Period, computed at the Commitment
Fee Rate on the average daily amount of the Available Revolving
Commitment of such Lender during the period for which payment is made,
payable quarterly in arrears on the last day of each March, June,
September and December and on the Revolving Termination Date, commencing
on the first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the
fees in the amounts and on the dates previously agreed to in writing by
the Borrower and the Administrative Agent.
2.9 Termination or Reduction of Revolving Commitments. The
Borrower shall have the right, upon not less than three Business Days'
notice to the Administrative Agent, to terminate the Revolving
Commitments or, from time to time, to reduce the amount of the Revolving
Commitments; provided that no such termination or reduction of Revolving
Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Loans and Swingline Loans made on the
effective date thereof, the Total Revolving Extensions of Credit would
exceed the Total Revolving Commitments. Any such reduction shall be in
an amount equal to $1,000,000, or a whole multiple thereof, and shall
reduce permanently the Revolving Commitments then in effect.
<PAGE>
2.10 Optional Prepayments. The Borrower may at any time and
from time to time prepay the Loans, in whole or in part, without premium
or penalty, upon irrevocable notice delivered to the Administrative Agent
at least three Business Days prior thereto in the case of Eurodollar
Loans and by 12:00 Noon, New York City time on the Business Day of such
prepayment in the case of ABR Loans, which notice shall specify the date
and amount of prepayment and whether the prepayment is of Term Loans or
Revolving Loans and of Eurodollar Loans or ABR Loans; provided, that if a
Eurodollar Loan is prepaid on any day other than the last day of the
Interest Period applicable thereto, the Borrower shall also pay any
amounts owing pursuant to Section 2.20. Upon receipt of any such notice
the Administrative Agent shall promptly notify each relevant Lender
thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together
with (in the case of Eurodollar Loans) accrued interest to such date on
the amount prepaid. Partial prepayments of Term Loans and Revolving
Loans shall be in an aggregate principal amount of $1,000,000 or a whole
multiple thereof. Partial prepayments of Term Loans shall be applied to
the installments thereof in accordance with Section 2.17(b). Partial
prepayments of Swingline Loans shall be in an aggregate principal amount
of $100,000 or a whole multiple thereof.
2.11 Mandatory Prepayments and Commitment Reductions. (a)
Unless the Required Lenders shall otherwise agree, if any Indebtedness
shall be issued or Incurred by the Borrower or any of its Subsidiaries
(excluding any Indebtedness Incurred in accordance with Section 7.2), an
amount equal to 100% of the Net Cash Proceeds thereof shall be applied on
the date of such issuance or Incurrence toward the prepayment of the Term
Loans and the reduction of the Revolving Commitments as set forth in
Section 2.11(d).
(b) Unless the Required Lenders shall otherwise agree, if on
any date the Borrower or any of its Subsidiaries shall receive Net Cash
Proceeds from any Asset Sale or Recovery Event then, unless a
Reinvestment Notice shall be delivered in respect thereof, such Net Cash
Proceeds shall be applied on such date toward the prepayment of the Term
Loans and the reduction of the Revolving Commitments as set forth in
Section 2.11(d); provided, that, notwithstanding the foregoing, on each
Reinvestment Prepayment Date, an amount equal to the Reinvestment
Prepayment Amount with respect to the relevant Reinvestment Event shall
be applied toward the prepayment of the Term Loans and the reduction of
the Revolving Commitments as set forth in Section 2.11(d).
(c) Unless the Required Lenders shall otherwise agree, if, for
any fiscal year of the Borrower commencing with the fiscal year ending on
or about December 31, 1999, there shall be Excess Cash Flow, the Borrower
shall, on the relevant Excess Cash Flow Application Date, apply the ECF
Percentage of such Excess Cash Flow toward the prepayment of the Term
Loans as set forth in Section 2.11(d). Each such prepayment shall be
made on a date (an "Excess Cash Flow Application Date") no later than
five days after the earlier of (i) the date on which the financial
statements of the Borrower referred to in Section 6.1(a), for the fiscal
year with respect to which such prepayment is to be made, are required to
be delivered to the Lenders and (ii) the date such financial statements
are actually delivered.
<PAGE>
(d) Amounts to be applied in connection with prepayments and
Revolving Commitment reductions made pursuant to Section 2.11 shall be
applied, first, to the prepayment of the Term Loans (in accordance with
Section 2.17(b)) and, second, to reduce permanently the Revolving
Commitments; provided, that, amounts to be applied in connection with
prepayments under Section 2.11(c) shall not be applied to reduce the
Revolving Commitments. Any such reduction of the Revolving Commitments
shall be accompanied by prepayment of the Revolving Loans and/or
Swingline Loans to the extent, if any, that the Total Revolving
Extensions of Credit exceed the amount of the Total Revolving Commitments
as so reduced, provided that if the aggregate principal amount of
Revolving Loans and Swingline Loans then outstanding is less than the
amount of such excess (because L/C Obligations constitute a portion
thereof), the Borrower shall, to the extent of the balance of such
excess, replace outstanding Letters of Credit and/or deposit an amount in
cash in a cash collateral account established with the Administrative
Agent for the benefit of the Lenders on terms and conditions satisfactory
to the Administrative Agent. The application of any prepayment pursuant
to this Section 2.11 shall be made first to ABR Loans and second to
Eurodollar Loans. Each prepayment of Loans under this Section 2.11 (in
the case of Eurodollar Loans) shall be accompanied by accrued interest to
the date of such prepayment on the amount prepaid.
2.12 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Eurodollar Loans to ABR Loans by
giving the Administrative Agent at least two Business Days' prior
irrevocable notice of such election, provided that any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period
with respect thereto. The Borrower may elect from time to time to
convert ABR Loans to Eurodollar Loans by giving the Administrative Agent
at least three Business Days' prior irrevocable notice of such election
(which notice shall specify the length of the initial Interest Period
therefor), provided that no ABR Loan under a particular Facility may be
converted into a Eurodollar Loan (i) when any Event of Default has
occurred and is continuing and the Administrative Agent has or the
Majority Facility Lenders in respect of such Facility have determined in
its or their sole discretion not to permit such conversions or (ii) after
the date that is one month prior to the scheduled termination or final
maturity date of such Facility. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by
the Borrower giving irrevocable notice to the Administrative Agent, in
accordance with the applicable provisions of the term "Interest Period"
set forth in Section 1.1, of the length of the next Interest Period to be
applicable to such Revolving Loans, provided that no Eurodollar Loan
under a particular Facility may be continued as such (i) when any Event
of Default has occurred and is continuing and the Administrative Agent
has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such
continuations or (ii) after the date that is one month prior to the
scheduled termination or final maturity date of such Facility, and
provided, further, that if the Borrower shall fail to give any required
notice as described above in this paragraph or if such continuation is
not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to ABR Loans on the last day of such then
expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
<PAGE>
2.13 Limitations on Eurodollar Tranches. Notwithstanding
anything to the contrary in this Agreement, all borrowings, conversions,
continuations and optional prepayments of Eurodollar Loans hereunder and
all selections of Interest Periods hereunder shall be in such amounts and
be made pursuant to such elections so that, (a) after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans
comprising each Eurodollar Tranche shall be equal to $1,000,000 or a
whole multiple of $500,000 in excess thereof and (b) no more than ten
Eurodollar Tranches shall be outstanding at any one time.
2.14 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with
respect thereto at a rate per annum equal to the Eurodollar Rate
determined for such day plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal
to the ABR plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any
Loan or Reimbursement Obligation shall not be paid when due (whether at
the stated maturity, by acceleration or otherwise), all outstanding Loans
and Reimbursement Obligations (whether or not overdue) shall bear
interest at a rate per annum equal to (x) in the case of the Loans, the
rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this Section 2.14 plus 2% or (y) in the case of
Reimbursement Obligations, the rate applicable to ABR Loans plus 2%, and
(ii) if all or a portion of any interest payable on any Loan or
Reimbursement Obligation or any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a
rate per annum equal to the rate then applicable to ABR Loans plus 2%, in
each case, with respect to clauses (i) and (ii) above, from the date of
such non-payment until such amount is paid in full (as well after as
before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c)
of this Section 2.14 shall be payable from time to time on demand.
2.15 Computation of Interest and Fees. (a) Interest and fees
payable pursuant hereto shall be calculated on the basis of a 360-day
year for the actual days elapsed, except that, with respect to ABR Loans
the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or
366-, as the case may be) day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and
the relevant Lenders of each determination of a Eurodollar Rate. Any
change in the interest rate on a Loan resulting from a change in the ABR
or the Eurocurrency Reserve Requirements shall become effective as of the
opening of business on the day on which such change becomes effective.
The Administrative Agent shall as soon as practicable notify the Borrower
and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
<PAGE>
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the
Borrower, deliver to the Borrower a statement showing the quotations used
by the Administrative Agent in determining any interest rate pursuant to
Section 2.14(a).
2.16 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower)
that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Majority Facility Lenders in respect of the relevant Facility
that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making
or maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof
to the Borrower and the relevant Lenders as soon as practicable
thereafter. If such notice is given (x) any Eurodollar Loans under the
relevant Facility requested to be made on the first day of such Interest
Period shall be made as ABR Loans or not borrowed, at the Borrower's
option, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans
shall be prepaid or continued as ABR Loans at the Borrower's option and
(z) any outstanding Eurodollar Loans under the relevant Facility shall be
prepaid or converted at the Borrower's option, on the first day of such
Interest Period, to ABR Loans. Until such notice has been withdrawn by
the Administrative Agent, no further Eurodollar Loans under the relevant
Facility shall be made or continued as such, nor shall the Borrower have
the right to convert Loans under the Relevant Facility to Eurodollar
Loans.
2.17 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on
account of any commitment fee and any reduction of the Commitments of the
Lenders shall be made pro rata according to the respective Term
Percentages or Revolving Percentages, as the case may be, of the relevant
Lenders.
(b) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Term Loans shall be made
pro rata according to the respective outstanding principal amounts of the
Term Loans then held by the Term Lenders. The amount of each principal
prepayment of the Term Loans shall be applied to reduce the then
remaining installments of the Term Loans pro rata based upon the then
remaining principal amount thereof. Amounts prepaid on account of the
Term Loans may not be reborrowed.
<PAGE>
(c) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Revolving Loans shall be
made pro rata according to the respective outstanding principal amounts
of the Revolving Loans then held by the Revolving Lenders.
(d) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made
prior to 12:00 Noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Funding
Office, in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments to the Lenders
promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be
extended to the next succeeding Business Day. If any payment on a
Eurodollar Loan becomes due and payable on a day other than a Business
Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such
payment into another calendar month, in which event such payment shall be
made on the immediately preceding Business Day. In the case of any
extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate
during such extension.
(e) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not
make the amount that would constitute its share of such borrowing
available to the Administrative Agent, the Administrative Agent may
assume that such Lender is making such amount available to the
Administrative Agent, and the Administrative Agent may, in reliance upon
such assumption, make available to the Borrower a corresponding amount.
If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to
the Administrative Agent, on demand, such amount with interest thereon at
a rate equal to the daily average Federal Funds Effective Rate for the
period until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this
Section 2.17(e) shall be conclusive in the absence of manifest error. If
such Lender's share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such
Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum
applicable to ABR Loans, on demand, from the Borrower.
<PAGE>
(f) Unless the Administrative Agent shall have been notified
in writing by the Borrower prior to the date of any payment being made
hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the
Borrower is making such payment, and the Administrative Agent may, but
shall not be required to, in reliance upon such assumption, make
available to the Lenders their respective pro rata shares of a
corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date,
the Administrative Agent shall be entitled to recover, on demand, from
each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing
herein shall be deemed to limit the rights of the Administrative Agent or
any Lender against the Borrower.
2.18 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall change the basis of Excluded Taxes of any Lender
with respect to this Agreement, any Letter of Credit, any
Application or any Eurodollar Loan made by it;
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account
of, advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender that is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such
Lender, by an amount that such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or issuing or
participating in Letters of Credit, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such increased cost or reduced
amount receivable; provided that the Borrower shall not be required to
compensate a Lender pursuant to this paragraph for any amounts incurred
more than six months prior to the date that such Lender notifies the
Borrower of such Lender's intention to claim compensation therefor; and
provided further that, if the circumstances giving rise to such claim
have a retroactive effect, then such six-month period shall be extended
to include the period of such retroactive effect. If any Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.18,
it shall promptly notify the Borrower (with a copy to the Administrative
Agent) of the event by reason of which it has become so entitled.
