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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIER EVENT REPORTED): OCTOBER 2, 1996
RUBBERMAID INCORPORATED
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO 1-4188 34-0628700
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(STATE OR OTHER JURISDICTION (COMMISSION FILE (IRS EMPLOYER
OF INCORPORATION) NUMBER) IDENTIFICATION NO.)
1147 AKRON ROAD, WOOSTER, OHIO 44691
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(330) 264-6464
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
THE EXHIBIT INDEX IS LOCATED AT PAGE 4.
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ITEM 2. ACQUISITION OF ASSETS
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On October 2, 1996, Rubbermaid Incorporated, an Ohio corporation (the
"Company"), acquired GCP Investors Inc., a Delaware corporation and the indirect
parent of Graco Children's Products, Inc. ("GCP"), in a transaction structured
as a merger, pursuant to a Merger Agreement, dated as of August 30, 1996, as
amended, by and among the Company, Rubbermaid Acquisition Corp. ("Merger Sub")
and GCP (the "Merger Agreement").
The transaction was effected by means of a merger (the"Merger") of Merger Sub
with and into GCP, pursuant to which GCP became a wholly owned subsidiary of the
Company. The Company paid an aggregate of $320 million in this transaction. Such
consideration was determined on the basis of arm's length negotiations by the
parties. The Company utilized available cash resources to fund the transaction.
Prior to the transaction, GCP was owned by an investor group and certain members
of GCP management, and the Company had no material relationship with GCP or its
investors, officers or directors.
GCP is a juvenile furnishings company, which has the leading market position in
early childhood products such as strollers, play yards and infant swings. The
Company will utilize the assets of GCP in a consistent fashion.
The Company's press release issued October 3, 1996 is hereby incorporated by
reference and included as Exhibit 99 of this report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS
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In reliance upon SEC Release Nos. 33-7355; 34-37802 (avail. 10/11/96), the
Company will not file any financial statements of the business acquired or any
pro forma financial information relating thereto.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RUBBERMAID INCORPORATED
By: /s/ James A. Morgan
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James A. Morgan
Senior Vice President,
General Counsel
October 16, 1996 and Secretary
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EXHIBIT INDEX
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SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NUMBERING
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(2)(i) Merger Agreement dated as of August 30, 1996 by and among 5
GCP Investors Inc., Rubbermaid Incorporated and Rubbermaid
Acquisition Corp. (the "Merger Agreement")*
(2)(ii) Amendment dated as of September 30, 1996 to the Merger 67
Agreement
(99) Press Release, dated October 3, 1996, issued by Rubbermaid 69
Incorporated
<FN>
*The Merger Agreement submitted herewith contains a list briefly identifying the
contents of all omitted schedules. Rubbermaid will furnish supplementally a copy
of any omitted schedule to the Commission upon request.
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EXHIBIT (2)(i)
CONFORMED
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and among
GCP INVESTORS INC.,
RUBBERMAID INCORPORATED
and
RUBBERMAID ACQUISITION CORP.
Dated as of August 30, 1996
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TABLE OF CONTENTS
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RECITALS
ARTICLE 1
THE MERGER; THE CLOSING; EFFECTIVE TIME
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Section 1.1. The Merger....................................................................1
Section 1.2. The Closing...................................................................1
Section 1.3. Effective Time................................................................2
ARTICLE 2
CERTIFICATE OF INCORPORATION AND
BYLAWS OF THE SURVIVING CORPORATION
Section 2.1. Certificate of Incorporation..................................................2
Section 2.2. Bylaws........................................................................2
ARTICLE 3
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
Section 3.1. Directors.....................................................................2
Section 3.2. Officers......................................................................2
ARTICLE 4
CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
Section 4.1. Conversion or Cancellation of Shares..........................................3
Section 4.2. Payment for Shares, Series B Preferred Shares, Employee Options and
Warrants......................................................................4
Section 4.3. Dissenters' Rights............................................................6
Section 4.4. Transfer of Shares and Series B Preferred Shares After the
Effective Time ...............................................................6
Section 4.5. Escrow Account; Selling Expenses..............................................6
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1. Organization and Standing.....................................................6
Section 5.2. Capitalization................................................................7
Section 5.3. Authority; No Conflict........................................................8
Section 5.4. Financial Statements..........................................................9
Section 5.5. Inventory....................................................................10
Section 5.6. Receivables..................................................................10
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Section 5.7. Tangible Property............................................................10
Section 5.8. Books and Records............................................................10
Section 5.9. Title to Assets; Encumbrances; Real Estate Matters...........................10
Section 5.10. Products; Warranties; Claims.................................................11
Section 5.11. Taxes .......................................................................12
Section 5.12. Employee Benefits............................................................13
Section 5.13. Compliance With Certain Legal Requirements; Governmental Authorizations......16
Section 5.14. Legal Proceedings; Orders; Workers' Compensation Claims......................17
Section 5.15. Absence of Certain Changes and Events........................................17
Section 5.16. Contracts; Leases; Absence of Certain Practices..............................20
Section 5.17. Insurance....................................................................22
Section 5.18. Environmental Matters........................................................23
Section 5.19. Employees....................................................................24
Section 5.20. Labor Disputes; Compliance...................................................25
Section 5.21. Intellectual Property........................................................25
Section 5.22. Relationships With Related Persons...........................................28
Section 5.23. Brokers or Finders...........................................................28
Section 5.24. Customers; Suppliers; etc....................................................28
Section 5.25. No Other Representations or Warranties.......................................29
Section 5.26. Disclosure...................................................................29
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND MERGER SUB
Section 6.1. Organization and Standing....................................................30
Section 6.2. Authority; No Conflict.......................................................30
Section 6.3. Brokers and Finders..........................................................31
Section 6.4. Available Funds..............................................................31
ARTICLE 7
COVENANTS
Section 7.1. Conduct of Business..........................................................31
Section 7.2. Forbearances by the Company..................................................32
Section 7.3. Access ......................................................................32
Section 7.4. Reasonable Efforts; Other Actions............................................33
Section 7.5. Books and Records............................................................33
Section 7.6. Expenses.....................................................................33
Section 7.7. Information Statement........................................................33
Section 7.8. Announcements................................................................34
Section 7.9. Updating Schedules...........................................................34
Section 7.10. Officers' and Directors' Indemnification.....................................34
Section 7.11. Employee Benefit Matters.....................................................35
Section 7.12. GAAP Exclusions..............................................................35
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Section 7.13. Exclusivity..................................................................36
Section 7.14. Working Capital..............................................................36
Section 7.15. Certain Agreements...........................................................36
ARTICLE 8
CONDITIONS
Section 8.1. Conditions to Each Party's Obligation to Effect the Merger...................36
Section 8.2. Conditions to Obligation of the Company to Effect the Merger.................36
Section 8.3. Conditions to Obligation of Purchaser and Merger Sub to Effect the
Merger.......................................................................37
ARTICLE 8A
INDEMNIFICATION
Section 8A.1 Certain Environmental Matters................................................38
Section 8A.2 Products Liability Matters...................................................39
Section 8A.3 Limitations of Indemnification...............................................40
Section 8A.4 Escrow Account...............................................................40
Section 8A.5 Third Party Claims...........................................................41
Section 8A.6 Insurance and Tax Recoveries.................................................41
Section 8A.7 Certain Definitions..........................................................41
ARTICLE 9
TERMINATION
Section 9.1. Termination by Mutual Consent................................................43
Section 9.2. Termination by Either the Company or Purchaser...............................43
Section 9.3. Termination by the Company...................................................43
Section 9.4. Termination by Purchaser.....................................................43
Section 9.5. Effect of Termination and Abandonment........................................44
ARTICLE 10
CERTAIN DEFINITIONS
Section 10.1. Definitions..................................................................44
ARTICLE 11
GENERAL PROVISIONS
Section 11.1. Nonsurvival of Representations, Warranties and Agreements....................51
Section 11.2. Notices......................................................................52
Section 11.3. Assignment; Binding Effect; Benefit..........................................52
Section 11.4. Entire Agreement.............................................................52
Section 11.5. Amendment....................................................................53
Section 11.6. Governing Law................................................................53
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Section 11.7. Counterparts.................................................................53
Section 11.8. Headings.....................................................................53
Section 11.9. Interpretation...............................................................53
Section 11.10. Incorporation of Exhibits and Schedules......................................53
Section 11.11. Severability.................................................................54
Section 11.12. Enforcement of Agreement.....................................................54
Section 11.13. Performance by Merger Sub....................................................54
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of
August 30, 1996, by and among GCP Investors Inc., a Delaware corporation (the
"COMPANY"), and Rubbermaid Incorporated, an Ohio corporation ("PURCHASER"), and
Rubbermaid Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Purchaser ("MERGER SUB").
RECITALS
WHEREAS, the Board of Directors of the Company, Purchaser and
Merger Sub each have determined that it is in the best interest of their
respective stockholders for Purchaser to acquire the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, the Boards of Directors of
the Company, Purchaser and Merger Sub have each approved the merger of the
Merger Sub with and into the Company in accordance with applicable law, upon the
terms and subject to the conditions set forth herein; and
WHEREAS, the Company, Purchaser and Merger Sub desire to make
certain representations, warranties, covenants and agreements in connection with
this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE 1
THE MERGER;
THE CLOSING; EFFECTIVE TIME
Section 1.1. THE MERGER. Subject to the terms and conditions
of this Agreement, at the Effective Time (as defined in SECTION 1.3), Merger Sub
shall be merged with and into the Company in accordance with this Agreement and
the separate corporate existence of Merger Sub shall thereupon cease (the
"MERGER"). The Company shall be the surviving corporation in the Merger
(sometimes hereinafter referred to as the "SURVIVING CORPORATION") and shall
continue to be governed by the laws of the State of Delaware, and the separate
corporate existence of the Company with all its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger. The Merger shall
have the effects specified in the Delaware General Corporation Law (the "DGCL").
Section 1.2. THE CLOSING. Subject to the terms and conditions
of this Agreement, the closing of the Merger (the "CLOSING") shall take place at
the offices of Fried, Frank, Harris, Shriver & Jacobson, at 9:00 a.m., local
time, on the first business day immediately following the later to occur of
September 30, 1996 or the day on which the last to be fulfilled or waived of the
conditions set forth in Article 8 shall be fulfilled or waived in accordance
herewith
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(or, if contemplated to be satisfied simultaneously with the Closing,
are capable of being satisfied), or at such other time, date or place as is
agreed to in writing by the parties hereto. The date on which the Closing occurs
is hereinafter referred to as the "CLOSING DATE."
Section 1.3. EFFECTIVE TIME. On the Closing Date the parties
hereto shall cause a certificate of merger meeting the requirements of section
251 of the DGCL (the "CERTIFICATE OF MERGER") to be properly executed and filed
in accordance with such section. The Merger shall become effective upon the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with the DGCL or at such later time as the parties hereto
shall have agreed upon and designated in such filing as the effective time of
the Merger (the "EFFECTIVE TIME").
ARTICLE 2
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
Section 2.1. CERTIFICATE OF INCORPORATION Subject to SECTION
7.10(A), the certificate of incorporation of Merger Sub as in effect immediately
prior to the Effective Time shall be the certificate of incorporation of the
Surviving Corporation, until duly amended in accordance with the terms thereof
and the DGCL.
Section 2.2. BYLAWS Subject to SECTION 7.10(A), the bylaws of
Merger Sub in effect at the Effective Time shall be the bylaws of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
DGCL.