<PAGE>
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in
the interpretation or application thereof or compliance by such Lender or
any corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from
any Governmental Authority made subsequent to the date hereof shall have
the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder or
under or in respect of any Letter of Credit to a level below that which
such Lender or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time,
after submission by such Lender to the Borrower (with a copy to the
Administrative Agent) of a written request therefor, the Borrower shall
pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction; provided that the Borrower shall not be
required to compensate a Lender pursuant to this paragraph for any
amounts incurred more than six months prior to the date that such Lender
notifies the Borrower of such Lender's intention to claim compensation
therefor; and provided further that, if the circumstances giving rise to
such claim have a retroactive effect, then such six-month period shall be
extended to include the period of such retroactive effect.
(c) A certificate as to any additional amounts payable
pursuant to this Section 2.18 submitted by any Lender to the Borrower
(with a copy to the Administrative Agent) shall be conclusive in the
absence of manifest error. The obligations of the Borrower pursuant to
this Section 2.18 shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
2.19 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes and
franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former
connection between the Administrative Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from the Administrative Agent or such
Lender having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or any other Loan
Document) (such excluded taxes, "Excluded Taxes"). If any such non-
excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder, the
amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or
such Lender (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement, provided, however, that the Borrower shall
not be required to increase any such amounts payable to any Lender that
is not organized under the laws of the United States of America or a
state thereof to the extent such Lender's compliance with the
requirements of Section 2.19(b) at the time such Lender becomes a party
to this Agreement fails to establish a complete exemption from such
withholding; provided, further, that the Borrower shall not be required
to increase any such amounts pursuant to this paragraph for any amounts
incurred more than six months prior to the date such Lender notified the
<PAGE>
Borrower of such Lender's intention to claim compensation therefor unless
(x) such Lender did not have actual knowledge of the circumstances giving
rise to the obligation of the Borrower to so increase such amount or (y)
the Borrower did have actual knowledge of the circumstances giving rise
to its obligation to so increase such amount; and provided further that,
if the circumstances giving rise to such claim have a retroactive effect,
then such six-month period shall be extended to include the period of
such retroactive effect. Whenever any Non-Excluded Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send
to the Administrative Agent for its own account or for the account of
such Lender, as the case may be, a certified copy of an original official
receipt, if available, received by the Borrower showing payment thereof.
If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative
Agent the required receipts or other required documentary evidence, the
Borrower shall indemnify the Administrative Agent and the Lenders for any
incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. The
agreements in this Section 2.19 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable
hereunder.
(b) Each Lender (or Transferee) that is not a citizen or
resident of the United States of America, a corporation, partnership or
other entity created or organized in or under the laws of the United
States of America (or any jurisdiction thereof), or any estate or trust
that is subject to federal income taxation regardless of the source of
its income (a "Non-U.S. Lender") shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender
from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service Form 1001 or Form 4224,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender
delivers a Form W-8, an annual certificate representing that such
Non-U.S. Lender is not a "bank" for purposes of Section 881(c) of the
Code, is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign
corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or a reduced rate of,
U.S. federal withholding tax on all payments by the Borrower under this
Agreement and the other Loan Documents. Such forms shall be delivered by
each Non-U.S. Lender on or before the date it becomes a party to this
Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each
Non-U.S. Lender shall deliver such forms promptly upon the obsolescence
or invalidity of any form previously delivered by such Non-U.S. Lender.
Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this Section 2.19(b), a Non-U.S.
Lender shall not be required to deliver any form pursuant to this Section
2.19(b) that such Non-U.S. Lender is not legally able to deliver.
<PAGE>
2.20 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense that such
Lender may sustain or incur as a consequence of (a) default by the
Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (b) default by
the Borrower in making any prepayment after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c)
the making of a prepayment of Eurodollar Loans on a day that is not the
last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i)
the amount of interest that would have accrued on the amount so prepaid,
or not so borrowed, converted or continued, for the period from the date
of such prepayment or of such failure to borrow, convert or continue to
the last day of such Interest Period (or, in the case of a failure to
borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable
rate of interest for such Revolving Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (ii) the
amount of interest (as reasonably determined by such Lender) that would
have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank
eurodollar market. A certificate as to any amounts payable pursuant to
this Section 2.20 submitted to the Borrower by any Lender shall be
conclusive in the absence of manifest error. This covenant shall survive
the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
2.21 Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.18
or 2.19(a) with respect to such Lender, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for
any Loans affected by such event with the object of avoiding the
consequences of such event; provided, that such designation is made on
terms that, in the sole judgment of such Lender, cause such Lender and
its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section 2.21
shall affect or postpone any of the obligations of any Borrower or the
rights of any Lender pursuant to Section 2.18 or 2.19(a).
<PAGE>
2.22 Replacement of Lenders. The Borrower shall be permitted
to replace any Lender that (a) requests reimbursement for amounts owing
pursuant to Section 2.18 or 2.19 or (b) defaults in its obligation to
make Loans hereunder, with a replacement financial institution; provided
that (i) such replacement does not conflict with any Requirement of Law,
(ii) no Event of Default shall have occurred and be continuing at the
time of such replacement, (iii) if applicable, prior to any such
replacement, such Lender shall have taken no action under Section 2.21 so
as to eliminate the continued need for payment of amounts owing pursuant
to Section 2.18 or 2.19, (iv) the replacement financial institution shall
purchase, at par, all Loans and other amounts owing to such replaced
Lender on or prior to the date of replacement, (v) the Borrower shall be
liable to such replaced Lender under Section 2.20 if any Eurodollar Loan
owing to such replaced Lender shall be purchased other than on the last
day of the Interest Period relating thereto, (vi) the replacement
financial institution, if not already a Lender, shall be reasonably
satisfactory to the Administrative Agent, (vii) the replaced Lender shall
be obligated to make such replacement in accordance with the provisions
of Section 10.6 (provided that the Borrower shall be obligated to pay the
registration and processing fee referred to therein), (viii) until such
time as such replacement shall be consummated, the Borrower shall pay all
additional amounts (if any) required pursuant to Section 2.18 or 2.19, as
the case may be, and (ix) any such replacement shall not be deemed to be
a waiver of any rights that the Borrower, the Administrative Agent or any
other Lender shall have against the replaced Lender.
2.23 Reporting Requirements of Issuing Lenders. Within two
Business Days following the last day of each calendar month, each Issuing
Lender shall deliver to the Administrative Agent a report detailing all
activity during the preceding month with respect to any Letters of Credit
issued by any such Issuing Lender, including the face amount, the account
party, the beneficiary and the expiration date of such Letters of Credit
and any other information with respect thereto as may be requested by the
Administrative Agent.
<PAGE>
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions
hereof, the Issuing Lender, in reliance on the agreements of the other
Revolving Lenders set forth in Section 3.4(a), agrees to issue letters of
credit ("Letters of Credit") for the account of the Borrower on any
Business Day during the Revolving Commitment Period in such form as may
be approved from time to time by the Issuing Lender; provided that the
Issuing Lender shall have no obligation to issue any Letter of Credit if,
after giving effect to such issuance, (i) the L/C Obligations would
exceed the L/C Commitment or (ii) the aggregate amount of the Available
Revolving Commitments would be less than zero. Letters of Credit may be
either standby letters of credit or commercial letters of credit.
Notwithstanding the foregoing, each of the letters of credit issued or
deemed issued under the Existing Credit Agreement shall, from and after
the Closing Date, be deemed to have been issued pursuant to this Section
3.1(a). Each Letter of Credit shall (i) be denominated in Dollars and
(ii) expire no later than the earlier of (x) the first anniversary of its
date of issuance and (y) the date that is five Business Days prior to the
Revolving Termination Date, provided that any Letter of Credit with a
one-year term may provide for the renewal thereof for additional one-year
periods (which shall in no event extend beyond the date referred to in
clause (y) above), provided, however, that any Letter of Credit which is
a commercial letter of credit shall expire no later than 180 days after
its date of issuance.
(b) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the
State of New York.
(c) The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict
with, or cause the Issuing Lender or any L/C Participant to exceed any
limits imposed by, any applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower
may from time to time request that the Issuing Lender issue a Letter of
Credit by delivering to the Issuing Lender and the Administrative Agent
at their respective addresses for notices specified herein (or to such
other address provided by such Issuing Lender) an Application therefor,
completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as the Issuing
Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other
papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the
Letter of Credit requested thereby (but in no event shall the Issuing
Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such
other certificates, documents and other papers and information relating
thereto) by issuing the original of such Letter of Credit to the
beneficiary thereof or as otherwise may be agreed to by the Issuing
Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower promptly following the issuance thereof.
The Issuing Lender shall promptly furnish to the Administrative Agent,
which shall in turn promptly furnish to the Lenders, notice of the
issuance of each Letter of Credit (including the amount thereof).
<PAGE>
3.3 Fees and Other Charges. (a) The Borrower will pay a fee
on all outstanding Letters of Credit at a per annum rate equal to (i) the
Applicable Margin then in effect with respect to Eurodollar Loans minus
1/8% times (ii) the average daily undrawn face amount of all such Letters
of Credit, shared ratably among the Revolving Lenders and payable
quarterly in arrears on each L/C Fee Payment Date after the issuance
date. In addition, the Borrower shall pay to the relevant Issuing Lender
for its own account a fronting fee at a rate to be agreed with such
Issuing Lender, payable quarterly in arrears on each L/C Fee Payment Date
after the Issuance Date.
(b) In addition to the foregoing fees, the Borrower shall pay
or reimburse the Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by the Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering
any Letter of Credit.
3.4 L/C Participations. (a) The Issuing Lender irrevocably
agrees to grant and hereby grants to each L/C Participant, and, to induce
the Issuing Lender to issue Letters of Credit hereunder, each L/C
Participant irrevocably agrees to accept and purchase and hereby accepts
and purchases from the Issuing Lender, on the terms and conditions
hereinafter stated, for such L/C Participant's own account and risk an
undivided interest equal to such L/C Participant's Revolving Percentage
in the Issuing Lender's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by the Issuing
Lender thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any Letter
of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C
Participant shall pay to the Issuing Lender upon demand at the Issuing
Lender's address for notices specified herein an amount equal to such L/C
Participant's Revolving Percentage of the amount of such draft, or any
part thereof, that is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant
to the Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any
Letter of Credit is paid to the Issuing Lender within three Business Days
after the date such payment is due, such L/C Participant shall pay to the
Issuing Lender on demand an amount equal to the product of (i) such
amount, times (ii) the daily average Federal Funds Effective Rate during
the period from and including the date such payment is required to the
date on which such payment is immediately available to the Issuing
Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360.
If any such amount required to be paid by any L/C Participant pursuant
to Section 3.4(a) is not made available to the Issuing Lender by such L/C
Participant within three Business Days after the date such payment is
due, the Issuing Lender shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to ABR Loans. A
certificate of the Issuing Lender submitted to any L/C Participant with
respect to any amounts owing under this Section shall be conclusive in
the absence of manifest error.
<PAGE>
(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C
Participant its pro rata share of such payment in accordance with Section
3.4(a), the Issuing Lender receives any payment related to such Letter of
Credit (whether directly from the Borrower or otherwise, including
proceeds of collateral applied thereto by the Issuing Lender), or any
payment of interest on account thereof, the Issuing Lender will
distribute to such L/C Participant its pro rata share thereof; provided,
however, that in the event that any such payment received by the Issuing
Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse the Issuing Lender on each date on which the Issuing
Lender notifies the Borrower of the date and amount of a draft presented
under any Letter of Credit and paid by the Issuing Lender for the amount
of (a) such draft so paid and (b) any taxes, fees, charges or other costs
or expenses incurred by the Issuing Lender in connection with such
payment. Each such payment shall be made to the Issuing Lender at its
address for notices specified herein in lawful money of the United States
of America and in immediately available funds. Interest shall be payable
on any and all amounts remaining unpaid by the Borrower under this
Section from the date such amounts become payable (whether at stated
maturity, by acceleration or otherwise) until payment in full at the rate
set forth in (i) until the second Business Day following the date of the
applicable drawing, Section 2.14(b) and (ii) thereafter, Section 2.14(c).
3.6 Obligations Absolute. The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment that the Borrower may have or have had against the Issuing
Lender, any beneficiary of a Letter of Credit or any other Person. The
Borrower also agrees with the Issuing Lender that the Issuing Lender
shall not be responsible for, and the Borrower's Reimbursement
Obligations under Section 3.5 shall not be affected by, among other
things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged (subject to the immediately succeeding sentence), or
any dispute between or among the Borrower and any beneficiary of any
Letter of Credit or any other party to which such Letter of Credit may be
transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing
Lender shall not be liable for any error, omission, interruption or delay
in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors
or omissions resulting from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted
by the Issuing Lender under or in connection with any Letter of Credit or
the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards or
care specified in the Uniform Commercial Code of the State of New York,
shall be binding on the Borrower and shall not result in any liability of
the Issuing Lender to the Borrower.