ARTICLE 3
DIRECTORS AND OFFICERS
OF THE SURVIVING CORPORATION
Section 3.1. DIRECTORS The directors of Merger Sub immediately
prior to the Effective Time shall, from and after the Effective Time, be the
directors of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's certificate of
incorporation and bylaws.
Section 3.2. OFFICERS The officers of the Company immediately
prior to the Effective Time shall, from and after the Effective Time, be the
officers of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's certificate of
incorporation and bylaws.
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ARTICLE 4
CONVERSION OR CANCELLATION
OF SHARES IN THE MERGER
Section 4.1. CONVERSION OR CANCELLATION OF SHARES The manner
of converting or canceling shares of the Company and Merger Sub in the Merger
shall be as follows:
(a) At the Effective Time, each share of class A common stock;
class B common stock; class C common stock; and series A cumulative, redeemable,
convertible preferred stock, each with a par value $0.01 per share (the
"SHARES"), of the Company issued and outstanding immediately prior to the
Effective Time (other than Shares owned by Purchaser, Merger Sub or any of their
respective affiliates and other than shares of capital stock of the Company
which are held by stockholders ("DISSENTING STOCKHOLDERS") exercising appraisal
rights with respect to such shares pursuant to section 262 of the DGCL) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive, without interest, the Merger
Consideration. All such Shares, by virtue of the Merger and without any action
on the part of the holders thereof, shall no longer be outstanding and shall be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall thereafter cease to have any rights with
respect to such Shares, except the right to receive the Merger Consideration for
such Shares upon the surrender of such certificate in accordance with SECTION
4.2 or the right, if any, to receive payment from the Surviving Corporation of
the "fair value" of such Shares as determined in accordance with section 262 of
the DGCL.
(b) At the Effective Time, each share of series B cumulative,
redeemable, preferred stock, par value $0.01 per share (the "SERIES B PREFERRED
SHARES"), of the Company issued and outstanding immediately prior to the
Effective Time (other than Series B Preferred Shares owned by Purchaser, Merger
Sub or any of their respective affiliates and other than Series B Preferred
Shares which are held by Dissenting Stockholders exercising appraisal rights
with respect to such shares) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive, without interest, an amount in cash equal to $100 plus an amount equal
to accrued and unpaid dividends thereon (whether or not declared), up to the
Effective Date (the "SERIES B MERGER CONSIDERATION"). All such Series B
Preferred Shares, by virtue of the Merger and without any action on the part of
the holders thereof, shall no longer be outstanding and shall be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such Series B Preferred Shares shall thereafter cease to have any rights
with respect to such shares, except the right to receive the Series B Merger
Consideration for such Series B Preferred Shares upon the surrender of such
certificate in accordance with SECTION 4.2 or the right, if any, to receive
payment from the Surviving Corporation of the "fair value" of such Series B
Preferred Shares as determined in accordance with section 262 of the DGCL.
(c) At the Effective Time, each Share and each Series B
Preferred Share issued and outstanding immediately prior to the Effective Time
and owned by any of the Purchaser, Merger Sub or any of their respective
affiliates and each Share issued and held in the Company's treasury immediately
prior to the Effective Time, shall, by virtue of the Merger and without any
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action on the part of the holder thereof, cease to be outstanding, shall be
canceled and retired without payment of any consideration therefor and shall
cease to exist.
(d) At the Effective Time, each share of common stock, without
par value, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of Merger Sub or the holders of such Shares, be converted into one share of
common stock, without par value, of the Surviving Corporation.
(e) At the Effective Time, each outstanding Employee Option
(as defined in SECTION 5.2) shall be canceled by the Company and each holder of
a canceled Employee Option shall receive from the Paying Agent, in cancellation
and settlement of the Employee Option, a cash amount (the "OPTION
CONSIDERATION") equal to the product of (i) the number of shares of class A
common stock of the Company subject to the Employee Option multiplied by (ii)
the excess of the Merger Consideration over the exercise price per share of the
class A common stock of the Company subject thereto immediately prior to the
Effective Time.
Prior to the Closing, the Company shall provide Purchaser with
a listing certified by an executive officer of the Company of Employee Options
held by each optionee (including the date of grant, the number of Shares
issuable upon exercise of each Employee Option, and the Option Consideration to
which each option is entitled). At and after the Effective Time, each holder of
an Employee Option will be entitled to receive only an amount equal to the
Option Consideration. All amounts payable under this SECTION 4.1(E) shall be
paid on the Effective Time by wire transfer of immediately available funds or
check (as the Paying Agent shall be instructed by the person entitled to such
payment), shall be subject to any required tax withholding and shall be paid
without interest.
(f) At the Effective Time, each outstanding warrant, dated
June 23, 1995 (a "WARRANT") to purchase class A common stock of the Company
issued to Edward H. Cone or Robert L. Cone shall be canceled by the Company and
each holder of a canceled Warrant shall receive from the Paying Agent, in
cancellation and settlement of such Warrant, a cash amount (the "WARRANT
CONSIDERATION") equal to the product of (i) the number of shares of class A
common stock of the Company subject to the Warrant multiplied by (ii) the excess
of the Merger Consideration over the exercise price per share of the class A
common stock of the Company subject thereto immediately prior to the Effective
Time. At and after the Effective Time, each holder of a Warrant will be entitled
to receive only an amount equal to the Warrant Consideration. All amounts
payable under this SECTION 4.1(F) shall be paid at the Effective Time against
delivery of the Warrant certificates by wire transfer of immediately available
funds or check (as the Paying Agent shall be instructed by the person entitled
to such payment) and shall be paid without interest.
Section 4.2. PAYMENT FOR SHARES, SERIES B PREFERRED SHARES,
EMPLOYEE OPTIONS AND WARRANTS At or prior to the Effective Time, Purchaser shall
deposit in trust with such paying agent as may be appointed by the Company with
the Purchaser's prior approval (the "PAYING AGENT") amounts sufficient in the
aggregate to provide all funds necessary for the Paying Agent to make payments
in immediately available funds pursuant to SECTION 4.1 hereof to holders of
Shares, Employee Options, Warrants and Series B Preferred Shares issued and
outstanding
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immediately prior to the Effective Time; provided however that, if, as of the
Closing Date, certificates representing less than 98% of the aggregate of the
Shares and the Series B Preferred Shares have been delivered to the Paying Agent
as set forth below, Purchaser shall only be required to deposit in trust with
the Paying Agent an amount sufficient in the aggregate to provide all funds
necessary for the Paying Agent to make payments in immediately available funds
pursuant to SECTION 4.1 hereof to holders of (i) Shares and Series B Preferred
Shares actually tendered as of such date and (ii) all Employee Options and
Warrants. Following the Effective Time, Purchaser shall provide funds to the
Paying Agent in an amount sufficient to make payments to the holders of Shares
and Series B Preferred Shares who did not tender certificates in respect of such
shares prior to such date, as and when such certificates are delivered to the
Paying Agent as set forth below. Prior to the Effective Time, the Company shall
cause the Paying Agent to deliver to each person (other than any of the
Purchaser, Merger Sub or their respective affiliates) who was or will be,
immediately prior to the Effective Time, a holder of record of issued and
outstanding Shares or Series B Preferred Shares a form (mutually agreed to by
the Company and Purchaser) of letter of transmittal and instructions for use in
effecting the surrender of the certificates which, immediately prior to the
Effective Time, represent any of such Shares or Series B Preferred Shares, as
the case may be, in exchange for payment therefor. It is agreed that letters of
transmittal will be made available to such holders prior to the Effective Time
in final form, so they may be delivered to the Paying Agent for payment at the
Effective Time. Upon surrender to the Paying Agent of such certificates,
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the Surviving Corporation shall cause
to be paid by the Paying Agent to the persons entitled thereto by wire transfer
of immediately available funds or check (as the Paying Agent shall be instructed
by the person surrendering such certificates) the amount of the Merger
Consideration and the Series B Merger Consideration payable in respect of the
Shares and the Series B Preferred Shares, respectively, represented by such
certificates. Such payment will be made at the Effective Time with respect to
certificates surrendered, and letters of transmittal duly executed and
completed, at the Effective Time, and as soon as practicable thereafter with
respect to certificates surrendered and letters of transmittal duly executed and
completed on a later date. No interest will be paid or will accrue on the amount
payable upon the surrender of any such certificate. If payment is to be made to
a person other than the registered holder of the certificate surrendered, it
shall be a condition of such payment that the certificate so surrendered shall
be properly endorsed or otherwise in proper form for transfer and that the
person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
certificate surrendered or establish to the satisfaction of the Surviving
Corporation or the Paying Agent that such tax has been paid or is not
applicable. One hundred and eighty days following the Effective Time, the
Surviving Corporation shall be entitled to cause the Paying Agent to deliver to
it any funds (including any interest received with respect thereto) made
available to the Paying Agent which have not been disbursed to holders of
certificates formerly representing Shares or Series B Preferred Shares
outstanding at the Effective Time and thereafter such holders shall be entitled
to look to the Surviving Corporation only as general creditors thereof with
respect to the cash payable upon due surrender of their certificates.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to any holder of certificates formerly representing Shares or
Series B Preferred Shares for any amount paid to a public official pursuant to
any applicable abandoned property, escheat or similar law. The Surviving
Corporation shall
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pay all charges and expenses, including those of the Paying Agent, in connection
with the exchange of Shares and Series B Preferred Shares for cash and the
payment of the Option Consideration and the Warrant Consideration.
Section 4.3. DISSENTERS' RIGHTS The Company shall give
Purchaser notice of the delivery of any demand from a Dissenting Stockholder
pursuant to section 262(d) of the DGCL. If any Dissenting Stockholder shall fail
to perfect or shall have effectively lost the right to dissent, the Shares or
Series B Preferred Shares held by such Dissenting Stockholder, as the case may
be, shall thereupon be treated as though such Shares or Series B Preferred
Shares had been converted into the right to receive the Merger Consideration or
the Series B Merger Consideration, respectively, pursuant to SECTION 4.1.
Section 4.4. TRANSFER OF SHARES AND SERIES B PREFERRED SHARES
AFTER THE EFFECTIVE TIME No transfers of Shares or Series B Preferred Shares
shall be made on the stock transfer books of the Surviving Corporation at or
after the Effective Time.
Section 4.5. ESCROW ACCOUNT; SELLING EXPENSES At or prior to
the Effective Time, AEA Investors Inc., Edward H. Cone and Robert L. Cone (the
"Escrow Parties") shall cause the Escrow Amount to be deposited with the Escrow
Agent to be held and administered in accordance with the Escrow Agreement.
Interest earned on the Escrow Amount will be paid in cash to the Escrow Parties
every six months, pursuant to the terms of the Escrow Agreement. At or prior to
the Effective Time, the Company shall cause all unpaid Selling Expenses to be
paid to the persons entitled thereto.
ARTICLE 5
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser as
follows:
Section 5.1. ORGANIZATION AND STANDING (a) Each of the Graco
Companies is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to (i) conduct its business as it is now being
conducted, (ii) own or use the property and assets that it owns or uses, and
(iii) perform all its obligations under all Contracts to which it is a party.
Each of the Graco Companies is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties or assets
owned or used by it, or the nature of the activities conducted by it, requires
such qualification and in which the failure to so qualify could reasonably be
expected to have a Material Adverse Effect. The Company has previously made
available to Purchaser true and complete copies of the certificate of
incorporation of and bylaws of each of the Graco Companies as currently in
effect.