<PAGE>
3.7 Letter of Credit Payments. If any draft shall be
presented for payment under any Letter of Credit, the Issuing Lender
shall promptly notify the Borrower of the date and amount thereof. The
responsibility of the Issuing Lender to the Borrower in connection with
any draft presented for payment under any Letter of Credit shall, in
addition to any payment obligation expressly provided for in such Letter
of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such
presentment are substantially in conformity with such Letter of Credit.
3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the
provisions of this Section 3, the provisions of this Section 3 shall
apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Loans and issue or participate in the
Letters of Credit, the Borrower hereby represents and warrants to the
Administrative Agent and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at June 30, 1998 (including the notes thereto) (the "Pro
Forma Balance Sheet"), copies of which have heretofore been furnished to
each Lender, has been prepared giving effect (as if such events had
occurred on such date) to (i) the consummation of the Newell Acquisition
and the Tenex Acquisition, (ii) the Loans to be made on the Closing Date
and the use of proceeds thereof and (iii) the payment of fees and
expenses in connection with the foregoing. The Pro Forma Balance Sheet
has been prepared based upon good faith estimates and assumptions
believed by management of the Borrower to be reasonable as of the date of
delivery thereof, and presents fairly on a pro forma basis the estimated
financial position of Borrower and its consolidated Subsidiaries as at
June 30, 1998, assuming that the events specified in the preceding
sentence had actually occurred at such date.
<PAGE>
(b) The audited consolidated balance sheets of the Borrower as
at December 28, 1996 and December 27, 1997, and the related audited
consolidated statements of income and of cash flows for the fiscal years
ended on such dates and the unaudited consolidating balance sheet of the
Borrower as at December 27, 1997, and the related unaudited consolidating
statement of income and of cash flows for the fiscal year ended on such
date, in each case, reported on, in the case of the consolidated
statements, by and accompanied by an unqualified report from Arthur
Andersen LLP, present fairly the consolidated and consolidating financial
condition of the Borrower as at such date, and the consolidated and
consolidating results of its operations and its consolidated and
consolidating cash flows for the respective fiscal years then ended. The
unaudited consolidated and consolidating balance sheets of the Borrower
as at June 30, 1998, and the related unaudited consolidated and
consolidating statements of income and cash flows for the twenty-six-week
period ended on such date, present fairly the consolidated and
consolidating financial condition of the Borrower as at such date and the
consolidated and consolidating results of its operations and its
consolidated and consolidating cash flows for the twenty-six-week period
then ended (subject to normal year-end audit adjustments). All such
financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned
firm of accountants and disclosed therein). Except as set forth in
Schedule 4.1(b), the Borrower and its Subsidiaries do not have any
material Guarantee Obligations, contingent liabilities or liabilities for
taxes, or any long-term leases or unusual forward or long-term
commitments, including, without limitation, any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial
statements referred to in this paragraph. During the period from
December 27, 1997 to and including the date hereof there has been no
Disposition by the Borrower of any material part of its business or
property.
4.2 No Change. Since December 27, 1997 there has been no
development or event that has had or could reasonably be expected to have
a Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of the
Borrower and its Subsidiaries (a) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization,
(b) has the corporate power and authority, and the legal right, to own
and operate its property, to lease the property it operates as lessee and
to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, except where the
failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect, and (d) is in compliance with all Requirements
of Law except to the extent that the failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
<PAGE>
4.4 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority, and the legal
right, to make, deliver and perform the Loan Documents to which it is a
party and, in the case of the Borrower, to borrow hereunder. Each Loan
Party has taken all necessary corporate action to authorize the
execution, delivery and performance of the Loan Documents to which it is
a party and, in the case of the Borrower, to authorize the borrowings on
the terms and conditions of this Agreement. No consent or authorization
of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with
the Newell Acquisition and the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of this
Agreement or any of the Loan Documents, except (i) consents,
authorizations, filings and notices described in Schedule 4.4, which
consents, authorizations, filings and notices have been obtained or made
and are in full force and effect and (ii) the filings referred to in
Section 4.19. Each Loan Document has been duly executed and delivered on
behalf of each Loan Party party thereto. This Agreement constitutes, and
each other Loan Document upon execution will constitute, a legal, valid
and binding obligation of each Loan Party party thereto, enforceable
against each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of
this Agreement and the other Loan Documents, the issuance of Letters of
Credit, the borrowings hereunder and the use of the proceeds thereof will
not violate any Requirement of Law or any Contractual Obligation of the
Borrower or any of its Subsidiaries and will not result in, or require,
the creation or imposition of any Lien on any of their respective
properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Security
Documents).
4.6 Litigation. Except as set forth on Schedule 4.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or
against any of their respective properties or revenues (a) with respect
to any of the Loan Documents or any of the transactions contemplated
hereby or thereby, or (b) that could reasonably be expected to have a
Material Adverse Effect.
4.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect that could reasonably be expected
to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
4.8 Ownership of Property; Liens. Each of the Borrower and
its Subsidiaries has title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other material property, and none of such
property is subject to any Lien except as permitted by Section 7.3.
<PAGE>
4.9 Intellectual Property. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all Intellectual Property
necessary for the conduct of its business as currently conducted. No
material claim has been asserted and is pending by any Person challenging
or questioning the use of any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does the Borrower know of
any valid basis for any such claim. To the knowledge of the Borrower,
the use of Intellectual Property by the Borrower and its Subsidiaries
does not infringe on the rights of any Person in any material respect.
4.10 Taxes. Each of the Borrower and each of its Subsidiaries
has filed or caused to be filed all Federal, state and other material tax
returns that are required to be filed and has paid all taxes shown to be
due and payable on said returns or on any assessments made against it or
any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (in each case,
other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of
the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being
asserted, with respect to any such tax, fee or other charge.
4.11 Federal Regulations. No part of the proceeds of any
Loans will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under
Regulation U as now and from time to time hereafter in effect or for any
purpose that violates the provisions of the Regulations of the Board. If
requested by any Lender or the Administrative Agent, the Borrower will
furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1
referred to in Regulation U.
4.12 Labor Matters. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect: (a) there are
no strikes or other labor disputes against the Borrower or any of its
Subsidiaries pending or, to the knowledge of the Borrower, threatened;
(b) hours worked by and payment made to employees of the Borrower and its
Subsidiaries have not been in violation of the Fair Labor Standards Act
or any other applicable Requirement of Law dealing with such matters; (c)
all payments due from the Borrower or any of its Subsidiaries on account
of employee health and welfare insurance have been paid or accrued as a
liability on the books of the Borrower or the relevant Subsidiary.
<PAGE>
4.13 ERISA. Except as set forth on Schedule 4.13, neither a
Reportable Event nor an "accumulated funding deficiency" (within the
meaning of Section 412 of the Code or Section 302 of ERISA) has occurred
during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each
Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. Except as set forth on Schedule 4.13, no
termination of a Single Employer Plan has occurred, and no Lien in favor
of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan
(based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation
is made or deemed made, exceed the value of the assets of such Plan
allocable to such accrued benefits by a material amount. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan that has resulted or could
reasonably be expected to result in a material liability under ERISA, and
neither the Borrower nor any Commonly Controlled Entity would become
subject to any material liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made. No such
Multiemployer Plan is in Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. No Loan Party
is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as
amended. No Loan Party is subject to regulation under any Requirement of
Law that limits its ability to incur Indebtedness.
4.15 Subsidiaries. The Subsidiaries listed on Schedule 4.15
constitute all the Subsidiaries of the Borrower at the date hereof.
4.16 Use of Proceeds. The proceeds of the Term Loans shall be
used to finance a portion of the Newell Acquisition and to pay related
fees and expenses. The proceeds of the Revolving Loans and the Swingline
Loans, and the Letters of Credit, shall be used to finance a portion of
the Newell Acquisition and the Tenex Acquisition, to finance working
capital needs and for general corporate purposes (including Permitted
Acquisitions).
4.17 Environmental Matters. Except as, in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect
and except as set forth on Schedule 4.17:
(a) the facilities and properties owned, leased or operated by
the Borrower or any of its Subsidiaries (the "Properties") do not
contain, and have not previously contained, any Materials of
Environmental Concern in amounts or concentrations or under
circumstances that constitute or constituted a violation of, or
could give rise to liability under, any Environmental Law;
<PAGE>
(b) neither the Borrower nor any of its Subsidiaries has
received or is aware of any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the business operated by the
Borrower or any of its Subsidiaries (the "Business"), nor does the
Borrower have knowledge or reason to believe that any such notice
will be received or is being threatened;
(c) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or
in a manner or to a location that could give rise to liability
under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of
at, on or under any of the Properties in violation of, or in a
manner that could give rise to liability under, any applicable
Environmental Law;
(d) no judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened,
under any Environmental Law to which the Borrower or any Subsidiary
is or will be named as a party with respect to the Properties or the
Business, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business;
(e) there has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of the Borrower or any
Subsidiary in connection with the Properties or otherwise in
connection with the Business, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws;
(f) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with
all applicable Environmental Laws; and
(g) neither the Borrower nor any of its Subsidiaries has
assumed any liability of any other Person under Environmental Laws.
4.18 Accuracy of Information, etc. No statement or
information contained in this Agreement, any other Loan Document, the
Confidential Information Memorandum or any other document, certificate or
statement furnished to the Administrative Agent or the Lenders or any of
them, by or on behalf of any Loan Party for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or
certificate was so furnished (or, in the case of the Confidential
Information Memorandum, as of the Closing Date), any untrue statement of
a material fact or omitted to state a material fact necessary to make the
statements contained herein or therein not misleading. The projections
and pro forma financial information contained in the materials referenced
above are based upon good faith estimates and assumptions believed by
management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates
to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may
differ from the projected results set forth therein by a material amount.
<PAGE>
4.19 Security Documents. (a) The Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent,
for the benefit of the Lenders, a legal, valid and enforceable security
interest in the Collateral described therein and proceeds thereof. In
the case of the Pledged Stock described in the Guarantee and Collateral
Agreement, when stock certificates representing such Pledged Stock are
delivered to the Administrative Agent, and in the case of the other
Collateral described in the Guarantee and Collateral Agreement, when
financing statements in appropriate form are filed in the offices
specified on Schedule 4.19(a), the Guarantee and Collateral Agreement
shall constitute a fully perfected Lien on, and security interest in, all
right, title and interest of the Loan Parties in such Collateral and the
proceeds thereof, as security for the Obligations (as defined in the
Guarantee and Collateral Agreement), in each case prior and superior in
right to any other Person other than the holders of the Liens permitted
pursuant to Section 7.3.
(b) Each of the Mortgages is effective to create in favor of
the Administrative Agent, for the benefit of the Lenders, a legal, valid
and enforceable Lien on the Mortgaged Properties described therein and
proceeds thereof, and when the Mortgages are filed in the offices
specified on Schedule 4.19(b), each such Mortgage shall constitute a
legal, valid and enforceable Lien on, and security interest in, all
right, title and interest of the Loan Parties in the Mortgaged Properties
and the proceeds thereof, as security for the Obligations (as defined in
the relevant Mortgage), in each case prior and superior in right to any
other Person other than the holders of the Liens permitted with respect
to such Mortgaged Properties pursuant to Section 7.3.
4.20 Solvency. Each Loan Party is, and after giving effect to
the Newell Acquisition and the Tenex Acquisition and the incurrence of
all Indebtedness and obligations being incurred in connection herewith
and therewith will be and will continue to be, Solvent.
4.21 Senior Indebtedness. The Obligations constitute "Senior
Indebtedness" of the Borrower under and as defined in the Senior
Subordinated Note Indenture. The obligations of each Subsidiary
Guarantor under the Guarantee and Collateral Agreement and of Prestige
Plastics, Inc. under the Guarantee constitute "Guarantor Senior
Indebtedness" of such Subsidiary Guarantor and Prestige Plastics, Inc.,
as the case may be, under and as defined in the Senior Subordinated Note
Indenture.