(b) SCHEDULE 5.1 sets forth a correct and complete list of
each of the Subsidiaries of the Company, its jurisdiction of incorporation or
organization, its authorized
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capital stock or share capital, and the percentage ownership by each record
holder thereof. Except as disclosed for each Subsidiary in Schedule 5.1, the
Company does not (i) own, directly or indirectly, any capital stock, option or
other equity interest in any other person or entity, or (ii) have any direct or
indirect equity or ownership interest in any business other than the businesses
conducted by the Company and each of its Subsidiaries. Except as disclosed in
Schedule 5.1, neither the Company nor any of its Subsidiaries is subject to any
obligation or requirement to provide capital contributions to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other person or entity.
Section 5.2. CAPITALIZATION (a) The authorized capital stock
of the Company consists of:
(i) 565,987 shares of class A common stock of which, as of the
date of this Agreement, 100,000 shares are issued and outstanding;
(ii) 1,000 shares of class B common stock of which 1,000
shares are issued and outstanding;
(iii) 113,286 shares of class C common stock of which 113,286
shares are issued and outstanding;
(iv) 300,000 shares of series A cumulative,
redeemable, convertible preferred stock of which, as of the date of
this Agreement, 300,000 shares are issued and outstanding; and
(v) 50,000 shares of series B cumulative, redeemable,
senior preferred stock of which 50,000 shares are issued and
outstanding.
(b) Not more than 57,143 shares of class A common stock of the
Company are issuable upon the exercise of outstanding stock options ("EMPLOYEE
OPTIONS") granted by the Company pursuant to the GCP Investors Inc. 1995 Stock
Option Plan (the "COMPANY STOCK OPTION PLAN"), with an exercise price per share
of $100. As of the date hereof, 108,844 shares of class A common stock are
issuable upon the exercise of the outstanding Warrants, with an aggregate
exercise price of $16,979,664.
(c) All of the issued and outstanding shares of each class of
capital stock of the Company and its Subsidiaries are duly authorized, validly
issued and fully paid and nonassessable. Except as set forth on SCHEDULE 5.2,
all of the issued and outstanding shares of each class of capital stock of the
Company's Subsidiaries are owned beneficially by the Company (directly or
through one or more of its Subsidiaries) and are free from all Encumbrances.
Except for the Employee Options and the Warrants or as set forth on SCHEDULE
5.2, neither the Company nor its Subsidiaries has any commitment or obligation
to redeem, buy, issue or sell any shares of capital stock of the Company or its
Subsidiaries or any securities or obligations convertible into or exercisable or
exchangeable for, or giving any person any right to put to, or subscribe for,
purchase or otherwise acquire from the Company or its Subsidiaries, any shares
of capital stock of
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the Company or any of its Subsidiaries, and no such securities or obligations
are issued or outstanding.
Section 5.3. AUTHORITY; NO CONFLICT (a) Subject to the
approval of this Agreement and the transactions contemplated hereby by the
holders of the Company's Class B Common Stock and Series A cumulative ,
redeemable, convertible, preferred stock (the "STOCKHOLDER APPROVAL"), the
Company has all requisite corporate right, power and authority to execute and
deliver this Agreement and to perform fully its obligations hereunder. The
execution and delivery of this Agreement and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(b) Except as set forth in SCHEDULE 5.3(B), the execution and
delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not, directly or indirectly (with or
without notice or the lapse of time or both):
(i) contravene, conflict with, or result in a
violation or breach of or default under any provision, term or
condition of the certificate of incorporation, bylaws or other
organizational documents of any of the Graco Companies;
(ii) contravene, conflict with, or result in a
material violation or breach of or default under, require filing with
or obtaining material consent from any Governmental Body or other
person, or give any Governmental Body or other person the right to
challenge any of the transactions contemplated hereby or to exercise
any remedy or obtain any relief under any Legal Requirement or any
Order to which the Graco Companies are subject;
(iii) contravene, conflict with, or result in a
violation or breach of or default under any of the terms, conditions or
requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, or terminate any material Governmental
Authorization that is held by the Graco Companies or that otherwise
relates to the Business;
(iv) contravene, conflict with, or result, in a
violation or breach of or default under any provision of, or give any
person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of or require any Consent
under, or to cancel or terminate any Material Contract to which any of
the Graco Companies are a party; or
(v) result in the imposition or creation of any
Encumbrance (other than a Permitted Encumbrance) upon or with respect
to any of the property or assets of the Graco Companies.
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(c) Except as set forth in SCHEDULE 5.3(C), none of the Graco
Companies is, nor will any be, required to give any notice to or obtain any
material Consent from any person in connection with the transactions
contemplated hereby.
Section 5.4. FINANCIAL STATEMENTS (a) Except as set forth in
SCHEDULE 5.4, the Financial Statements and all Interim Financial Statements
delivered pursuant to Section 7.3 will, when delivered, fairly present the
financial condition and the results of operation, changes in stockholders'
equity, and cash flows of Graco and its Subsidiaries as at the respective dates
of and for the periods referred to in such Financial Statements, all in
accordance with GAAP, subject, with respect to the interim Financial Statements,
to normal recurring year-end adjustments, none of which are or will be material.
The Graco Companies and the Business have no Liabilities, other than Liabilities
which (i) are fully reflected or fully reserved for on the Balance Sheet, (ii)
are disclosed on the Schedules hereto, (iii) have been incurred in the ordinary
course of business consistent (in amount and kind) with past practices and
prudent business practice prevailing in the industry since June 29, 1996, or
(iv) could not otherwise be reasonably expected to have a Material Adverse
Effect. To the Knowledge of the Company, there are no circumstances, conditions,
events or arrangements that would hereafter give rise to any material
Liabilities of the Graco Companies, the Business or any of their respective
successors, except in the ordinary course of business consistent (in amount and
kind) with past practice and prudent business practices prevailing in the
industry or as set forth in the Schedules hereto. Since June 23, 1995, the
Company has established an IBNR reserve on its books and records in accordance
with GAAP.
(b) Subject to SECTION 7.12, the Predecessor Financial
Statements fairly present the financial condition and the results of operations,
changes in stockholders' equity, and cash flows of Graco Children's Products,
Inc., a Pennsylvania corporation and the predecessor of Graco ("GRACO PA") as at
the respective dates of and for the periods referred to in such Predecessor
Financial Statements, all in accordance with GAAP. Graco PA did not establish
reserves in the Predecessor Financial Statements for incurred but not reported
employee benefit claims; provided that if such reserves had been established on
Graco PA's balance sheet as of December 31, 1994 in accordance with GAAP, such
reserves would not to the Knowledge of the Company have exceeded $1,000,000.
Graco PA did not established Return Reserves in the Predecessor Financial
Statements; provided, that if such reserves for defective or unsuitable
merchandise had been established on Graco PA's balance sheet as of December 31,
1994 in accordance with GAAP, such reserves for such defective or unsuitable
merchandise would not, to the Knowledge of the Company, have exceeded
$2,000,000.
(c) Except to the extent specifically provided otherwise in
the Financial Statements and the Predecessor Financial Statements, and, in the
case of the Predecessor Financial Statements, subject to SECTION 7.12, (i) all
inventories reflected in the Financial Statements and the Predecessor Financial
Statements were valued in accordance with GAAP at the lower of cost or market,
with cost being determined using the first in, first out method; and (ii) sales
were stated in accordance with GAAP in the Financial Statements and the
Predecessor Financial Statements net of allowances relating to such sales,
discounts and permitted returns.
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Section 5.5. INVENTORY The inventory of the Graco Companies is
suitable, usable, or salable in the ordinary course of business for the purposes
for which intended, consistent with past practice, except to the extent written
down on the Balance Sheet. To the Knowledge of the Company there are no adverse
conditions affecting a material source of materials or services available to the
Graco Companies (including materials or services obtained through Hong Kong
Company).
Section 5.6. RECEIVABLES All accounts and notes receivable of
the Graco Companies have arisen in the ordinary course of business of the Graco
Companies from bona fide transactions and represent valid obligations due the
Graco Companies in accordance with their terms. SCHEDULE 5.6 sets forth a true
and correct list, as of August 3, 1996, of all accounts receivable of the Graco
Companies which are more than 60 days old.
Section 5.7. TANGIBLE PROPERTY Except as set forth in SCHEDULE
5.7, the buildings, facilities, machinery, equipment, furniture, leasehold
improvements, fixtures, vehicles and structures and any related capitalized
items and other tangible property, in each case, that are material to the
conduct of the Business (the "TANGIBLE PROPERTY") are, with due regard to the
age of the equipment, in good operating condition and repair, reasonable wear
and tear excepted. The buildings or structures located on the Real Property are
in good operating condition, reasonable wear and tear excepted and are, to the
Knowledge of the Company, free of any material structural or engineering
defects, and, subject to continued repair and replacement in accordance with
past practice, are suitable for their intended use. Except as set forth on
SCHEDULE 5.7, during the past five years there has not been any significant
interruption of the operations of the Business due to inadequate maintenance of
the Tangible Property.
Section 5.8. BOOKS AND RECORDS The books of account, minute
books, stock record books, and other records of the Graco Companies, all of
which have been or will, upon request, be made available to Purchaser, are
accurate, complete and correct in all material respects.
Section 5.9. TITLE TO ASSETS; ENCUMBRANCES; REAL ESTATE
MATTERS.
(a) The Graco Companies do not own, lease, or operate any real
property other than the Real Property or the Leased Real Property. All of the
real estate, buildings, structures and other improvements owned or used by the
Graco Companies in, or necessary for, the conduct of the Business are included
in the Real Property and the Leased Real Property. The Leases constitute all
agreements or binding arrangements, whether written or oral, (i) pursuant to
which the Graco Companies lease or otherwise have the right to use any real or
personal property and (ii) under which (solely in the case of leased personal
property) the Graco Companies currently make or are obligated to make annual
rental payments of more than $50,000.
(b) The properties, assets and rights of the Graco Companies
constitute all properties, assets and rights owned and used in, or necessary
for, the operation of the Business as currently conducted, it being understood
that no representation is being made pursuant to this SECTION 5.9(B) with
respect to the Intellectual Property.
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<PAGE> 16
(c) The Company and its Subsidiaries have (i) good and
marketable fee simple title to the Real Property, free and clear of all material
Liabilities and Encumbrances subject, however, to (1) the Permitted Encumbrances
and (2) the matters described in SCHEDULE 5.9; (ii) good and marketable title to
all of its other property and assets (other than Intellectual Property, with
respect to which the representations and warranties of the Company set forth in
SECTION 5.21 regarding title thereto and other matters shall govern and
control); and (iii) a valid and marketable leasehold interest in the Leased Real
Property and leased personal property pursuant to the respective Leases, free
and clear of any material Liability or Encumbrance subject, however, to the
Permitted Encumbrances.
(d) Except as set forth on SCHEDULE 5.9, (i) the Real Property
and the Leased Real Property, the use and occupancy thereof by the Graco
Companies, and the conduct thereon and therein of the Business does not violate
in any material respect any applicable Legal Requirement consisting of building
codes, deed restrictions, or any zoning, subdivision or other land use or
similar laws; (ii) the Graco Companies have received no written notice of any
material violation of any applicable Legal Requirements consisting of building
codes, deed restrictions or any zoning, subdivision or other land use or similar
laws which relate to the Real Property or the Leased Real Property, the use and
occupancy thereof by the Graco Companies or the conduct therein and thereon of
the Business; (iii) there are no existing or pending and, to the Knowledge of
the Company, there are no Threatened, (A) requests, applications or proceedings
to alter or restrict, in any material respect, the zoning or other use
restrictions applicable to any of the Real Property or the Leased Real Property,
(B) condemnation proceedings that would adversely affect any of the Real
Property or the Leased Real Property, or (C) public improvements that would
result in any material charge or Tax being levied or assessed against, or would
result in the creation of any material Encumbrance upon, any of the Real
Property or the Leased Real Property.