<PAGE>
4.22 Year 2000 Matters. Any reprogramming reasonably foreseen
to be necessary in accordance with customary business practices to permit
the proper functioning (but only to the extent that such proper
functioning would otherwise be impaired by the occurrence of the year
2000) in and following the year 2000 of computer systems and other
equipment containing embedded microchips, in either case owned or
operated by the Borrower or any of its Subsidiaries and the testing of
all such systems and other equipment as so reprogrammed, will be
completed by June 30, 1999 (or September 30, 1999 in the case of Tamor
Corporation). The Borrower will make reasonable inquiry of all Persons
the computer systems of which interface with the Borrower's computer
systems (other than those of any Lender or any immaterial customer or
vendor) with regard to such Person's year 2000 compliance. The Borrower
does not have actual knowledge that any of such Persons will not be year
2000 compliant. The Borrower does not have any actual knowledge that the
reasonably anticipated remaining costs to the Borrower and its
Subsidiaries for such reprogramming and testing and for the other
reasonably foreseeable consequences to them of any improper functioning
of other computer systems and equipment containing embedded microchips
due to the occurrence of the year 2000 could result in a Default or Event
of Default or to have a Material Adverse Effect. Except for any
reprogramming referred to above, the computer systems of the Borrower and
its Subsidiaries are and, with ordinary course upgrading and maintenance,
will continue for the term of this Agreement to be, sufficient for the
conduct of their business as currently conducted. The Borrower does not
make any representations other than as set forth above about any other
Person's year 2000 compliance.
4.23 Regulation H. No Mortgage encumbers improved real
property that is located in an area that has been identified by the
Secretary of Housing and Urban Development as an area having special
flood hazards and in which flood insurance has been made available under
the National Flood Insurance Act of 1968.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement
of each Lender to make the initial extension of credit requested to be
made by it is subject to the satisfaction, prior to or concurrently with
the making of such extension of credit on the Closing Date, of the
following conditions precedent:
(a) Credit Agreement; Guarantee and Collateral Agreement;
Guarantee. The Administrative Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of
the Borrower, (ii) the Guarantee and Collateral Agreement, executed
and delivered by a duly authorized officer of the Borrower and each
Subsidiary Guarantor and (iii) the Guarantee, executed and delivered
by a duly authorized officer of Prestige Plastics, Inc.
(b) Acquisitions. The Newell Acquisition and the Tenex
Acquisition shall have been consummated for an aggregate purchase
price not exceeding $100,000,000 (including related fees and
expenses) pursuant to the Purchase Agreements and on other terms and
conditions reasonably satisfactory to the Lenders, and no provision
of such purchase agreements shall have been waived, amended,
supplemented or otherwise modified without the consent of the
Lenders (other than any modifications which are not adverse to the
interests of the Lenders).
<PAGE>
(c) Pro Forma Balance Sheet; Financial Statements. The
Lenders shall have received (i) the Pro Forma Balance Sheet, (ii)
audited consolidated and unaudited consolidating financial
statements of the Borrower for the 1996 and 1997 fiscal years and
(iii) unaudited interim consolidated financial statements of the
Borrower for each fiscal quarterly period ended subsequent to the
date of the latest applicable financial statements delivered
pursuant to clause (ii) of this paragraph as to which such financial
statements are available, and such financial statements shall not,
in the reasonable judgment of the Lenders, reflect any material
adverse change in the consolidated financial condition of the
Borrower, as reflected in the financial statements or projections
contained in the Confidential Information Memorandum.
(d) Financial Information of Targets. The Lenders shall have
received and be reasonably satisfied with (i) the historical sales
data and cost projections of the Consumer Plastic Storage Product
Lines of Tenex Corporation and (ii) audited financial statements of
Plastics, Inc. for each of its three most recently ended fiscal
years.
(e) Approvals. All governmental and third party approvals
(including landlords' and other consents) necessary or, in the
discretion of the Administrative Agent, advisable in connection with
the Newell Acquisition, the continuing operations of the Borrower
and its Subsidiaries and the transactions contemplated hereby shall
have been obtained and be in full force and effect, and all
applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority that would
restrain, prevent or otherwise impose adverse conditions on the
Newell Acquisition or the financing contemplated hereby.
(f) Lien Searches. The Administrative Agent shall have
received the results of a recent lien search in each of the
jurisdictions where assets to be acquired in the Newell Acquisition
and the Tenex Acquisition are located, and such search shall reveal
no liens on any of such assets except for liens permitted by Section
7.3.
(g) Environmental Audit. To the extent any such audit is
received by the Borrower in connection with the Newell Acquisition,
the Administrative Agent shall have received a reasonably
satisfactory environmental audit with respect to the real properties
owned or leased by Plastics, Inc., or if such environmental audits
are not so received by the Borrower, the Borrower shall benefit from
environmental indemnities from Plastics, Inc. and Newell Co. which
are satisfactory to the Administrative Agent.
(h) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each
Loan Party, dated the Closing Date, substantially in the form of
Exhibit C, with appropriate insertions and attachments.
(i) Solvency Certificate. The Lenders shall have received a
certificate of the chief financial officer of the Borrower
certifying the solvency of the Borrower and its Subsidiaries after
giving effect to the Newell Acquisition, the Loans to be made on the
Closing Date and the other transactions contemplated hereby or
thereby.
<PAGE>
(j) Compliance Certificate. The Lenders shall have received a
certificate of the chief financial officer of the Borrower (with
supporting calculations) detailing compliance by the Borrower with
the financial covenants contained in Section 7.1 (in the manner set
forth in Section 7.8(g)) after giving effect to the Newell
Acquisition, the Loans to be made on the Closing Date and the other
transactions contemplated hereby or thereby, as well as detailing
compliance by the Borrower with the other items described in Section
7.8(g) with respect to the Newell Acquisition.
(k) Legal Opinions. The Administrative Agent shall have
received the following executed legal opinions:
(i) the legal opinion of Sonnenschein Nath & Rosenthal,
counsel to the Borrower and its Subsidiaries, substantially in
the form of Exhibit F; and
(ii) the legal opinion of local counsel in each
jurisdiction where a Mortgaged Property is located and of such
other special and local counsel, in each case, as may be
required by the Administrative Agent.
Each such legal opinion shall cover such other matters incident to
the transactions contemplated by this Agreement as the
Administrative Agent may reasonably require.
(l) Pledged Stock; Stock Powers. The Administrative Agent
shall have received the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral
Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the
pledgor thereof.
(m) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code
financing statement) required by the Security Documents or under law
or reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lenders, a perfected
Lien on the Collateral described therein, prior and superior in
right to any other Person (other than with respect to Liens
expressly permitted by Section 7.3), shall be in proper form for
filing, registration or recordation.
(n) Mortgages, etc. (i) The Administrative Agent shall have
received a Mortgage with respect to each Mortgaged Property,
executed and delivered by a duly authorized officer of each party
thereto.
<PAGE>
(ii) If requested by the Administrative Agent, the
Administrative Agent shall have received, and the title
insurance company issuing the policy referred to in clause
(iii) below (the "Title Insurance Company") shall have
received, maps or plats of an as-built survey of the sites of
the Mortgaged Properties certified to the Administrative Agent
(if the Administrative Agent determines such certification to
it is reasonably practicable) and the Title Insurance Company
in a manner satisfactory to them, dated a date satisfactory to
the Administrative Agent and the Title Insurance Company by an
independent professional licensed land surveyor satisfactory to
the Administrative Agent and the Title Insurance Company, which
maps or plats and the surveys on which they are based shall be
made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and
adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without
limiting the generality of the foregoing, there shall be
surveyed and shown on such maps, plats or surveys the
following: (A) the locations on such sites of all the
buildings, structures and other improvements and the
established building setback lines; (B) the lines of streets
abutting the sites and width thereof; (C) all access and other
easements appurtenant to the sites; (D) all roadways, paths,
driveways, easements, encroachments and overhanging projections
and similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the sites or otherwise
known to the surveyor; (E) any encroachments on any adjoining
property by the building structures and improvements on the
sites; (F) if the site is described as being on a filed map, a
legend relating the survey to said map; and (G) the flood zone
designations, if any, in which the Mortgaged Properties are
located.
(iii) The Administrative Agent shall have received in
respect of each Mortgaged Property a mortgagee's title
insurance policy (or policies) or marked up unconditional
binder for such insurance. Each such policy shall (A) be in an
amount satisfactory to the Administrative Agent; (B) be issued
at ordinary rates; (C) insure that the Mortgage insured thereby
creates a valid first Lien on such Mortgaged Property free and
clear of all defects and encumbrances, except as disclosed
therein; (D) name the Administrative Agent for the benefit of
the Lenders as the insured thereunder; (E) be in the form of
ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or
equivalent policies); (F) contain such endorsements and
affirmative coverage as the Administrative Agent may reasonably
request and (G) be issued by title companies satisfactory to
the Administrative Agent (including any such title companies
acting as co-insurers or reinsurers, at the option of the
Administrative Agent). The Administrative Agent shall have
received evidence satisfactory to it that all premiums in
respect of each such policy, all charges for mortgage recording
tax, and all related expenses, if any, have been paid.
<PAGE>
(iv) If requested by the Administrative Agent, the
Administrative Agent shall have received (A) a policy of flood
insurance that (1) covers any parcel of improved real property
that is encumbered by any Mortgage, (2) is written in an amount
not less than the outstanding principal amount of the
indebtedness secured by such Mortgage that is reasonably
allocable to such real property or the maximum limit of
coverage made available with respect to the particular type of
property under the National Flood Insurance Act of 1968,
whichever is less, and (3) has a term ending not later than the
maturity of the Indebtedness secured by such Mortgage and (B)
confirmation that the Borrower has received the notice required
pursuant to Section 208(e)(3) of Regulation H of the Board.
(v) The Administrative Agent shall have received a copy
of all recorded documents referred to, or listed as exceptions
to title in, the title policy or policies referred to in clause
(iii) above and a copy of all other material documents
affecting the Mortgaged Properties.
(o) Fees. The Lenders and the Administrative Agent shall have
received all fees required to be paid, and all expenses for which
invoices have been presented, on or before the Closing Date.
5.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any extension of credit requested to be made by it on
any date (including, without limitation, its initial extension of credit)
is subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant
to the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date
except to the extent any such representation or warranty relates
specifically to an earlier date, in which case such representation
or warranty shall be true and correct in all material respects on
and as of such earlier date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to
the extensions of credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the
Borrower hereunder shall constitute a representation and warranty by the
Borrower as of the date of such extension of credit that the conditions
contained in this Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or
other amount is owing to any Lender or the Administrative Agent
hereunder, the Borrower shall and shall cause each of its Subsidiaries
to:
6.1 Financial Statements. Furnish to the Administrative Agent
and each Lender:
<PAGE>
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of the
audited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related
audited consolidated statements of income and of cash flows for such
year, setting forth in each case in comparative form the figures for
the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the
scope of the audit, by Arthur Andersen LLP or other independent
certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of
each fiscal year of the Borrower, the unaudited consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the
end of such quarter and the related unaudited consolidated
statements of income and of cash flows for such quarter and the
portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for the previous
year, certified by a Responsible Officer as being fairly stated in
all material respects (subject to normal year-end audit
adjustments).
All such financial statements shall be complete and correct in all
material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by such
accountants or officer, as the case may be, and disclosed therein).
6.2 Certificates; Other Information. Furnish to the
Administrative Agent and each Lender (or, in the case of clause (f), to
the relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default, except as
specified in such certificate;
<PAGE>
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer
stating that such Responsible Officer has obtained no knowledge of
any Default or Event of Default during the period covered by such
financial statements except as specified in such certificate
(including, in the case of any such Default or Event of Default, an
explanation of the proposed actions the Borrower intends to take
with respect thereto), (ii) a Compliance Certificate containing all
information necessary for determining compliance by the Borrower and
its Subsidiaries with the provisions of this Agreement referred to
therein as of the last day of the fiscal quarter or fiscal year of
the Borrower, as the case may be, (iii) to the extent not previously
disclosed to the Administrative Agent, a listing of the locations
within the United States as to which UCC financing statements in
favor of the Administrative Agent have not been filed and in which
any Loan Party keeps inventory or equipment with an aggregate value
for all such locations and all such Loan Parties in excess of
$500,000, (iv) in the case of annual financial statements, a report
of all Intellectual Property owned by any Loan Party and (v) in the
case of quarterly financial statements, a report of any material
Intellectual Property acquired by any Loan Party since the date of
the most recent list delivered pursuant to this clause (v) (or, in
the case of the first such list so delivered, since the Closing
Date);
(c) as soon as available, and in any event no later than 45
days after the end of each fiscal year of the Borrower, a detailed
consolidated budget for the following fiscal year (including a
projected consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of the following fiscal year, and the
related consolidated statements of projected cash flow, projected
changes in financial position and projected income and a statement
and explanation of the principal assumptions underlying such
projections), and, as soon as available, significant revisions, if
any, of such budget and projections with respect to such fiscal year
(collectively, the "Projections"), which Projections shall in each
case be accompanied by a certificate of a Responsible Officer
stating that such Projections are based on reasonable estimates,
information and assumptions and that such Responsible Officer has no
reason to believe that such Projections are incorrect or misleading
in any material respect;
(d) no later than 10 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed
amendment, supplement, waiver or other modification with respect to
the Senior Subordinated Note Indenture (other than any such
amendments or supplements which are administrative or corrective in
nature, in which case final copies of which shall be delivered
within five days after the effectiveness thereof);
(e) within five days after the same are sent, copies of all
financial statements and reports that the Borrower sends to the
holders of any class of its debt securities or public equity
securities and, promptly after the same are filed, copies of all
financial statements and reports that the Borrower may make to, or
file with, the Securities and Exchange Commission or any successor
or analogous Governmental Authority; and
<PAGE>
(f) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the
case may be, all its material obligations of whatever nature, except
where the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on the books of the Borrower or
its Subsidiaries, as the case may be.