(e) Except as disclosed on Schedule 5.9, the Graco Companies
have not leased or sublet, as lessor or sublessor, and no third party is in
possession of, any of the Real Property, and neither the whole nor any portion
of any tract of the Real Property has been condemned, requisitioned or otherwise
taken by any Governmental Body and, to the Knowledge of the Company, no such
condemnation, requisition or taking is threatened or contemplated.
(f) All facilities located on the Real Property and the Leased
Real Property are supplied with utilities and other services necessary for the
operation of such facilities as presently operated, and all of such services are
adequate to conduct that portion of the Business as presently is conducted at
each of such facilities.
Section 5.10. PRODUCTS; WARRANTIES; CLAIMS (a) Except as set
forth in SCHEDULE 5.10(A), to the Knowledge of the Company, there is no material
Liability, or any basis for any present or future proceeding against the Graco
Companies giving rise to any material Liability, for the recall or, except in
the ordinary course of business, consistent with past practice, the replacement
or repair of any products that the Graco Companies have designed, sold or
manufactured. Except as set forth in SCHEDULE 5.10(A), no product manufactured
or sold by Graco is, in any respect material to the Business, subject to any
express warranty nor any other warranty, other than any warranties that are
implied by any applicable Legal Requirement.
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<PAGE> 17
(b) Except as set forth on SCHEDULE 5.10(B), to the Knowledge
of the Company, there is no (i) material Liability to the Graco Companies or
(ii) basis for any present or future proceeding against the Graco Companies that
would result in any material Liability to the Graco Companies, arising out of or
in connection with any injury, death or damage to individuals, persons or
property that occurred by reason of the ownership, possession, or use of or
otherwise arising from or relating to any product designed, manufactured or sold
by Graco.
Section 5.11. TAXES (a) Except as set forth on SCHEDULE 5.11,
(i) each of the Graco Companies has timely filed or caused to be timely filed
all Tax Returns that are or were required to be filed by it, or will cause all
Tax Returns due between the date of this Agreement and the Closing Date to be
timely filed (in each case, taking into account any valid extensions of time for
filing), pursuant to applicable Legal Requirements, (ii) each of the Graco
Companies has paid or will pay all Taxes that have become or will become due
pursuant to such Tax Returns, or pursuant to any assessment received by the
Graco Companies, except such Taxes, if any, that are not material to the
Business or (x) that are being contested in good faith, (y) that are fully
reflected or fully reserved for on the Balance Sheet, and (z) that are listed in
SCHEDULE 5.11 and (iii) each of the Graco Companies has properly withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid to any stockholder, employee, creditor, independent contractor or
other third party.
(b) Each Tax Return filed or to be filed on or before the
Closing by the Graco Companies was, or will be, prepared in compliance in all
material respects with all Legal Requirements and is, or will be, true and
correct in all material respects.
(c) For federal income tax purposes, Graco Children's
Products, Inc., a Pennsylvania corporation, was, between November 1, 1986 and
the date of the consummation of the transactions contemplated by the Acquisition
Agreement, properly classified as an "S corporation" under section 1361(a) of
the Code and the treasury regulations promulgated thereunder, and was so
classified for state and local income tax purposes, pursuant to analogous state
or local provisions, in the jurisdictions and between the dates set forth on
Schedule 5.11.
(d) Except as set forth on SCHEDULE 5.11:
(i) during the past five years, there has been no
action, suit, proceeding or audit commenced against any of the Graco
Companies regarding a material amount of Taxes;
(ii) none of the Graco Companies is a party to or
bound by any Tax allocation or Tax sharing agreement or arrangement and
none of the Graco Companies has any current contractual obligation to
indemnify any other person or entity with respect to Taxes;
(iii) no taxing authority in a jurisdiction where any
of the Graco Companies does not file Tax Returns has, to the Knowledge
of the Company, made a claim, assertion or threat that such nonfiling
person is or may be subject to taxation by such jurisdiction;
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<PAGE> 18
(iv) there are no agreements with any taxing
authority that may affect the liability for Taxes of any of the Graco
Companies for any period (or portion thereof) beginning on or after the
Closing Date.
(v) all income and franchise Tax Returns of each of
the Graco Companies filed prior to the date hereof have been audited by
the relevant taxing authority or the time for assessing or collecting
Tax with respect thereto has closed and such income and franchise Tax
Returns are not subject to review by any relevant taxing authority;
(vi) none of the Graco Companies has consented to
extend the time in which any material amount of Tax may be assessed or
collected by any taxing authority; and
(vii) the amount of tax deductible amortizable
Section 197 intangibles as defined in Code Section 197 acquired in the
transactions consummated pursuant to the Acquisition Agreement was not
less than $90,000,000.
Section 5.12. EMPLOYEE BENEFITS (a) SCHEDULE 5.12(A) contains
a true and complete list of each Employee Benefit Plan and, other than with
respect to the Employee Benefit Plans listed on SCHEDULE 5.12(A), no Graco
Company or ERISA Affiliate has any material liability, contingent or otherwise,
to, or with respect to, any plan, program or arrangement which provides cash or
non-cash compensation or benefits to any Employee. No Graco Company or ERISA
Affiliate has any plan or commitment, whether legally binding or not, to
establish any new Employee Benefit Plan, to enter into any Employment Agreement
or to modify or to terminate any Employee Benefit Plan (except to the extent
required by law or to conform any such Employee Benefit Plan to the requirements
of any applicable law, in each case as previously disclosed to Purchaser, or as
required by this Agreement), nor has any intention to do any of the foregoing
been communicated to Employees.
(b) The Company has provided or has caused to be provided to
Purchaser (i) current, accurate and complete copies of all material documents
embodying or relating to each Employee Benefit Plan, including all amendments
thereto, written interpretations thereof and trust or funding agreements with
respect thereto; (ii) the two (2) most recent annual actuarial valuations, if
any, prepared for each Employee Benefit Plan; (iii) the two (2) most recent
annual reports (Series 5500 and all schedules thereto), if any, required under
ERISA in connection with each Employee Benefit Plan or related trust; (iv) a
statement of alternative form of compliance pursuant to Department of Labor (the
"Department") Regulation 2520.104-23, if any, filed for each Employee Benefit
Plan which is an "employee pension benefit plan", as defined in section 3(2) of
ERISA, for a select group of management or highly compensated Employees; (v) the
most recent determination letter received from the IRS, if any, for each
Employee Benefit Plan and related trust which is intended to satisfy the
requirements of section 401(a) of the Code; (vi) if the Employee Benefit Plan is
funded, the most recent annual and periodic accounting of its assets; (vii) the
most recent summary plan description together with the most recent summary of
material modifications, if any, required under ERISA with respect to each
Employee Benefit Plan; and
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<PAGE> 19
(viii) all material communications to any Employee or Employees relating to each
Employee Benefit Plan.
(c) Except as set forth on SCHEDULE 5.12(C), each of the Graco
Companies and each ERISA Affiliate has performed all material obligations
required to be performed by it under each Employee Benefit Plan and each
Employee Benefit Plan has, in all material respects, been established and
maintained in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations (foreign or domestic), including
but not limited, to ERISA and the Code including, without limiting the
foregoing, the timely filing of all required reports, documents and notices,
where applicable, with the Pension Benefit Guaranty Corporation, the IRS and the
Department. To the Knowledge of the Company, each Employee Benefit Plan intended
to qualify under section 401 of the Code is, and since its inception has been,
so qualified and a determination letter has been issued by the IRS to the effect
that each such Employee Benefit Plan is so qualified and that each trust forming
a part of any such Employee Benefit Plan is exempt from tax pursuant to section
501(a) of the Code and, to the Knowledge of the Company, no circumstances exist
which would adversely affect this qualification or exemption. No "prohibited
transaction," within the meaning of section 4975 of the Code or section 406 of
ERISA, has occurred with respect to any Employee Benefit Plan. No action or
failure to act and no transaction or holding of any asset by, or with respect
to, any Employee Benefit Plan has or could reasonably be expected to subject the
Graco Companies, any ERISA Affiliate or any fiduciary to any material tax,
penalty or other liability, whether by way or indemnity or otherwise. There are
no proceedings or claims pending, or to the Knowledge of the Company, Threatened
or anticipated (other than routine claims for benefits) against any of the Graco
Companies or any ERISA Affiliate with respect to any Employee Benefit Plan, or
against any Employee Benefit Plan or against the assets of any Employee Benefit
Plan. No event or transaction has occurred with respect to any Employee Benefit
Plan that would result in the imposition of any material amount of Tax under
Chapter 43 of Subtitle I of the Code. Except as described on Schedule 5.12(c),
each Employee Benefit Plan can be amended, terminated or otherwise discontinued
without material liability to the Graco Companies or any ERISA Affiliate, other
than the liability for making payments to such plan which have accrued in
accordance with the terms of such plan but which have not been paid as of the
date of such amendment, termination or other discontinuation. The Graco
Companies and each ERISA Affiliate have made all payments with respect to all
periods which are required by each Employee Benefit Plan, each related trust,
each collective bargaining agreement or by law (foreign or domestic) to be made
to, or with respect to each Employee Benefit Plan. To the Knowledge of the
Company, (i) no Employee Benefit Plan is under audit or investigation by the
IRS, the Department, the Pension Benefit Guaranty Corporation, or any other
governmental agency (foreign or domestic) and (ii) no such audit or
investigation is pending or Threatened.
(d) Except as set forth on SCHEDULE 5.12(D), no Graco Company
or ERISA Affiliate presently sponsors, maintains, contributes to, is required to
contribute to, nor has any of the Graco Companies or any ERISA Affiliate ever
sponsored, maintained, contributed to, been required to contribute to, or
incurred any withdrawal liability (within the meaning of section 4201 of ERISA)
to, any Employee Benefit Plan which is an "employee pension benefit plan" within
the meaning of section 3(2) of ERISA which is subject to Title IV of ERISA or
which is a "multiemployer plan" within the meaning of sections 3(37) and
4001(a)(3) of ERISA. No Graco
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<PAGE> 20
Company or ERISA Affiliate has any liability, contingent or otherwise, to, with
respect to, or arising from (i) the Prior Salary Continuation Plan, other than
for the payment of certain disability and survivor benefits to those persons
listed on Exhibit 3 to SCHEDULE 5.12(D) to the extent set forth on such Exhibit,
(ii) the Graco Metals Products, Inc. Employee Pension Plan, or (iii) the
Pleasant Manufacturing Company Profit Sharing Plan.
(e) Except as set forth on SCHEDULE 5.12(E), no Graco Company
or any ERISA Affiliate maintains or contributes to any Employee Benefit Plan
which provides, or has any liability to provide, life insurance, medical,
severance or other employee welfare benefits to any Employee upon his retirement
or termination of employment, except as may be required by section 4980B of the
Code, and, to the Knowledge of the Company, no Graco Company or any ERISA
Affiliate has ever represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group)
that such Employee(s) would be provided with life insurance, medical, severance
or other employee welfare benefits upon their retirement or termination of
employment, except to the extent required by section 4980B of the Code.
(f) Except as set forth on SCHEDULE 5.12(F), the execution of
this Agreement and performance of the transactions contemplated hereby will not
(either alone or upon the occurrence of any additional or subsequent events) (i)
constitute an event under any Employee Benefit Plan, trust or loan related to
any such plan or any Employment Agreement that will result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in any benefits or obligation to
fund any material benefits with respect to Employees of the Graco Companies, or
(ii) result in the triggering or imposition of any restrictions or limitations
on the right of any of the Graco Companies or any ERISA Affiliate to amend or
terminate any Employee Benefit Plan and receive the full amount of any excess
assets remaining or resulting from such amendment or termination, subject to
applicable taxes.