6.4 Maintenance of Existence; Compliance. (_) (a) (i)
Continue to engage in business of the same general type as now conducted
by it, (ii) preserve, renew and keep in full force and effect its
corporate existence and (iii) take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal
conduct of its business, except, in each case, as otherwise permitted by
Section 7.4 or in connection with the dissolution of any Subsidiary with
de minimis assets and except, in the case of clause (iii) above, to the
extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and(_) (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to
comply therewith could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted and (b) maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but
including in any event public liability, product liability and business
interruption) as are usually insured against in the same general area by
companies engaged in the same or a similar business.
6.6 Inspection of Property; Books and Records; Discussions.
(a) Keep proper books of records and account in which proper entries in
conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and
(b) permit, upon two Business Days' prior notice to the chief financial
officer or other Responsible Officer of the Borrower (except when a
Default or Event of Default has occurred and is continuing, in which
case, no notice shall be required), representatives of the Administrative
Agent or any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired and to discuss
the business, operations, properties and financial and other condition of
the Borrower and its Subsidiaries with officers and employees of the
Borrower and its Subsidiaries and with its independent certified public
accountants; provided that all such visits and inspections shall be
coordinated through the Administrative Agent; provided, further, that
such visits and inspections (i) shall be at the expense of the Borrower
(A) upon the occurrence and during the continuance of an Event of Default
and (B) in respect of up to two visits a year by the Administrative Agent
and (ii) shall otherwise be at the expense of the Administrative Agent or
the relevant Lender, as the case may be.
<PAGE>
6.7 Notices. Promptly give notice to the Administrative Agent
and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding that may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority, that in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have
a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any
of its Subsidiaries in which the amount involved is $1,000,000 or
more and not believed by the Borrower to be covered by insurance or
in which injunctive or similar relief is sought;
(d) (i) any release or discharge by the Borrower or any
Subsidiary of any Materials of Environmental Concern required to be
reported under Environmental Laws to any Governmental Authority;
(ii) any condition, circumstance, occurrence or event that could
result in a material liability under Environmental Laws or could
result in the imposition of any lien or other restriction on the
title, ownership or transferability of any Property; and (iii) any
proposed action to be taken by the Borrower or any Subsidiary that
could subject the Borrower or any Subsidiary to any additional or
different requirements or liabilities under Environmental Law that
could reasonably be expected to result in a Material Adverse Effect;
(e) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any
withdrawal from, or the termination, Reorganization or Insolvency
of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or the Borrower or any
Commonly Controlled Entity or any Multiemployer Plan with respect to
the withdrawal from, or the termination, Reorganization or
Insolvency of, any Plan; and
(f) any development or event that has had or could reasonably
be expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a
statement of a Responsible Officer setting forth details of the
occurrence referred to therein and stating what action the Borrower or
the relevant Subsidiary proposes to take with respect thereto.
6.8 Environmental Laws. Except as could not in the aggregate
reasonably be expected to result in a Material Adverse Effect:
<PAGE>
(a) comply with, and use reasonable efforts to ensure
compliance by all tenants and subtenants, if any, with, all
applicable Environmental Laws, and obtain and comply with and
maintain, and use reasonable efforts to ensure that all tenants and
subtenants obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws; and
(b) conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required
under Environmental Laws and promptly comply with all lawful orders
and directives of all Governmental Authorities regarding
Environmental Laws.
6.9 Additional Collateral, etc. (a) With respect to any
property acquired after the Closing Date by the Borrower or any of its
Subsidiaries (other than (x) any property described in paragraph (b), (c)
or (d) below and (y) any property subject to a Lien expressly permitted
by Section 7.3(g) or 7.3(i)) as to which the Administrative Agent, for
the benefit of the Lenders, does not have a perfected Lien, promptly (i)
execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement or such other documents as the
Administrative Agent deems necessary or reasonably advisable to grant to
the Administrative Agent, for the benefit of the Lenders, a security
interest in such property and (ii) take all actions necessary or
reasonably advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in
such property, subject to the Liens permitted pursuant to Section 7.3,
including without limitation, the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may otherwise be
reasonably requested by the Administrative Agent.
(b) With respect to any fee interest in any real property
having a value (together with improvements thereof) of at least
$1,000,000 acquired after the Closing Date by the Borrower or any of its
Subsidiaries (other than any such real property subject to a Lien
expressly permitted by Section 7.3(g) or 7.3(i)), promptly (i) execute
and deliver a first priority Mortgage, subject to the Liens permitted
pursuant to Section 7.3, in favor of the Administrative Agent, for the
benefit of the Lenders, covering such real property, (ii) if requested by
the Administrative Agent, provide the Lenders with (x) title and extended
coverage insurance covering such real property in an amount at least
equal to the purchase price of such real property (or such other amount
as shall be reasonably specified by the Administrative Agent) as well as,
to the extent reasonably practicable in the judgment of the
Administrative Agent, a current ALTA survey thereof, together with a
surveyor's certificate and (y) any consents or estoppels reasonably
deemed necessary or advisable by the Administrative Agent in connection
with such mortgage or deed of trust, each of the foregoing in form and
substance reasonably satisfactory to the Administrative Agent and (iii)
if requested by the Administrative Agent, deliver to the Administrative
Agent legal opinions relating to the matters described above, which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
<PAGE>
(c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by the
Borrower (which, for the purposes of this paragraph (c), shall include
any existing Subsidiary that ceases to be an Excluded Foreign
Subsidiary), the Borrower or any of its Subsidiaries, promptly (i)
execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement as the Administrative Agent deems
necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in
the Capital Stock of such new Subsidiary that is owned by the Borrower or
any of its Subsidiaries, (ii) deliver to the Administrative Agent the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of
the Borrower or such Subsidiary, as the case may be, (iii) cause such new
Subsidiary (A) to become a party to the Guarantee and Collateral
Agreement and (B) to take such actions necessary or reasonably advisable
to grant to the Administrative Agent for the benefit of the Lenders a
perfected first priority security interest, subject to the Liens
permitted pursuant to Section 7.3, in the Collateral described in the
Guarantee and Collateral Agreement with respect to such new Subsidiary,
including, without limitation, the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be requested by
the Administrative Agent, and (iv) if reasonably requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form
and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative
Agent such amendments to the Guarantee and Collateral Agreement as the
Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in the Capital Stock of such new Subsidiary
that is owned by the Borrower or any of its Subsidiaries (provided that
in no event shall more than 65% of the total outstanding Capital Stock of
any such new Subsidiary be required to be so pledged or, following any
change in applicable law, such greater or lesser percentage which would
not result in adverse tax consequences), (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a
duly authorized officer of the Borrower or such Subsidiary, as the case
may be, and take such other action as may be necessary or, in the opinion
of the Administrative Agent, desirable to perfect the Administrative
Agent's security interest therein, and (iii) if reasonably requested by
the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or
other amount is owing to any Lender or the Administrative Agent
hereunder, the Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:
<PAGE>
7.1 Financial Condition Covenants.
(a) Consolidated Total Leverage Ratio. Permit the
Consolidated Total Leverage Ratio as at the last day of any period of
four consecutive fiscal quarters of the Borrower ending on or about any
date occurring during the periods set forth below to exceed the ratio set
forth below opposite such period:
Consolidated Total
Period Leverage Ratio
June 30, 1998 - June 30, 1999 5.75 to 1.00
September 30, 1999 - June 30, 2000 5.50 to 1.00
September 30, 2000 - June 30, 2001 5.25 to 1.00
September 30, 2001 - June 30, 2002 5.00 to 1.00
September 30, 2002 - June 30, 2003 4.75 to 1.00
September 30, 2003 - September 30, 2004 4.50 to 1.00
(b) Consolidated Senior Leverage Ratio. Permit the
Consolidated Senior Leverage Ratio as at the last day of any period of
four consecutive fiscal quarters of the Borrower ending on or about any
date occurring during the periods set forth below to exceed the ratio set
forth below opposite such period:
Consolidated Senior
Period Leverage Ratio
June 30, 1998 - June 30, 2000 3.00 to 1.00
September 30, 2000 - June 30, 2002 2.75 to 1.00
September 30, 2002 - September 30, 2004 2.50 to 1.00
(c) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive
fiscal quarters of the Borrower ending on or about any date occurring
during the periods set forth below to be less than the ratio set forth
below opposite such period:
Consolidated Interest
Period Coverage Ratio
June 30, 1998 - June 30, 1999 1.75 to 1.00
September 30, 1999 - June 30, 2001 2.00 to 1.00
September 30, 2001 - June 30, 2002 2.25 to 1.00
September 30, 2002 - September 30, 2004 2.50 to 1.00
7.2 Indebtedness and Preferred Stock. Create, incur, assume
or suffer to exist (in each case, to "Incur") any Indebtedness or issue
any Preferred Stock, except:
(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any
Wholly Owned Subsidiary Guarantor to the Borrower or any other
Subsidiary;
<PAGE>
(c) Indebtedness incurred to finance, contemporaneously
therewith, the acquisition of fixed or capital assets and Capital
Lease Obligations in an aggregate principal amount not to exceed
$7,500,000 at any one time outstanding;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals or
extensions thereof (without increasing, or shortening the maturity
of, the principal amount thereof);
(e) Guarantee Obligations Incurred in the ordinary course of
business by the Borrower or any of its Subsidiaries of obligations
of any Wholly Owned Subsidiary Guarantor;
(f) (i) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed
$125,000,000 and (ii) Guarantee Obligations of any Subsidiary
Guarantor in respect of such Indebtedness, provided that such
Guarantee Obligations are subordinated to the same extent as the
obligations of the Borrower in respect of the Senior Subordinated
Notes;
(g) Indebtedness of the Borrower or any of its Subsidiaries
Incurred to finance the Purchase Price of any Permitted Acquisition
permitted by Section 7.8(g) (including, without limitation any
assumed Indebtedness or any Indebtedness of a Subsidiary acquired in
any such Permitted Acquisition so long as the Borrower complies with
the provisions of Section 6.9(c)), in an aggregate principal amount
(for the Borrower and all Subsidiaries) not to exceed $7,500,000 at
any one time outstanding, provided that such Indebtedness is
Incurred substantially simultaneously with such Permitted
Acquisition;
(h) the Borrower may issue Preferred Stock so long as such
Preferred Stock is not mandatorily redeemable by the Borrower and is
not convertible into debt obligations of the Borrower or any of its
Subsidiaries, in each case, during the term of this Agreement, the
dividends payable with respect thereto would not be in violation of
Section 7.9, and is otherwise on terms and conditions satisfactory
to the Administrative Agent; and
(i) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and
all Subsidiaries) not to exceed $5,000,000 at any one time
outstanding.
7.3 Liens. Create, incur, assume or suffer to exist any Lien
upon any of its property or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes, assessments and other governmental
charges not yet due or that are being contested in good faith by
appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
<PAGE>
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business that, in the aggregate, are not substantial in amount and
that do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance, social security and other
similar legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in
the aggregate, are not substantial in amount and that do not in any
case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule
7.3(f), securing Indebtedness permitted by Section 7.2(d), provided
that no such Lien is spread to cover any additional property after
the Closing Date and that the principal amount of Indebtedness
secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(c) (and Liens associated
with any immaterial intangibles related to the assets financed with
such Indebtedness), provided that (i) such Liens shall be created
substantially simultaneously with the acquisition or lease of the
assets financed thereby, (ii) such Liens do not at any time encumber
any property other than the property financed by such Indebtedness
and (iii) the principal amount of Indebtedness secured thereby is
not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered
into by the Borrower or any other Subsidiary in the ordinary course
of its business and covering only the assets so leased;
(j) deposits of money securing statutory obligations of the
Borrower or any Subsidiary;
(k) Liens arising by reason of any judgment, decree or order
of any court or other Governmental Authority, if appropriate legal
proceedings which may have been duly initiated for the review of
such judgment, decree or order, are being diligently prosecuted and
shall not have been finally terminated or the period within which
such proceedings may be initiated shall not have expired and the
amount of all such judgments, decrees and orders are in an aggregate
amount not to exceed $1,000,000 at any one time outstanding;
<PAGE>
(l) deposits securing, or in lieu of, surety, appeal or
customs bonds in proceedings to which the Borrower or any Subsidiary
is a party;
(m) cash deposits to secure the performance of the Borrower
under any hedging agreements with respect to resin in the ordinary
course of business for legitimate hedging purposes; and
(n) Liens not otherwise permitted by this Section 7.3 so long
as the aggregate outstanding principal amount of the obligations
secured thereby does not exceed (as to the Borrower and all
Subsidiaries) $2,500,000 at any one time.
7.4 Fundamental Changes. Enter into any merger, consolidation
or amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of
its property or business, except:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into
any Wholly Owned Subsidiary Guarantor or into any Person which
contemporaneously with such merger or consolidation is to become a
Wholly Owned Subsidiary Guarantor (provided that the Wholly Owned
Subsidiary Guarantor shall be the continuing or surviving
corporation); and
(b) any Subsidiary of the Borrower may Dispose of any or all
of its assets (upon voluntary liquidation or otherwise) to the
Borrower or any Wholly Owned Subsidiary Guarantor or to the extent
permitted by Section 7.5.
7.5 Disposition of Property. Dispose of any of its property
(including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock
to any Person, except:
(a) the Disposition of obsolete or worn out property in the
ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to
the Borrower or any Wholly Owned Subsidiary Guarantor;
(e) the Dispositions set forth on Schedule 7.5; and
(f) the Disposition of other property having a fair market
value not to exceed $10,000,000 in the aggregate during the term of
this Agreement.
<PAGE>
7.6 Restricted Payments. Declare or pay any dividend (other
than dividends payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart assets for
a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any Capital Stock of the
Borrower or any Subsidiary, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower or any
Subsidiary (collectively, "Restricted Payments"); provided, that (i) any
Subsidiary may make Restricted Payments to the Borrower or any Wholly
Owned Subsidiary Guarantor, (ii) the Borrower may repurchase shares of
its common stock or rights, options or units in respect thereof, from its
officers and directors for an aggregate purchase price not to exceed
$1,000,000 in any fiscal year, (iii) so long as no Default or Event of
Default has occurred and is continuing, the Borrower may, at any time
after January 1, 1999, otherwise repurchase shares of its common stock so
long as (A) there are no Revolving Extensions of Credit outstanding at
the time of such repurchase (other than outstanding L/C Obligations which
have not become Reimbursement Obligations) and (B) after giving effect to
such repurchase, Consolidated Net Worth at such time shall be an amount
at least equal to the sum of (x) $52,000,000, (y) the aggregate amount of
any Preferred Stock permitted to be issued pursuant to Section 7.2(h)
which has been issued prior to the date of such repurchase and (z) 25% of
the cumulative amount of any Consolidated Net Income since May 14, 1998
reflected on the financial statements of the Borrower which have been
delivered pursuant to Section 6.1(a) on or prior to the date of such
repurchase and (iv) so long as no Default or Event of Default has
occurred and is continuing, the Borrower may make Restricted Payments up
to $2,000,000 in any fiscal year with respect to Preferred Stock which
has been issued in accordance with Section 7.2(h).
7.7 Capital Expenditures. Make or commit to make (by way of
the acquisition of securities of a Person or otherwise) any Capital
Expenditure, except:
(a) Capital Expenditures of the Borrower and its Subsidiaries
in the ordinary course of business not exceeding in any fiscal year
the amount set forth below opposite such fiscal year:
Fiscal Year Amount
1998 $15,000,000
1999 $28,000,000
2000 $20,000,000
2001 $20,000,000
2002 $20,000,000
2003 $20,000,000
2004 $20,000,000
; provided, that (i) up to $5,000,000 of any such amount referred to
above, if not so expended in the fiscal year for which it is
permitted, may be carried over for expenditure in the next
succeeding fiscal year and (ii) Capital Expenditures made pursuant
to this clause (a) during any fiscal year shall be deemed made,
first, in respect of amounts carried over from the prior fiscal year
pursuant to subclause (i) above and, second, in respect of amounts
permitted for such fiscal year as provided above; and
(b) Newell Facility CapEx during fiscal years 1998 and 1999 in
an aggregate amount not to exceed $5,250,000.
<PAGE>
7.8 Investments. Make any advance, loan, extension of credit
(by way of guaranty or otherwise) or capital contribution to, or purchase
any Capital Stock, bonds, notes, debentures or other securities of, or
any assets constituting all or a material part of a business unit of, or
make any other investment in, any Person (all of the foregoing,
"Investments"), except:
(a) extensions of trade credit in the ordinary course of
business;
(b) Investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees of the Borrower or any of
its Subsidiaries in the ordinary course of business (including,
without limitation, for travel, entertainment and relocation
expenses) in an aggregate amount for the Borrower and its
Subsidiaries not to exceed $100,000 with respect to any one employee
and $500,000 in the aggregate at any one time outstanding;
(e) Investments by the Borrower or any of its Subsidiaries in
the Borrower or any Person that, prior to such investment, is a
Wholly Owned Subsidiary Guarantor;
(f) (i) Investments by Seymour Housewares Corporation
("Seymour") in or to Seymour S.A. de C.V. (the "Mexican Subsidiary")
in such amounts as are necessary to fund the working capital
requirements of the Mexican Subsidiary in the ordinary course of
business and to maintain level capital expenditure requirements of
the Mexican Subsidiary and (ii) Investments by Seymour in the
Mexican Subsidiary in an aggregate amount not to exceed $3,000,000
to finance the expansion of the manufacturing facility of the
Mexican Subsidiary (including for the purchase of machinery and
equipment in connection with such expansion) (it being understood
that the expenditures in connection with such expansion shall, to
the extent they constitute "Capital Expenditures" pursuant to the
definition thereof, be deemed to be a utilization of the amounts of
Capital Expenditures permitted under Section 7.7(a)); provided, that
Seymour shall not permit cash or Cash Equivalents in excess of such
immediate needs to be accumulated or held by the Mexican Subsidiary;
<PAGE>
(g) any Acquisition of any Person or business, either through
the purchase of the assets (including the goodwill) of such Person
or business or the purchase of 100% of the Capital Stock of such
Person, if each of the following conditions is satisfied: (i) the
Borrower would have been in compliance as of the last day (such day
relating to any Acquisition, the "Related Test Date") of the most
recently completed fiscal quarter for which financial statements are
available, on a pro forma basis, with each of the financial
covenants contained in Section 7.1 as if such Acquisition had been
made on the first day of the Reference Period ending on the Related
Test Date for such Acquisition, and if the Purchase Price for such
Acquisition is greater than $10,000,000, the Borrower shall deliver
to the Lenders 10 days prior to the consummation of such Acquisition
a certificate of its chief financial officer, supported by detailed
calculations, demonstrating such pro forma compliance; (ii) no
Default or Event of Default has occurred and is continuing, or would
occur after giving effect to such Acquisition (including, without
limitation, under Section 7.1); (iii) such Acquisition shall be in
compliance with Section 7.14; and (iv) any such Acquisition shall
have been approved by the Board of Directors or such comparable
governing body of the Person or business being acquired (all such
Acquisitions, the "Permitted Acquisitions");
(h) the Newell Acquisition and the Tenex Acquisition on the
terms set forth in Section 5.1(b); and
(i) other Investments by the Borrower or any of its
Subsidiaries in an aggregate amount (for the Borrower and all
Subsidiaries) not to exceed $7,500,000 during the term of this
Agreement.
7.9 Optional Payments and Modifications of Debt Instruments,
etc. (a) Make or offer to make any payment, prepayment, repurchase or
redemption of or otherwise defease or segregate funds (any such event or
combination thereof referred to herein as a "Take-Out") with respect to
the Senior Subordinated Notes (other than scheduled interest payments
required to be made in cash); provided, that the Borrower may Take Out
the Senior Subordinated Notes with the proceeds of any issuance of
Capital Stock by the Borrower (to the extent the issuance of such Capital
Stock is permitted under Section 7.2), (b) amend, modify, waive or
otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of the Senior Subordinated
Notes (other than any such amendment, modification, waiver or other
change that (x) (i) would extend the maturity or reduce the amount of any
payment of principal thereof or reduce the rate or extend the date for
payment of interest thereon and (ii) does not involve the payment of a
consent fee or (y) is administrative or corrective in nature and is not
adverse to the interests of the Lenders) or (c) designate any
Indebtedness (other than obligations of the Loan Parties pursuant to the
Loan Documents) as "Designated Senior Indebtedness" for the purposes of
the Senior Subordinated Note Indenture.
<PAGE>
7.10 Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than the
Borrower or any Wholly Owned Subsidiary Guarantor) unless such
transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of business of the Borrower or such Subsidiary, as the
case may be, and (c) upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary, as the case may be, than it would obtain
in a comparable arm's length transaction with a Person that is not an
Affiliate; provided, that the Borrower and its Subsidiaries may (i) enter
into transactions with Selfix Europe L.L.C. in the ordinary course of
business and consistent in character with past practice, (ii) make loans
and advances to employees permitted under Section 7.8(d), (iii) pay
directors' fees to members of the Borrower's board of directors who are
not employees of the Borrower, (iv) issue securities in connection with
the Borrower's stock option plan to the extent such plan has been
approved by the board of directors of the Borrower and (v) in the case of
any Subsidiary, make payments to the Borrower pursuant to a tax sharing
agreement.
7.11 Changes in Fiscal Periods. Permit the fiscal year of the
Borrower to end on a day other than the last Saturday in December or
change the Borrower's method of determining fiscal quarters.
7.12 Negative Pledge Clauses. Enter into or suffer to exist
or become effective any agreement that prohibits or limits the ability of
the Borrower or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its property or revenues, whether
now owned or hereafter acquired, other than (a) this Agreement and the
other Loan Documents and (b) any agreements governing any purchase money
Liens or Capital Lease Obligations otherwise permitted hereby (in which
case, any prohibition or limitation shall only be effective against the
assets financed thereby).
7.13 Clauses Restricting Subsidiary Distributions. Enter into
or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of the Borrower to (a) pay
dividends or make any other distributions in respect of any Capital Stock
of such Subsidiary held by, or pay any Indebtedness owed to, the Borrower
or any other Subsidiary of the Borrower, (b) make loans or advances to
the Borrower or any other Subsidiary of the Borrower or (c) transfer any
of its assets to the Borrower or any other Subsidiary of the Borrower,
except for such encumbrances or restrictions existing under or by reason
of (i) any restrictions existing under the Loan Documents and (ii) any
restrictions with respect to a Subsidiary imposed pursuant to an
agreement that has been entered into in connection with the Disposition
of all or substantially all of the Capital Stock or assets of such
Subsidiary.
7.14 Lines of Business. Enter into any business, either
directly or through any Subsidiary, except for those businesses in which
the Borrower and its Subsidiaries are engaged on the date of this
Agreement or that are reasonably related thereto.