(g) Except as set forth on SCHEDULE 5.12(G), no payment or
benefit which will or may be made by any of the Graco Companies, any ERISA
Affiliate, or any of their respective affiliates with respect to any Employee
nor the payment by Purchaser of any portion of Merger Consideration will be
characterized as an "excess parachute payment" within the meaning of section
280G(b)(1) of the Code.
(h) Except as set forth on SCHEDULE 5.12(H), none of the Graco
Companies is a party to any Employment Agreement or Contract or Employee Benefit
Plan providing for the payment of any benefit as a result of the consummation of
the transactions contemplated by this Agreement.
Section 5.13. COMPLIANCE WITH CERTAIN LEGAL REQUIREMENTS;
GOVERNMENTAL AUTHORIZATIONS (a) Except as set forth in SCHEDULE 5.13(A) and
subject to the provisions of SECTION 5.13(C):
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(i) each of the Graco Companies has complied with each Legal
Requirement that is applicable to it or to the conduct or operation of
the Business or to the ownership or use of any of its properties or
assets;
(ii) no event has occurred or circumstances exist that (A)
would constitute or result in a violation by the Graco Companies of, or
a failure on the part of the Graco Companies to comply with, any Legal
Requirement, or (B) would give rise to any obligation on the part of
the Graco Companies to undertake, or to bear all or any portion of the
cost of, any remedial action pursuant to any such Legal Requirement;
and
(iii) since January 1, 1990, none of the Graco Companies has
received any written notice from any Governmental Body or any other
person regarding (A) any actual, alleged, or potential violation of, or
failure to comply with, any Legal Requirement, or (B) any actual,
alleged, or potential obligation on the part of any of the Graco
Companies to undertake, or to bear all or any portion of the cost of,
any remedial action pursuant to any applicable Legal Requirement, nor
have any of the Graco Companies received any such notice prior to
January 1, 1990 that has not been fully complied with or resolved;
except as could not reasonably be expected to have a Material Adverse Effect.
(b) SCHEDULE 5.13(B) contains a complete and accurate list of
each material Governmental Authorization that is held by each of the Graco
Companies or that otherwise relates to or is required in connection with the
Business. Each Governmental Authorization listed in SCHEDULE 5.13(B) is, in all
material respects, valid and in full force and effect. Except as set forth in
SCHEDULE 5.13(B):
(i) each of the Graco Companies has complied in all
material respects with all of the terms and requirements of each
Governmental Authorization applicable to such Graco Company identified
in SCHEDULE 5.13(B); and
(ii) no event has occurred or circumstance exists
that (A) would constitute or result directly or indirectly in a
material violation of or a material failure to comply with any term or
requirement of any Governmental Authorizations listed in SCHEDULE
5.13(B), or (B) would result in the revocation, withdrawal, suspension,
cancellation, or termination of, any Governmental Authorization listed
in SCHEDULE 5.13(B).
(c) Anything to the contrary set forth in this Agreement
notwithstanding, (i) the term "Legal Requirement," as used in this SECTION 5.13,
shall not include, or be deemed to include, any Legal Requirement which
constitutes an Environmental Law; (ii) the term "Governmental Authorization," as
used in this SECTION 5.13, shall not include, or be deemed to include, any
Governmental Authorization which constitutes an Environmental Permit and (iii)
all matters pertaining to Environmental Laws and any environmental liabilities,
and the representations and warranties of the Company with respect thereto,
shall be exclusively governed by, and set forth in, SECTION 5.18.
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Section 5.14. LEGAL PROCEEDINGS; ORDERS; WORKERS' COMPENSATION
CLAIMS (a) Except as set forth in SCHEDULE 5.14:
(i) there is no proceeding that (a) has been
commenced by or against any of the Graco Companies or, to the Knowledge
of the Company, their Related Persons or (b) that, to the Knowledge of
the Company, otherwise relates to, or if adversely determined, could
reasonably be expected to materially and adversely affect, the
Business, or any of the Graco Companies' properties or assets; and
(ii) there is no proceeding that has been commenced
by or against any of the Graco Companies or, to the Knowledge of the
Company, their Related Persons or, to the Knowledge of the Company, by
or against any other person, that challenges or that would have the
effect of preventing or rendering illegal any of the transactions
contemplated hereby; and
(iii) to the Knowledge of the Company, (A) no
proceeding of the type described in SECTIONS 5.14(A)(I) or (II) has
been Threatened, and (B) no event has occurred or circumstances exist
that would give rise to or serve as a basis for the commencement of any
such proceeding.
(b) Except as set forth in SCHEDULE 5.14:
(i) there is no Order to which any of the Graco
Companies or any of their respective properties or assets are subject;
and
(ii) each of the Graco Companies has complied in all
material respects with all of the terms and requirements of each Order
applicable to it set forth in SCHEDULE 5.14.
(c) SCHEDULE 5.14 sets forth a complete and accurate summary
and current status of all pending and, to the Knowledge of the Company,
Threatened workers' compensation claims by any current or former employees of
each of the Graco Companies.
Section 5.15. ABSENCE OF CERTAIN CHANGES AND EVENTS (a) Except
as set forth in SCHEDULE 5.15, and except for the transactions contemplated by
the Agreement, since January 1, 1996, each of the Graco Companies has conducted
the Business only in the ordinary course and none of the following events has
occurred:
(i) (A) amendment to the certificate of
incorporation, bylaws or other organizational documents of any Graco
Company, (B) merger by any Graco Company with or into or consolidation
by any Graco Company with any other person, (C) subdivision in any way
or reclassification of any shares of any Graco Company's capital stock,
or (D) change or agreement to change in any manner the rights of Graco
Company's outstanding capital stock or the character of the Business;
(ii) material payment or material increase by any
Graco Company of any bonuses, salaries, or other compensation to any
director, officer or Employee (except
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in the ordinary course of business) or the execution by any Graco
Company of any Employment Agreement;
(iii) adoption of any Employee Benefit Plan, or any
amendment to any Employee Benefit Plan which would materially increase
any benefits payable thereunder;
(iv) damage to or destruction or loss of any property
or assets of a Graco Company, whether or not covered by insurance,
materially and adversely affecting the Business or financial condition
of the Company, taken as a whole;
(v) execution of, termination of, failure to renew,
or receipt of any written threat or notice of termination of or
intention not to renew any Material Contract;
(vi) sale, lease, or other disposition of any
property or assets of any Graco Company or any mortgage, pledge, or
imposition of any Encumbrance on any of its property or assets,
including the sale, lease, or other disposition of any of the
Intellectual Property, other than (A) sales of inventory in the
ordinary course of the Business, (B) the sale or other disposition of
used machinery or equipment or other property or assets no longer used
or useful in connection with the Business, or (C) any other sale or
disposition of an insubstantial amount of property or assets in the
ordinary course of business consistent with past practice;
(vii) change in the accounting methods or practices
or any change in depreciation or amortization policies or rates used by
the Company;
(viii) declaration or payment of any dividends by the
Company or declaration or making of any other distributions of any kind
by the Company to its stockholders, or any direct or indirect
redemption, retirement, purchase or other acquisition by the Company of
any shares of its capital stock or options, warrants or rights to
purchase such capital stock;
(ix) except for bank borrowings in the ordinary
course of business pursuant to the credit agreement, dated as of June
23, 1995, among Graco, certain commercial lending institutions and The
Bank of Nova Scotia, as amended, and except for capital leases entered
into in the ordinary course of business that are not material to the
Company, taken as a whole, transactions whereby any Graco Company
incurred any indebtedness or assumed, guaranteed or otherwise became
liable or responsible for the obligations of any other person or made
any loans, advances or capital contributions to, or investments in, any
other person or entity (other than subsidiaries of the Company) or
granted any security interest or created or modified any Encumbrance on
any properties or assets of Graco;
(x) modification, amendment, termination or waiver of
any material right or obligation under any Material Contract or other
agreement of the type required to be set forth on any Schedule (other
than as contemplated in SECTION 7.1) or of any asset or liability
reflected in the Balance Sheet, except in the ordinary course of
business consistent
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with past practice, or lapse of any material rights to the use of any
Intellectual Properties or sale, assignment, license, transfer or other
disposition of any material rights thereto;
(xi) material change in any of any Graco Companies'
business policies, including, without limitation, advertising,
investment, marketing, pricing, purchasing, production, personnel,
sales, returns, budget, product acquisition or capital expenditure
policies;
(xii) loan or advance or other transaction by any of
the Graco Companies to or with any of its stockholders, officers,
directors, employees, consultants, agents or other representatives, or
any loan or advance otherwise than in the ordinary course of business
consistent with past practice;
(xiii) payment, directly or indirectly, of any Graco
Company's material Liabilities before the same became due in accordance
with its terms or otherwise than in the ordinary course of business;
(xiv) other than in the ordinary course of business,
consistent with past practice, acceleration or delay by any of the
Graco Companies in the manufacture, shipment or sale of inventory, the
collection of accounts or notes receivable or the payment of accounts
or notes payable or other Liabilities;
(xv) the making or changing of a material Tax
election, compromise of any material Tax Liability, or the making of
any payment to any person other than one of the Graco Companies
pursuant to any agreement, arrangement or contractual obligation
described in Section 5.11(d)(ii);
(xvi) any Graco Company's agreement, whether oral or
written, to do any of the foregoing; or
(xvii) as of the date of this Agreement, any loss of,
or deterioration of relations with, any key employee, customer or
vendor of any Graco Company which could reasonable be expected to be
material to the Business.
(b) Except as set forth on SCHEDULE 5.15, since January 1,
1996, the Company has not suffered any change or event which has or could
reasonably be expected to have a Material Adverse Effect.