<PAGE>
7.15 Amendments to Purchase Agreements. (a) Amend,
supplement or otherwise modify (pursuant to a waiver or otherwise) the
terms and conditions of the indemnities and licenses furnished to the
Borrower or any of its Subsidiaries pursuant to the Purchase Agreements
or any other document delivered by the sellers of the Targets or any of
their affiliates in connection therewith such that after giving effect
thereto such indemnities or licenses shall be materially less favorable
to the interests of the Loan Parties or the Lenders with respect thereto
or (b) otherwise amend, supplement or otherwise modify the terms and
conditions of the Purchase Agreements or any such other documents except
for any such amendment, supplement or modification that (i) becomes
effective after the Closing Date and (ii) does not adversely affect the
interests of the Lenders.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan
or Reimbursement Obligation when due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Loan
or Reimbursement Obligation, or any other amount payable hereunder
or under any other Loan Document, within five days after any such
interest or other amount becomes due in accordance with the terms
hereof; or
(b) any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or that is contained
in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this
Agreement or any such other Loan Document shall prove to have been
inaccurate in any material respect on or as of the date made or
deemed made; or
(c) (i) any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of
Section 6.4(a) (with respect to the Borrower only), Section 6.7(a)
or Section 7 of this Agreement or (ii) an "Event of Default" under
and as defined in any Mortgage shall have occurred and be
continuing; or
(d) any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a)
through (c) of this Section), and such default shall continue
unremedied for a period of 30 days after notice from the
Administrative Agent or the Required Lenders; or
<PAGE>
(e) the Borrower or any of its Subsidiaries shall (i) default
in making any payment of any principal of any Indebtedness
(including, without limitation, any Guarantee Obligation, but
excluding the Loans) on the scheduled or original due date with
respect thereto; or (ii) default in making any payment of any
interest on any such Indebtedness beyond the period of grace, if
any, provided in the instrument or agreement under which such
Indebtedness was created; or (iii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating to such Indebtedness, or any other event shall
occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of
such Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or (in the
case of any such Indebtedness constituting a Guarantee Obligation)
to become payable; provided, that a default, event or condition
described in clause (i), (ii) or (iii) of this paragraph (e) shall
not at any time constitute an Event of Default unless, at such time,
one or more defaults, events or conditions of the type described in
clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the
outstanding principal amount of which exceeds in the aggregate
$1,000,000; or
(f) (i) the Borrower or any of its Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking
to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part
of its assets, or the Borrower or any of its Subsidiaries shall make
a general assignment for the benefit of its creditors; or (ii) there
shall be commenced against the Borrower or any of its Subsidiaries
any case, proceeding or other action of a nature referred to in
clause (i) above that (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or
(iii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets that results in
the entry of an order for any such relief that shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60
days from the entry thereof; or (iv) the Borrower or any of its
Subsidiaries shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) the Borrower or
any of its Subsidiaries shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its debts as they
become due; or
<PAGE>
(g) (i) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or
in the reasonable opinion of the Required Lenders is likely to,
incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if
any, could, in the sole judgment of the Required Lenders, reasonably
be expected to have a Material Adverse Effect; or
(h) one or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance as to which the
relevant insurance company has acknowledged coverage) of $1,000,000
or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days
from the entry thereof; or
(i) any of the Security Documents shall cease, for any reason,
to be in full force and effect, or any Loan Party or any Affiliate
of any Loan Party shall so assert, or any Lien created by any of the
Security Documents shall cease to be enforceable and of the same
effect and priority purported to be created thereby; or
(j) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement or Section 2 of the Guarantee shall cease, for
any reason, to be in full force and effect or any Loan Party or any
Affiliate of any Loan Party shall so assert; or
(k) (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) other than the Permitted Investors
shall become, or obtain rights (whether by means or warrants,
options or otherwise) to become, the "beneficial owner" (as defined
in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of more than 25% of the outstanding common stock of the
Borrower; (ii) the board of directors of the Borrower shall cease to
consist of a majority of Continuing Directors; or (iii) a Specified
Change of Control shall occur; or
<PAGE>
(l) the Senior Subordinated Notes or the guarantees thereof
shall cease, for any reason, to be validly subordinated to the
Obligations, the obligations of the Subsidiary Guarantors under the
Guarantee and Collateral Agreement or the obligations of Prestige
Plastics, Inc. under the Guarantee, as the case may be, as provided
in the Senior Subordinated Note Indenture, or any Loan Party, any
Affiliate of any Loan Party, the trustee in respect of the Senior
Subordinated Notes or the holders of at least 25% in aggregate
principal amount of the Senior Subordinated Notes shall so assert;
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above with respect to
the Borrower, automatically the Commitments shall immediately terminate
and the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether
or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i)
unless and to the extent previously cured or waived, with the consent of
the Majority Revolving Facility Lenders, the Administrative Agent may, or
upon the request of the Majority Revolving Facility Lenders, the
Administrative Agent shall, by notice to the Borrower declare the
Revolving Commitments to be terminated forthwith, whereupon the Revolving
Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of
the Required Lenders, the Administrative Agent shall, by notice to the
Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether
or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which presentment
for honor shall not have occurred at the time of an acceleration pursuant
to this paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of
Credit. Amounts held in such cash collateral account shall be applied by
the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters
of Credit shall have expired or been fully drawn upon, if any, shall be
applied to repay other obligations of the Borrower hereunder and under
the other Loan Documents. After all such Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall
have been satisfied and all other obligations of the Borrower hereunder
and under the other Loan Documents shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower (or such other Person as may be lawfully entitled thereto).
Except as expressly provided above in this Section, presentment, demand,
protest and all other notices of any kind are hereby expressly waived by
the Borrower.
<PAGE>
SECTION 9. THE ADMINISTRATIVE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates
and appoints the Administrative Agent as the agent of such Lender under
this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Administrative Agent, in such capacity, to
take such action on its behalf under the provisions of this Agreement and
the other Loan Documents and to exercise such powers and perform such
duties as are expressly delegated to the Administrative Agent by the
terms of this Agreement and the other Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Administrative
Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other
Loan Document or otherwise exist against the Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan
Documents by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
9.3 Exculpatory Provisions. Neither the Administrative Agent
nor any of its respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (i) liable to any Lender for any
action lawfully taken or omitted to be taken by it or such Person under
or in connection with this Agreement or any other Loan Document (except
to the extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by any Loan
Party or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent
under or in connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for any
failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions of,
this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party.
<PAGE>
9.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying,
upon any instrument, writing, resolution, notice, consent, certificate,
affidavit, letter, telecopy, telex or teletype message, statement, order
or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and
other experts selected by the Administrative Agent. The Administrative
Agent may deem and treat the payee of any Note as the owner thereof for
all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent.
The Administrative Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan Document unless
it shall first receive such advice or concurrence of the Required Lenders
(or, if so specified by this Agreement, all Lenders) as it deems
appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by
it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any
action taken or failure to act pursuant thereto shall be binding upon all
the Lenders and all future holders of the Loans.
9.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Administrative Agent has received
notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice
is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice
thereof to the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement,
all Lenders); provided that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
<PAGE>
9.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent
nor any of its respective officers, directors, employees, agents,
attorneys-in-fact or affiliates have made any representations or
warranties to it and that no act by the Administrative Agent hereinafter
taken, including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender.
Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates and made its
own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without
reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of any Loan Party or any affiliate of a Loan Party that
may come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
<PAGE>
9.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not
reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to their respective Aggregate
Exposure Percentages in effect on the date on which indemnification is
sought under this Section 9.7 (or, if indemnification is sought after the
date upon which the Commitments shall have terminated and the Loans shall
have been paid in full, ratably in accordance with such Aggregate
Exposure Percentages immediately prior to such date), from and against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or
arising out of, the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action
taken or omitted by the Administrative Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the Administrative Agent's
gross negligence or willful misconduct. The Administrative Agent shall
have the right to deduct any amount owed to it by any Lender under this
Section from any payment made by it to such Lender hereunder. The
agreements in this Section 9.7 shall survive the payment of the Loans and
all other amounts payable hereunder.
9.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with any Loan
Party as though the Administrative Agent was not the Administrative
Agent. With respect to its Loans made or renewed by it and with respect
to any Letter of Credit issued or participated in by it, the
Administrative Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its
individual capacity.
<PAGE>
9.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 10 days' notice to the Lenders
and the Borrower. If the Administrative Agent shall resign as
Administrative Agent under this Agreement and the other Loan Documents,
then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall (unless an
Event of Default under Section 8(a) or Section 8(f) with respect to the
Borrower shall have occurred and be continuing) be subject to approval by
the Borrower (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights,
powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon
such appointment and approval, and the former Administrative Agent's
rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is 10 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall assume and perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint
a successor agent as provided for above. After any retiring
Administrative Agent's resignation as Administrative Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent
under this Agreement and the other Loan Documents.
9.10 Authorization to Release Liens. The Administrative Agent
is hereby irrevocably authorized by each of the Lenders to release any
Lien covering any property of the Borrower or any of its Subsidiaries
that is the subject of a Disposition or to release the guarantee of any
Subsidiary Guarantor which is the subject of a fundamental change
permitted by Section 7.4, in either case, that is permitted by this
Agreement or that has been consented to in accordance with Section 10.1.
<PAGE>
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.1. The Required Lenders and each Loan Party party to the
relevant Loan Document may, or, with the written consent of the Required
Lenders, the Administrative Agent and each Loan Party party to the
relevant Loan Document may, from time to time, (a) enter into written
amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or
the other Loan Documents or changing in any manner the rights of the
Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on
such terms and conditions as the Required Lenders or the Administrative
Agent, as the case may be, may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents or any Default
or Event of Default and its consequences; provided, however, that no such
waiver and no such amendment, supplement or modification shall (i)
forgive or reduce the principal amount or extend the final scheduled date
of maturity of any Loan, extend the scheduled date of any amortization
payment in respect of any Term Loan, reduce the stated rate of any
interest or fee payable hereunder, or increase the amount or extend the
expiration date of any Lender's Revolving Commitment, in each case
without the consent of each Lender directly affected thereby; (ii) amend,
modify or waive any provision of this Section 10.1 or reduce any
percentage specified in the definition of Required Lenders, consent to
the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, release
all or substantially all of the Collateral or release all or
substantially all of the Subsidiary Guarantors from their obligations
under the Guarantee and Collateral Agreement, in each case without the
written consent of all Lenders; (iii) reduce the percentage specified in
the definition of Majority Facility Lenders with respect to any Facility
without the written consent of all Lenders under such Facility; (iv)
amend, modify or waive any provision of Section 9 without the written
consent of the Administrative Agent; (v) amend, modify or waive any
provision of Section 2.6 or 2.7 without the written consent of the
Swingline Lender; or (v) amend, modify or waive any provision of Section
3 without the written consent of each of the Issuing Lenders. Any such
waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan
Parties, the Lenders, the Administrative Agent and all future holders of
the Loans. In the case of any waiver, the Loan Parties, the Lenders and
the Administrative Agent shall be restored to their former position and
rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing;
but no such waiver shall extend to any subsequent or other Default or
Event of Default, or impair any right consequent thereon.
<PAGE>
10.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered, or three
Business Days after being deposited in the mail, postage prepaid, or, in
the case of telecopy notice, when received, addressed as follows in the
case of the Borrower and the Administrative Agent, and as set forth in an
administrative questionnaire delivered to the Administrative Agent in the
case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto:
The Borrower: Home Products International, Inc.
4501 West 47th Street
Chicago, Illinois 60632
Attention: James E. Winslow, Executive
Vice President and Chief Financial Officer
Telecopy: (773) 890-0523
Telephone: (773) 890-8904
The Administrative Agent: The Chase Manhattan Bank
The Loan and Agency Services Group
One Chase Manhattan Plaza
8th Floor
New York, New York 10081
Attention: Margaret Swales
Telecopy: (212) 552-5662
Telephone: (212) 552-7472
with a copy to: The Chase Manhattan Bank
10 South Lasalle Street
23rd Floor
Chicago, Illinois 60603
Attention: Jonathan Twichell
Telecopy: (312) 807-4550
Telephone: (312) 807-4038
in the case of
Letters of Credit,
with a copy to: Chase Manhattan Bank Delaware
Corporate Banking Department
1201 Market Street
Wilmington, Delaware 19801
Attention: Michael Handago
Telecopy: (302) 428-3390
Telephone: (302) 428-3311
provided that any notice, request or demand to or upon the Administrative
Agent or the Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or
any Lender, any right, remedy, power or privilege hereunder or under the
other Loan Documents shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by law.
<PAGE>
10.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan
Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the making of the Loans and other
extensions of credit hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement
or modification to, this Agreement and the other Loan Documents and any
other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent and filing and
recording fees and expenses, with statements with respect to the
foregoing to be submitted to the Borrower prior to the Closing Date (in
the case of amounts to be paid on the Closing Date) and from time to time
thereafter on a quarterly basis or such other periodic basis as the
Administrative Agent shall deem appropriate, (b) to pay or reimburse each
Lender and the Administrative Agent for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights
under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of
counsel (including the allocated fees and expenses of in-house counsel)
to each Lender and of counsel to the Administrative Agent, (c) to pay,
indemnify, and hold each Lender and the Administrative Agent harmless
from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and
other taxes, if any, that may be payable or determined to be payable in
connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under
or in respect of, this Agreement, the other Loan Documents and any such
other documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an "Indemnitee")
harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents,
including, without limitation, any of the foregoing relating to the use
of proceeds of the Loans or the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of
the Borrower or any of its Subsidiaries or any of the Properties (all the
foregoing in this clause (d), collectively, the "Indemnified
Liabilities"), provided, that the Borrower shall have no obligation
hereunder to any Indemnitee (x) with respect to Indemnified Liabilities
to the extent such Indemnified Liabilities resulted from the gross
negligence or willful misconduct of such Indemnitee, (y) with respect to
any proceeding initiated by the Administrative Agent against any Lender
or by any Lender against the Administrative Agent or any other Lender or
(z) to the extent arising in connection with any action by or on behalf
of the Borrower against such Indemnitee where the Borrower is found to be
the prevailing party pursuant to a final and nonappealable decision of a
court of competent jurisdiction. Without limiting the foregoing, and to
the extent permitted by applicable law, the Borrower agrees not to assert
<PAGE>
and to cause its Subsidiaries not to assert, and hereby waives and agrees
to cause its Subsidiaries to so waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of whatever
kind or nature, under or related to Environmental Laws, that any of them
might have by statute or otherwise against any Indemnitee. The
agreements in this Section 10.5 shall survive repayment of the Loans and
all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent, all future holders of
the Loans and their respective successors and assigns, except that the
Borrower may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of each Lender.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks,
financial institutions or other entities (each, a "Participant")
participating interests in any Loan owing to such Lender, any Commitment
of such Lender or any other interest of such Lender hereunder and under
the other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under
this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan
for all purposes under this Agreement and the other Loan Documents, and
the Borrower and the Administrative Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no
event shall any Participant under any such participation have any right
to approve any amendment or waiver of any provision of any Loan Document,
or any consent to any departure by any Loan Party therefrom, except to
the extent that such amendment, waiver or consent would reduce the
principal of, or interest on, the Loans or any fees payable hereunder, or
postpone the date of the final maturity of the Loans, in each case to the
extent subject to such participation. The Borrower agrees that if
amounts outstanding under this Agreement and the Loans are due or unpaid,
or shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement,
provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a
Lender hereunder. The Borrower also agrees that each Participant shall
be entitled to the benefits of Sections 2.18, 2.19 and 2.20 with respect
to its participation in the Commitments and the Loans outstanding from
time to time as if it was a Lender; provided that, in the case of Section
2.19, such Participant shall have complied with the requirements of said
Section and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such Section than the
transferor Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Lender to such
Participant had no such transfer occurred.