Section 5.16. CONTRACTS; LEASES; ABSENCE OF CERTAIN PRACTICES
(a) SCHEDULE 5.16(A) sets forth a complete and accurate list of each Contract to
which any of the Graco Companies is a party, or by or to which any of the Graco
Companies or the properties, assets or operations of the Business may be
subject, of a type described below ("MATERIAL CONTRACTS"), and the Company has
made available to Purchaser for its review true and complete copies of:
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(i) each Contract (other than open sales orders
arising in the ordinary course of business) that involves performance
of services or delivery of goods or materials by any of the Graco
Companies involving amounts in excess of $100,000;
(ii) each Contract (other than open purchase orders
arising in the ordinary course of business) that involves performance
of services for or delivery of goods or materials to any of the Graco
Companies involving amounts in excess of $100,000;
(iii) each open sales or purchase order not in the
ordinary course of business, consistent with past practice that
involves performance of services or delivery of goods by or to any of
the Graco Companies involving amounts in excess of $100,000;
(iv) each material licensing agreement or other
Contract with respect to any of the Intellectual Property;
(v) each Contract with a labor union or association
representing any Employee;
(vi) each joint venture, partnership, and other
Contract (however named) involving a sharing of profits, losses, costs,
or Liabilities by any of the Graco Companies with any other person;
(vii) each Contract containing covenants that purport
to restrict, in any material respect, any of the Graco Companies'
business activity or limit, in any material respect, the freedom of any
of the Graco Companies to engage in any line of business or to compete
with any person;
(viii) each Contract for material capital
expenditures to which any of the Graco Companies is a party;
(ix) each material Contract entered into by any of
the Graco Companies for, or regarding, the sale, distribution,
exportation or importation of products by any distributor, broker,
agent or other representative of any of the Graco Companies which will
be outstanding or otherwise in effect at the Closing Date, together
with the name and address of each distributor, broker, agent or other
representative of any of the Graco Companies that is engaged in the
sale, distribution, import or export of a material amount of products
designed, manufactured or sold by any of the Graco Companies, as well
as a list of all informal material arrangements and understandings
which relate to any of such distributors, brokers, agents or other
representatives (whether or not legally binding and whether oral or in
writing);
(x) each of the Leases;
(xi) each Contract for the sale of any properties,
assets or operations of any of the Graco Companies or the Business
other than inventory in the ordinary course of business, or for the
grant of any option or preferential rights to purchase any such
properties, assets or operations;
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(xii) each Contract relating to the acquisition by
any of the Graco Companies of any operating business or the capital
stock of any other person whether or not consummated, and each option
for the purchase by any of the Graco Companies of any property, assets
or operations;
(xiii) each Contract and other agreement pursuant to
which any party is required to purchase or sell a stated portion of its
requirements or output to another party;
(xiv) each Contract relating to the lending or
borrowing of money, including loan agreements, guarantees of
obligations of affiliates and third parties, performance bonds, letters
of credit, and similar instruments or arrangements;
(xv) each Contract with any current or former
officer, director, stockholder or affiliate of any of the Graco
Companies or with an entity in which any of the foregoing is a
controlling person;
(xvi) each Contract under which any of the Graco
Companies has agreed to share in the Tax liability of any party;
(xvii) each Contract relating to clean-up, abatement
or other actions in connection with the remediation of any material
liabilities relating to Hazardous Substances;
(xviii) each material Contract currently in
negotiation by any of the Graco Companies of a type that is out of the
ordinary course of business, including, without limitation, any
partnership or joint venture agreement, strategic marketing or alliance
agreement or any material refinancing; and
(xix) each material amendment, supplement, and
modification in respect of any of the Contracts or Leases identified in
SECTIONS 5.16(A)(I) through (XIX), inclusive.
(b) Except as set forth on SCHEDULE 5.16(B):
(i) to the Knowledge of the Company, each Contract or
Lease identified in SCHEDULE 5.16(A) is, in all material respects, in
full force and effect and valid and enforceable in accordance with its
terms;
(ii) to the Knowledge of the Company, each of the
Graco Companies and each other person that has or had any Liability
under any Contract or Lease identified in SCHEDULE 5.16(A) has complied
in all material respects with all applicable terms and requirements of
such Contract or Lease; and
(iii) to the Knowledge of the Company, no event has
occurred or circumstance exists that would contravene, conflict with,
or result in a violation or breach of, or give any of the Graco
Companies or any other person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance
of, or to
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cancel or terminate, any Material Contract involving any of the Graco
Companies or the Business or any property or assets of any of the Graco
Companies.
(c) Except as disclosed in Schedule 5.16(c), none of the
Contracts pursuant to which any of the Indebtedness is outstanding require or
otherwise provide for any prepayment penalty, make-whole premium, or similar
payment to be made in connection with the repayment or refinancing or any such
Indebtedness.
(d) None of the terms of the Series B Preferred Shares or the
series A cumulative, redeemable, convertible preferred stock require or
otherwise provide for any prepayment penalty or similar payment to be made in
connection with the redemption or other repayment of any such stock.
(e) Except in accordance with past practice and applicable
law, no direct or indirect payments have been made to any person by any of the
Graco Companies or their respective Related Persons or, to the Knowledge of the
Company, any of their respective distributors, brokers, agents or other
Representatives, for the purposes of inducing such person to sell or purchase
any products to or from any of the Graco Companies or any of their respective
distributors, brokers, agents or other Representatives or to induce such person
not to purchase or sell any items to or from any other person. None of the Graco
Companies, and their respective officers, directors and employees or, to the
Knowledge of the Company, any of their respective distributors, brokers, agents
or other Representatives, have, directly or indirectly, given or made or agreed
to give or make any improper or illegal commission, payment, gratuity, gift,
political contribution or similar benefit, to any customer, supplier,
governmental employee or other person who is or may be in a position to assist
or hinder the Graco Companies or the Business or to assist the Graco Companies
in connection with any actual or proposed transaction relating to the Business
or any of its property or assets.
Section 5.17. INSURANCE (a) SCHEDULE 5.17(A) sets forth a
complete and accurate list and the Company has made available to Purchaser or
its representatives for its review true and complete copies of all "occurrence"
insurance policies and all "claims made" insurance policies (including all
policies or binders of fire, liability, product liability, worker's
compensation, vehicular and other insurance and all surety and fidelity bonds
with respect to the Company and the Business, and all pending applications for
any of the foregoing) currently in force and effect. Such policies, binders and
bonds are valid and binding in accordance with their terms and are in full force
and effect. All premiums and fees due and payable under such insurance policies,
binders and bonds have been paid. The Graco Companies are not in default with
respect to any material provision contained in any insurance policy, binder or
bond and have not failed to give any notice or present any claim under any
policy or binder in due and timely fashion. Except for claims set forth on
SCHEDULE 5.17(A), there are no outstanding unpaid claims under any instrument,
policy or binder, and the Graco Companies have not received any written notice
of cancellation or non-renewal of any such instrument, policy or binder. Except
as set forth on SCHEDULE 5.17(A), the Graco Companies have not received any
written notice from any of its insurance carriers that any insurance premiums
will be materially increased in the future or that any insurance coverage listed
on SCHEDULE 5.17(A) will not be available in the future on substantially the
same terms as now in effect.
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(b) SCHEDULE 5.17(B) identifies:
(i) any material Contract or arrangement, other than
a policy of insurance, for the transfer or sharing of any risk by the
Graco Companies; and
(ii) all obligations of the Graco Companies to
provide coverage to third parties (for example, under Leases or other
Contracts) and the policy under which such coverage is provided.
Section 5.18. ENVIRONMENTAL MATTERS (a) Except as set forth in
SCHEDULE 5.18(A) or as could not reasonably be expected to have a Material
Adverse Effect:
(i) no Real Property or Leased Real Property is
currently being used, nor, to the Knowledge of the Company, has the
Real Property or the Leased Real Property ever been used, to make,
store, handle, treat, dispose of, generate, recycle or transport
Hazardous Substances in violation of any applicable Environmental Law;
(ii) to the Knowledge of the Company, there has never
been a Release, or threatened Release, of Hazardous Substances at, on,
under, from, or within any of the Real Property or Leased Real Property
or any formerly owned or leased real property of the Graco Companies;
(iii) the Graco Companies, the Real Property and the
Leased Real Property fully comply and have fully complied with all
applicable Environmental Laws and Environmental Permits (as hereinafter
defined);
(iv) no proceeding or, to the Knowledge of the
Company, investigation arising under or relating to any Environmental
Laws is pending, or to the Knowledge of the Company is Threatened,
against the Graco Companies or any of the Real Property or any of the
Leased Real Property and, to the Knowledge of the Company, no such
proceeding or investigation is pending or threatened against any
formerly owned or leased real property of the Graco Companies.
(v) none of the Graco Companies has ever received any
written notification, citation, complaint, violation, notice or Order
of any kind from any Governmental Body or any other person relating or
pertaining to any Environmental Laws or any Environmental Costs or the
making, storing, handling, treating, disposing, generating,
transporting, recycling or Release of any Hazardous Substances;
(vi) to the Knowledge of the Company, no above or
below ground storage tanks have ever been used by the Graco Companies
or the Business or by any other person for the storage of any Hazardous
Substances on or under any of the Real Property or any of the Leased
Real Property;
(vii) the Graco Companies have obtained and have
filed all required applications for all permits, licenses,
registrations, consents and other authorizations required through the
date hereof with respect to the Real Property, the Leased Real
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Property or the operation of the Business under any Environmental Law
(the "ENVIRONMENTAL PERMITS"), and all such Environmental Permits are,
and have continuously been, in full force and effect;
(viii) to the Knowledge of the Company, none of the
Graco Companies, nor any of their respective affiliates, employees and
agents, have transported or permitted any person to transport, any
Hazardous Substances used, produced, Released or generated by the
Business or at any Real Property or Leased Real Property, to any site
or location listed or proposed for listing on the National Priorities
List, the Comprehensive Environmental Response, Compensation and
Liability Information System (CERCLIS) or any other similar state or
federal list; and
(ix) to the Knowledge of the Company, there are no
conditions, events, circumstances, facts, activities, practices,
incidents, actions or omissions that (1) are reasonably likely to
interfere with or prevent compliance by the Business, the Real Property
or the Leased Real Property with any Environmental Laws or
Environmental Permits, or (2) may give rise to any liability or other
obligation or form the basis for a claim under any Environmental Law
that arises from the operations of the Business or otherwise relates to
the Real Property or the Leased Real Property.
(b) SCHEDULE 5.18(B) contains a list of all sites or locations
used by each of the Graco Companies during the last 8 years for the disposal of
any material amount of wastes containing Hazardous Substances.
(c) SCHEDULE 5.18(C) sets forth a complete and accurate list
of, and the Company has made available to Purchaser for its review true and
complete copies and results of, any reports, studies, analyses, tests, or
monitorings that it possesses pertaining to Hazardous Substances or hazardous
activities in, on, or under any of the Real Property or Leased Real Property, or
concerning compliance by the Graco Companies with any applicable Environmental
Laws.
Section 5.19. EMPLOYEES Except as set forth on SCHEDULE 5.19,
to the Knowledge of the Company, no senior executive officer, or other key
member of executive management of any of the Graco Companies intends to
terminate his or her employment with the Graco Companies as a result of or in
connection with the transactions contemplated by this Agreement or otherwise.
Section 5.20. LABOR DISPUTES; COMPLIANCE Except as set forth
in SCHEDULE 5.20:
(a) none of the Graco Companies is a party to any labor
Contract or collective bargaining agreement with respect to Employees and no
such Contract or agreement is currently being negotiated by any of the Graco
Companies, and there has not been, there is not presently pending or existing,
and to the Knowledge of the Company, there is not Threatened (i) any strike,
slowdown, picketing, work stoppage, labor arbitration or proceeding in respect
of the grievance of any Employee, (ii) any application or complaint filed by an
Employee or union with the
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National Labor Relations Board or any comparable Governmental Body, or (iii) to
the Knowledge of the Company, any organizational activity the purpose of which
is to achieve representation of some or all of the Employees by a union for
purposes of collective bargaining, or other labor dispute against or affecting
any of the Graco Companies, and no application for certification of a collective
bargaining agent is pending or, to the Knowledge of the Company, is Threatened;
(b) to the Knowledge of the Company, no event has occurred or
circumstances exist that would provide the basis for any work stoppage or other
labor dispute;
(c) each of the Graco Companies (i) has complied with all
Legal Requirements relating to employment, labor, equal employment opportunity,
nondiscrimination, immigration, wages, hours, unemployment, benefits, as well as
all Occupational Safety and Health Laws, (ii) has withheld all amounts required
by Legal Requirements or by agreement to be withheld from the wages, salaries
and other payments to Employees; (iii) is not liable for any arrears of wages;
and (iv) is not delinquent with respect to any payment to any trust or other
fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other benefits for
Employees, except, in the case of clause (i) of this SECTION 5.19(C), as could
not reasonably be expected to have a Material Adverse Effect; and
(d) none of the Graco Companies is (i) liable for the payment
of any material Taxes, fines, penalties, or other amounts, however designated,
or (ii) involved in any pending proceeding or, to Knowledge of the Company,
aware of any Threatened proceeding, in each case for failure (or an alleged
failure) to comply, in any material respect, with any of the Legal Requirements
described in SECTION 5.20(C).
Section 5.21. INTELLECTUAL PROPERTY.
(a) SCHEDULE 5.21(A) sets forth a complete and accurate list
of all material Contracts to which any of the Graco Companies is a party or by
which any of the Graco Companies is bound that relate to the Intellectual
Property or to the intellectual property or similar proprietary rights of other
persons that are licensed by any of the Graco Companies. To the Knowledge of the
Company, except as set forth in SCHEDULE 5.21(a), there are no outstanding and,
to Knowledge of the Company, no Threatened material disputes or disagreements
with respect to any such Contract. To the Knowledge of the Company, each such
Contract is in full force and effect and valid and enforceable in accordance
with its terms. To the Knowledge of the Company, each of the Graco Companies and
each other person that has or had any Liability under any such Contract has
complied in all material respects with all applicable terms and requirements of
such Contract. To the Knowledge of the Company, no event has occurred or
circumstance exists that would contravene, conflict with, or result in a
violation or breach of, or give any of the Graco companies or any other person
the right to declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel or terminate, any such Contract.
(b) SCHEDULE 5.21(B) sets forth a complete and accurate list
of all Patents. Except as set forth in SCHEDULE 5.21(B):
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(i) each of the Graco Companies is the owner of all
right, title, and interest in and to each of the Patents identified as
being owned by such Graco Company on SCHEDULE 5.21(B), free and clear
of any Encumbrances other than Permitted Encumbrances;
(ii) all of the Patents identified on SCHEDULE
5.21(B) currently comply in all material respects with all Legal
Requirements;
(iii) no Patent identified on SCHEDULE 5.21(B) has
been or is now involved, in any material respect, in any opposition,
interference, reissue, reexamination, or similar proceeding to which
any of the Graco Companies is or was a party or participant and, to the
Knowledge of the Company, there is no potentially interfering patent or
patent application held by any person; and
(iv) no Patent is, to the Knowledge of the Company,
infringed or has been challenged in any material respect nor has any
proceeding been Threatened with respect thereto and, to the Knowledge
of the Company, none of the products manufactured and sold, nor any
process or technology used, by any of the Graco Companies infringes or
is alleged to infringe in any material respect any patent or other
proprietary right of any other person.
(c) SCHEDULE 5.21(C) sets forth a complete and accurate list
of all Marks owned or used by the Graco Companies. Except as set forth in
SCHEDULE 5.21(C):
(i) each of the Graco Companies is the owner of all
right, title, and interest in and to each of the Marks identified as
being owned by such Graco Company on SCHEDULE 5.21(C), free and clear
of all Encumbrances other than Permitted Encumbrances;
(ii) all Marks identified on SCHEDULE 5.21(C)
currently comply in all material respects with all Legal Requirements;
(iii) to the Knowledge of the Company, there is no
potentially interfering trademark or trademark application of any
person relating to the Marks identified on SCHEDULE 5.21(C); and
(iv) to the Knowledge of the Company, no Mark
identified on SCHEDULE 5.21(C) is infringed or has been challenged in
any material respect, no proceeding has been Threatened with respect
thereto and none of the Marks used by the Graco Companies or in the
Business infringes in any material respect or is alleged to infringe
any trade name, trademark, or service mark of any person.
(d) SCHEDULE 5.21(D) sets forth a complete and accurate list
of all Copyrights (including all Copyrights relating to drawings used in the
Business). Except as set forth in SCHEDULE 5.21(D):
(i) each of the Graco Companies is the owner of all
rights, title, and interest in and to each of the Copyrights identified
as being owned by such Graco
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Company on SCHEDULE 5.21(D), free and clear of all material
Encumbrances other than Permitted Encumbrances;
(ii) all of the Copyrights identified on SCHEDULE
5.21(D) currently comply in all material respects with all Legal
Requirements and have, to the Knowledge of the Company, been
registered; and
(iii) to the Knowledge of the Company, no Copyright
identified on SCHEDULE 5.21(D) is infringed, has been challenged in any
material respect, no proceeding has been Threatened with respect
thereto and none of the subject matter of any of such Copyrights
infringes or is alleged to infringe in any material respect any
copyright of any person.
(e) Except as set forth on SCHEDULE 5.21(E), the Graco
Companies own or have the right to use all material Trade Secrets used or
necessary for the operation of the Business, free and clear of all material
Encumbrances, and no Trade Secret has been challenged or, to the Knowledge of
the Company, misappropriated in any material respect nor has any proceeding
been, to the Knowledge of the Company, Threatened with respect thereto and, to
the Knowledge of Company, none of the subject matter of any such material Trade
Secret has been misappropriated or is alleged to have been misappropriated from
any person.
(f) No trade dress of the Graco Companies used or necessary
for the operation of the Business, if any, has been challenged in any material
respect nor, to the Knowledge of the Company, has any proceeding been Threatened
with respect thereto and, to the Knowledge of the Company, none of the subject
matter of any such trade dress has been, or is alleged to have been,
misappropriated from any person.
(g) The Graco Companies own or have the right to use all
Software used or necessary for the operation of the Business, free and clear of
all Encumbrances (other than customary restrictions under applicable software
agreements), and no Software has been misappropriated or challenged in any way
nor has any proceeding been Threatened with respect thereto and, to the
Knowledge of the Company, none of the subject matter of any such Software has
been misappropriated or is alleged to have been misappropriated from any person.
(h) To the Knowledge of the Company, the Graco Companies have
made all filings with Governmental Bodies and have entered into all Contracts,
in each case, as is reasonable and appropriate to protect and preserve their
ownership interests in, or other rights to use, the Intellectual Property,
except as could not reasonably be expected to have a Material Adverse Effect.
Section 5.22. RELATIONSHIPS WITH RELATED PERSONS Except as set
forth in SCHEDULE 5.22:
(a) no Related Person of any of the Graco Companies has any
interest in the Business, any of its properties or assets or any properties or
assets used or necessary to conduct the Business;
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(b) no Related Person of any of the Graco Companies owns of
record or as a beneficial owner, an equity interest or any other financial or
profit interest in any person that has (i) had business dealings or a financial
interest in any transaction with any of the Graco Companies or (ii) engaged in
competition with any of the Graco Companies with respect to any line of products
or services of any of the Graco Companies in any market presently served by any
of the Graco Companies; and
(c) no Related Person of any of the Graco Companies is a party
to any Contract with, or has any claim or right against, the Graco Companies nor
does any Graco Company have any claim or right against any Related Person of any
of the Graco Companies.
Section 5.23. BROKERS OR FINDERS The Graco Companies have
incurred no obligation or Liability, contingent or otherwise, for brokerage or
finder's fees or agent's commissions or other similar payments in connection
with this Agreement or the transactions contemplated by this Agreement for which
Purchaser or Merger Sub will directly or indirectly have any Liability, except
for such amounts as are included in Selling Expenses.
Section 5.24. CUSTOMERS; SUPPLIERS; ETC (a) SCHEDULE 5.24(A)
sets forth the ten largest customers of the Graco Companies during each of 1995
and the first six months of 1996 and the dollar amount of gross sales to each
such customer for each such period. SCHEDULE 5.24(A) also sets forth the ten
largest suppliers to the Graco Companies during each of 1995 and the first six
months of 1996 and the dollar amount purchased from each such supplier for each
such period. As of the date hereof, none of such customers and suppliers has
terminated its relationship with the Graco Companies or materially reduced its
sales or purchases to the Graco Companies or, to the Knowledge of the Company,
has Threatened to do so, other than, in the case of any such reduction of sales
or purchases, in the ordinary course of business or other than as could not
reasonably be expected to be material to the Business. Schedule 5.24(a) also
sets forth the cost of cooperative advertising for the ten largest customers of
the Graco Companies.
(b) To the Knowledge of the Company, none of the customers of
the Graco Companies listed on SCHEDULE 5.24(A) taken as a whole are, as of the
date hereof, currently carrying quantities of products manufactured by the Graco
Companies materially in excess of quantities of such products historically
carried by such customers, taken as a whole. Since January 1, 1996 to the date
of this Agreement, none of the customers identified on SCHEDULE 5.24(A) have
materially and adversely altered their payment practices in respect of amounts
owed to the Graco Companies in a manner which is inconsistent with past
practice. None of the Graco Companies consign any of its products to any
customers.
(c) The information contained in SCHEDULE 5.24(C) is true and
correct in all material respects.
(d) Attached hereto in Schedule 5.24(d) is a true and correct
list of the resin purchases made by the Graco Companies during 1995 and the
first six months of 1996 from the Graco Companies' five largest resin suppliers.
Except as disclosed in SCHEDULE 5.24(D), none of the Graco Companies is party to
or otherwise bound by any resin purchase Contract that is not terminable by a
Graco Company without cost or penalty within 60 days.
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(e) Since January 1, 1996 to the date of this Agreement, the
Graco Companies' five largest suppliers have not materially increased the prices
charged by them to the Graco Companies and, to the Knowledge of the Company, no
such price increase is pending or Threatened.
(f) Since January 1, 1996 to the date of this Agreement, the
Graco Companies have not experienced any material delay outside the ordinary
course of business in receiving goods from their five largest suppliers.
Section 5.25. NO OTHER REPRESENTATIONS OR WARRANTIES Except
for the representations and warranties contained in this Agreement, the Company
makes no representations or warranties, and hereby disclaims any such
representations or warranties by the Company with respect to the execution and
delivery of this Agreement, the transactions contemplated hereby, the Graco
Companies or the Business.
Section 5.26. DISCLOSURE No representation or warranty of the
Company in this Agreement and no statement of the Company in any of the
Schedules hereto makes an untrue statement of a material fact or omits to state
a material fact necessary to make any representation, warranty or statement made
herein or therein, in light of the circumstances in which they were made, not
misleading, except as could not reasonably be expected to have a Material
Adverse Effect.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND MERGER SUB
Each of Purchaser and Merger Sub hereby represents and
warrants to the Company as follows:
Section 6.1. ORGANIZATION AND STANDING Each of Purchaser and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to (i) conduct its business as it is now being
conducted, (ii) own or use the property and assets that it owns or uses, and
(iii) perform all its obligations under all Contracts to which it is a party.
Each of the Purchaser and Merger Sub is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties or
assets owned or used by it, or the nature of the activities conducted by it,
requires such qualification and in which the failure to so qualify could
reasonably be expected to have a material adverse effect on the assets, current
assets, current liabilities, properties, condition (financial or otherwise),
operations, results of operations or prospects of all or any material part of
the Purchaser or its business. Purchaser has delivered to the Company true and
complete copies of the certificates of incorporation and bylaws of each of
Purchaser and Merger Sub as currently in effect and as shall be in effect at the
Effective Time.
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Section 6.2. AUTHORITY; NO CONFLICT (a) Each of Purchaser and
Merger Sub has all requisite corporate right, power and authority to execute and
deliver this Agreement and to perform fully its obligations hereunder. The
execution and delivery of this Agreement and the consummation by each of
Purchaser and Merger Sub of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of each of Purchaser and Merger Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed by each of Purchaser and Merger Sub and
constitutes a valid and binding agreement of each of Purchaser and Merger Sub,
enforceable against each in accordance with its terms.