<PAGE>
(c) Any Lender (an "Assignor") may, in accordance with
applicable law, at any time and from time to time assign to any Lender or
any affiliate thereof or, with the consent of the Borrower and the
Administrative Agent (which, in each case, shall not be unreasonably
withheld or delayed), to an additional bank, financial institution or
other entity (an "Assignee") all or any part of its rights and
obligations under this Agreement pursuant to an Assignment and
Acceptance, substantially in the form of Exhibit E, executed by such
Assignee, such Assignor and any other Person whose consent is required
pursuant to this Section 10.6(c), and delivered to the Administrative
Agent for its acceptance and recording in the Register; provided that no
such assignment to an Assignee (other than any Lender or any affiliate
thereof) shall be in an aggregate principal amount of less than
$5,000,000 (other than in the case of an assignment of all of a Lender's
interests under this Agreement), unless otherwise agreed by the Borrower
and the Administrative Agent. Any such assignment need not be ratable as
among the Facilities. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment
and/or Loans as set forth therein, and (y) the Assignor thereunder shall,
to the extent provided in such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such Assignor shall cease to be a party
hereto). Notwithstanding any provision of this Section 10.6, the consent
of the Borrower shall not be required for any assignment that occurs when
an Event of Default pursuant to Section 8(f) shall have occurred and be
continuing with respect to the Borrower.
(d) The Administrative Agent shall maintain at its address
referred to in Section 10.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of
the names and addresses of the Lenders and the Commitment of, and the
principal amount of the Loans owing to, each Lender from time to time.
The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, each other Loan Party, the
Administrative Agent and the Lenders shall treat each Person whose name
is recorded in the Register as the owner of the Loans and any Notes
evidencing the Loans recorded therein for all purposes of this Agreement.
Any assignment of any Loan, whether or not evidenced by a Note, shall be
effective only upon appropriate entries with respect thereto being made
in the Register (and each Note shall expressly so provide). Any
assignment or transfer of all or part of a Loan evidenced by a Note shall
be registered on the Register only upon surrender for registration of
assignment or transfer of the Note evidencing such Loan, accompanied by a
duly executed Assignment and Acceptance, and thereupon one or more new
Notes shall be issued to the designated Assignee.
(e) Upon its receipt of an Assignment and Acceptance executed
by an Assignor, an Assignee and any other Person whose consent is
required by Section 10.6(c), together with payment to the Administrative
Agent of a registration and processing fee of $4,000, the Administrative
Agent shall (i) promptly accept such Assignment and Acceptance and (ii)
record the information contained therein in the Register on the effective
date determined pursuant thereto.
<PAGE>
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 10.6 concerning
assignments of Loans and Notes relate only to absolute assignments and
that such provisions do not prohibit assignments creating security
interests, including, without limitation, any pledge or assignment by a
Lender of any Loan or Note to any Federal Reserve Bank in accordance with
applicable law.
(g) The Borrower agrees to issue Notes to any Lender requiring
Notes to facilitate transactions of the type described in paragraph (f)
above.
10.7 Adjustments; Set-off. (a) Except to the extent that
this Agreement provides for payments to be allocated to the Lenders under
a particular Facility, if any Lender (a "Benefitted Lender") shall at any
time receive any payment of all or part of the Obligations owing to it,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the
nature referred to in Section 8(f), or otherwise), in a greater
proportion than any such payment to or collateral received by any other
Lender, if any, in respect of the Obligations owing to such other Lender,
such Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of the Obligations owing to each
such other Lender, or shall provide such other Lenders with the benefits
of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably
with each of the Lenders; provided, however, that if all or any portion
of such excess payment or benefits is thereafter recovered from such
Benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall upon the occurrence and during the
continuance of an Event of Default have the right, without prior notice
to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, upon any amount becoming due
and payable by the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise), to set off and appropriate and apply against
such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held
or owing by such Lender or any Affiliate, branch or agency thereof to or
for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any
such setoff and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such setoff
and application.
10.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument. Delivery of an executed
signature page of this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof. A set
of the copies of this Agreement signed by all the parties shall be lodged
with the Borrower and the Administrative Agent.
<PAGE>
10.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
10.10 Integration. This Agreement and the other Loan
Documents represent the agreement of the Borrower, the Administrative
Agent and the Lenders with respect to the subject matter hereof, and
there are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
10.12 Submission To Jurisdiction; Waivers. The Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of
the United States of America for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail),
postage prepaid, to the Borrower at its address set forth in Section
10.2 or at such other address of which the Administrative Agent
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this Section 10.12 any special, exemplary,
punitive or consequential damages.
<PAGE>
10.13 Acknowledgements. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan
Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of
or in connection with this Agreement or any of the other Loan
Documents, and the relationship between Administrative Agent and
Lenders, on one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders.
10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.15 Confidentiality. Each of the Administrative Agent and
each Lender agrees to keep confidential all non-public information
provided to it by any Loan Party pursuant to this Agreement that is
designated by such Loan Party as confidential; provided that nothing
herein shall prevent the Administrative Agent or any Lender from
disclosing any such information (a) to the Administrative Agent, any
other Lender or any affiliate of any Lender, (b) to any Transferee or
prospective Transferee that agrees to comply with the provisions of this
Section 10.15, (c) to its employees, directors, agents, attorneys,
accountants and other professional advisors or those of any of its
affiliates that agree to comply with this Section 10.15, (d) upon the
request or demand of any Governmental Authority, (e) in response to any
order of any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, in which case the
Administrative Agent or such Lender shall give notice of such order to
the Borrower, (f) if requested or required to do so in connection with
any litigation or similar proceeding, (g) that has been publicly
disclosed, (h) to the National Association of Insurance Commissioners or
any similar organization or any nationally recognized rating agency that
requires access to information about a Lender's investment portfolio in
connection with ratings issued with respect to such Lender, or (i) in
connection with the exercise of any remedy hereunder or under any other
Loan Document.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
HOME PRODUCTS INTERNATIONAL, INC.
By:
Name:
Title:
THE CHASE MANHATTAN BANK, as Administrative
Agent and as a Lender
By:
Name:
Title:
<PAGE>
Annex A
PRICING GRID FOR TERM LOANS REVOLVING LOANS, SWINGLINE LOANS,
AND COMMITMENT FEES
ConsolidatedTotal Applicable Applicable Commitment
Leverage Ratio Margin for Margin for Fee Rate
Eurodollar ABR Loans
Loans
Greater than or equal 2.00% 1.00% .50%
to 4.75 to 1.00
Less than 4.75 to 1.00 1.75% .75% .50%
and greater than or
equal to 3.75 to 1.00
Less than 3.75 to 1.00 1.50% .50% .375%
Changes in the Applicable Margin with respect to Revolving Loans or
Swingline Loans or in the Commitment Fee Rate resulting from changes in
the Consolidated Total Leverage Ratio shall become effective on the date
(the "Adjustment Date") on which financial statements are delivered to
the Lenders pursuant to Section 6.1 (but in any event not later than the
45th day after the end of each of the first three quarterly periods of
each fiscal year or the 90th day after the end of each fiscal year, as
the case may be) and shall remain in effect until the next change to be
effected pursuant to this paragraph. If any financial statements
referred to above are not delivered within the time periods specified
above, then, until such financial statements are delivered, if the
Administrative Agent or the Required Lenders so determine, the
Consolidated Total Leverage Ratio as at the end of the fiscal period that
would have been covered thereby shall for the purposes of this definition
be deemed to be greater than 4.75 to 1.00. In addition, at all times
while an Event of Default shall have occurred and be continuing and the
Administrative Agent or the Required Lenders so determine, the
Consolidated Total Leverage Ratio shall for the purposes of this
definition be deemed to be greater than 4.75 to 1.00. Each determination
of the Consolidated Total Leverage Ratio pursuant to this definition
shall be made with respect to the period of four consecutive fiscal
quarters of the Borrower ending at the end of the period covered by the
relevant financial statements.
EXHIBIT 10.2
ASSIGNMENT OF CON TRACTS
This Assignment of Contracts ("Assignment") is made as
of September 8, 1998 ("Effective Date"), between Plastics, Inc.,
a Delaware corporation ("Assignor") and Prestige Plastics, Inc. a
Minnesota corporation ("Assignee"), pursuant to that certain
Asset Purchase and Sale Agreement dated as of July 31, 1998,
among the Assignor, Home Products International Inc. ("HPI") and
Newell Co. ("Agreement"). Subsequent to the execution of the
Agreement HPI assigned all of its right, title and interest in
the Agreement to Assignee. Capitalized terms not defined herein
shall have the meanings assigned thereto in the Agreement.
RECITALS
A. Pursuant to the Agreement and certain other agreements being
executed and delivered to Assignee simultaneously herewith,
Assignor is selling, transferring, conveying, assigning and
delivering the Assets subject to certain Liabilities.
B. Assignor is the owner of all right, title and interest in
and to the contracts making up part of the Assets and described
in Section 1.1(f) of the Agreement (the "Contracts").
C. Assignor now desired to transfer to Assignee all its rights,
title and interest in the Contracts.
CLAUSES
1. Consideration. For good and valuable consideration,
receipt and sufficiency of which Assignor specifically
acknowledges, Assignor assigns, transfers and sells the Contracts
to Assignee.
2. Warrant. Except as otherwise disclosed in the
Agreement or any exhibit or schedule attached thereto, Assignor
warrants that it has not previously assigned the Contracts, that
the Contracts are not subject to any valid Lien or encumbrance of
any Person, and that to Assignor's Knowledge, there is no fact
which impairs the rights assigned.
3. No Retained Rights. Assignor's assignment of the
Contracts to Assignee under this Assignment constitutes a
complete, absolute and exclusive transfer of all rights (legal,
equitable, use and otherwise) in the Contracts, whether currently
existing or arising or recognized in the future. Assignor does
not reserve or retain any rights.
<PAGE>
4. Further Instruments. Assignor may execute, acknowledge
and deliver to Assignee, such further instruments and documents
which relate to the Contracts as set forth in this Assignment as
Assignee may reasonably request from time to time or otherwise to
give notice or evidence of Assignee's exclusive rights to the
Contracts and all claims or rights thereunder. Assignor
acknowledges and agrees that the Contracts constitute the sole
and exclusive property of Assignee.
5. Successors and Assigns. The provisions of this
Assignment shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns;
Provided that no party may assign, delegate or otherwise transfer
any of its rights or obligations under this Assignment without
the consent of the other party.
6. Governing Law. This Assignment shall be construed in
accordance with and governed by the laws of the State of
Illinois, without reference to rules regarding conflicts of law.
IN WITNESS WHEREOF, the parties hereto have caused this
Assighment to be executed as of the date first written above.
PLASTICS, INC.
By: /s/ Dale. L. Matschullat
Name: Dale L. Matschullat
Title: Vice President
ACCEPTED:
PRESTIGE PLASTICS, INC.
By: /s/ James E. Winslow
Name: James E. Winslow
Title: Executive Vice President
EXHIBIT 23
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
inclusion in this Form 8-K of our report dated July 23, 1998
on the financial statements of Plastics, Inc. It should be
noted that we have not audited any financial statements of
Plastics, Inc. subsequent to December 31, 1997 or performed
any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
November 6, 1998