(b) Except as set forth in SCHEDULE 6.3(B), the execution and
delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not, directly or indirectly (with or
without notice or the lapse of time):
(i) contravene, conflict with, or result in a
violation or breach of or default under any provision, term or
condition of the certificate of incorporation, bylaws or other
organizational documents of either of Purchaser or Merger Sub;
(ii) contravene, conflict with, or result in a
violation or breach of or default under, require filing with
or obtaining consent from any Governmental Body or other
person, or give any Governmental Body or other person the
right to challenge any of the transactions contemplated hereby
or to exercise any remedy or obtain any relief under any Legal
Requirement or any Order to which either of Purchaser or
Merger Sub is subject;
(iii) contravene, conflict with, or result in a
violation or breach of or default under any of the terms,
conditions or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, or terminate
any Governmental Authorization that is held by either of
Purchaser or Merger Sub;
(iv) contravene, conflict with, or result, in a
violation or breach of or default under any provision of, or
give any person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of
or require any Consent under, or to cancel or terminate any
material Contract to which either of Purchaser or Merger Sub
are a party; or
(v) result in the imposition or creation of any
Encumbrance upon or with respect to any of the property or
assets of either of Purchaser or Merger Sub.
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(c) Except as set forth in SCHEDULE 6.3(C), neither Purchaser
nor Merger Sub is, nor will either be, required to give any notice to or obtain
any Consent from any person in connection with the Transactions contemplated
hereby.
Section 6.3. BROKERS AND FINDERS Purchaser and Merger Sub have
incurred no obligation or Liability, contingent or otherwise, for brokerage or
finder's fees or agent's commissions or other similar payments in connection
with this Agreement or the transactions contemplated by this Agreement for which
the Company or its stockholders, option holders or warrant holders will directly
or indirectly have any Liability.
Section 6.4. AVAILABLE FUNDS Purchaser has available to it,
and at or prior to the Effective Time, will contribute to the Paying Agent, all
funds necessary to pay the aggregate Merger Consideration, the Series B Merger
Consideration, the Option Consideration and the Warrant Consideration payable
hereunder and to satisfy its and Merger Sub's other obligations hereunder.
ARTICLE 7
COVENANTS
Section 7.1. CONDUCT OF BUSINESS After the date hereof and
prior to the Closing, the Company shall, and shall cause each of its
Subsidiaries to, (a) conduct its operations only in the usual, regular and
ordinary manner substantially consistent with past practices (except as
contemplated by this Agreement), and (b) use reasonable efforts to preserve
intact the present business organization of the Company, keep available the
services of its officers, employees, representatives, agents and consultants and
preserve relationships with those persons having business relationships with the
Company and its Subsidiaries, and maintain in effect current insurance coverage.
Notwithstanding the foregoing, Purchaser and Merger Sub acknowledge and agree
that, immediately prior to the Effective Time, the Acquisition Agreement shall
be terminated by the parties thereto and shall thereafter be of no further force
and effect, and that the Shareholders (as defined in the Acquisition Agreement)
shall thereafter have no liability thereunder.
Section 7.2. FORBEARANCES BY THE COMPANY Except as
contemplated by this Agreement, or as set forth on SCHEDULE 7.2 hereto, or
pursuant to the terms of an agreement disclosed in a schedule hereto, the
Company will not, and will cause each of its Subsidiaries not to, without the
written consent of Purchaser (which consent will not be unreasonably withheld or
delayed), (a) sell, lease, transfer or dispose of any of the assets of the
Company or any of its Subsidiaries, except in each case in the ordinary course
of business; (b) mortgage, pledge or otherwise encumber any of the assets of the
Company or any of its Subsidiaries, except in each case in the ordinary course
of business consistent with past practice; (c) amend, modify, transfer, assign
or cancel any Material Contract or Lease, except in the ordinary course of
business consistent with past practice; (d) except for sales or purchase orders
or other similar agreements for the sale or purchase of goods or services
entered into in the ordinary course consistent with past practice and to be
performed within a period of twelve months from the date of entry, and except
for capital expenditures consistent with the applicable annual budget previously
delivered
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to Purchaser, enter into any contract which will require an expenditure of more
than $500,000 annually by the Company or any of its Subsidiaries; (e) pay any
dividend or make any distribution in respect of the Shares or the Series B
Preferred Shares, or issue any shares of capital stock of the Company or any of
its Subsidiaries (except pursuant to the exercise of Employee Options and
Warrants or the conversion of the Series A cumulative, redeemable, convertible
preferred stock in accordance with their terms) or any securities convertible
into or exercisable or exchangeable for shares of capital stock of the Company
or any of its Subsidiaries other than allocation of previously authorized but
unallocated Employee Options; (f) grant any increase in the base compensation or
other payment (including bonuses) to any director, officer or employee, except
in the ordinary course of business consistent with past practice; (g) amend its
certificate of incorporation or bylaws; or (h) enter into any agreement to do
any of the things described in clauses (a) through (g) above.
Section 7.3. ACCESS From the date of this Agreement until the
Closing Date, the Company will, and will cause each Subsidiary to, at reasonable
times and upon reasonable notice (i) give Purchaser reasonable access to the
personnel, premises, properties, contracts and books and records of the Company
and each Subsidiary; and (ii) furnish Purchaser with monthly balance sheets and
statements of income and cash flows of the Company (the "Interim Financial
Statements") as soon as reasonably practicable but in any event within 25 days
following the end of the month to which such Interim Financial Statements relate
and such other financial and operating data and such other information relating
to the Company and each Subsidiary as Purchaser may from time to time reasonably
request. All access and information will be provided subject to the
confidentiality agreement referred to in SECTION 11.4. Without limiting the
generality of the foregoing provisions of this SECTION 7.3, the Company shall,
upon receipt of reasonable notice and under the Company's coordination, permit
the Purchaser to (a) contact customers and suppliers of and to the Graco
Companies for the purpose of examining the reputation of the Graco Companies
with such customers and suppliers, (b) conduct reasonable inventory sampling at
any facility of the Graco Companies, and (c) conduct one or more Phase I
environmental reviews at any of the facilities of the Graco Companies; provided
in each case, such actions by the Purchaser will be conducted in such a manner
as not to interfere with the operations of the Business or the Graco Companies'
relations with customers, suppliers or employees.
Section 7.4. REASONABLE EFFORTS; OTHER ACTIONS Subject to the
terms and conditions herein provided, each of the parties hereto agrees to (i)
use all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done as promptly as practicable, all things necessary, proper
or advisable under applicable laws, to consummate and make effective the
transactions contemplated by this Agreement, including obtaining any
governmental or other consents, transfers, orders, qualifications, waivers,
authorizations, exemptions and approvals, providing all notices and making all
registrations, filings and applications necessary or desirable for the
consummation of the transactions contemplated herein, including under the HSR
Act; (ii) subject to Section 8.2(ii) and Section 8.3(vii), use all reasonable
efforts to defend any lawsuits or other legal proceedings (whether judicial or
administrative) challenging this Agreement or the consummation of the
transactions contemplated herein, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Body
vacated or reversed; and (iii) use all reasonable efforts to fulfill or obtain
the fulfillment of all other conditions to
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Closing, including, without limitation, the execution and delivery of all
agreements or other documents contemplated hereunder to be so executed and
delivered.
Section 7.5. BOOKS AND RECORDS At the Closing, the Company
shall cause to be delivered to Purchaser all the organizational documents,
minute books, stock ledgers, documents and related items of the Company and each
of its Subsidiaries.
Section 7.6. EXPENSES Except as otherwise provided in this
Agreement, all fees, commissions, and other expenses incurred by any of the
parties hereto in connection with negotiation of this Agreement and in preparing
to consummate the transactions contemplated herein, including the fees of their
respective brokers, finders and counsel, shall be borne by (i) Purchaser, for
such fees or expenses incurred by Purchaser or Merger Sub, or (ii) the Company,
for such fees or expenses incurred by or on behalf of the Company or any
Subsidiary. Purchaser shall bear the cost of any documentary, stamp, sales,
excise, transfer or other similar taxes or recording fees payable in respect of
the Merger.
Section 7.7. INFORMATION STATEMENT The Company will cause a
notice (the "INFORMATION STATEMENT") to be sent, not less than 20 days prior to
the Effective Time, to the stockholders of the Company pursuant to section
262(d)(2) of the DGCL. The Information Statement, at the mailing date thereof,
will not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER, that the foregoing shall not apply to the extent
that any such untrue statement of a material fact or omission to state a
material fact was made by the Company in reliance upon and in conformity with
written information concerning Purchaser, Merger Sub or any of their respective
affiliates furnished to the Company by Purchaser specifically for use in the
Information Statement. The Information Statement, including any amendment or
supplement thereto, shall be prepared by the Company in consultation with
Purchaser and its counsel, and Purchaser promptly shall be provided with a true
and correct copy of such Information Statement and any such amendment or
supplement.
Section 7.8. ANNOUNCEMENTS Except to the extent required by
law or the rules and regulations of the New York Stock Exchange, from the date
of this Agreement through the Closing and, in the event of any termination of
this Agreement pursuant to ARTICLE 9, thereafter, no statement or announcement
of any nature with respect to the existence of this Agreement or the
transactions contemplated herein and no press release shall be issued or made to
any other person by any of the parties hereto, without the express written
consents of both the Company and Purchaser, which consents shall not be
unreasonably withheld. Notwithstanding anything to the contrary set forth in
this Section 7.8, prior to the release of any statement, comment or press
release, the party proposing to make such release shall afford the other party
hereto the opportunity to review such comment, statement or press release.
Section 7.9. UPDATING SCHEDULES The Company will deliver to
Purchaser at least two (2) business days prior to the Closing Date one or more
written updates of or supplements to the Schedules reflecting events occurring
and contracts and agreements entered into after the date of this Agreement
through the Closing Date. To the extent that such updated or supplemental
Schedules reflect matters or events which have occurred after the date of this
Agreement in the ordinary course of the business or, to the extent not in the
ordinary course, which otherwise could not reasonably be expected to have
Material Adverse Effect, and which do not constitute a violation of any of the
Company's covenants set forth in Article 7, then the Schedules attached to this
Agreement will be deemed to be amended as of the Closing Date to include the
information set forth on such updated or supplemental Schedules. To the extent
that such updated
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or supplemental Schedules reflect matters or events which have occurred after
the date of this Agreement outside the ordinary course of the business which
have or could reasonably be expected to have a Material Adverse Effect, then (i)
Purchaser and the Company will negotiate in good faith for a period of at least
seven days to determine the consequences of such disclosures, (ii) the Schedules
attached to this Agreement will be amended only to the extent that Purchaser and
the Company mutually agree as a result of such negotiation and (iii) Purchaser
may elect to terminate this Agreement after the expiration of such seven-day
period if Purchaser's concerns have not been reasonably accommodated, in which
event neither the Company nor Purchaser will have any liability to the other as
a result of such termination.
Section 7.10. OFFICERS' AND DIRECTORS' INDEMNIFICATION (a)
Until the fifth anniversary of the Closing Date, Purchaser shall cause the
Surviving Corporation to keep in effect in each of its certificate of
incorporation and bylaws and the certificates of incorporation and bylaws (or
other comparable documents) of each of its Subsidiaries, provisions providing
for exculpation and indemnification of the respective officers and directors of
the Company and its Subsidiaries to the fullest extent permitted under
applicable law.
(b) In the event Purchaser or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person, then, and in each such case, to the extent necessary to
effectuate the purposes of this SECTION 7.10, proper provision shall be made so
that the successors and assigns of Purchaser assume the obligations set forth in
this SECTION 7.10 and none of the actions described in clauses (i) or (ii) shall
be taken until such provision is made.
Section 7.11. EMPLOYEE BENEFIT MATTERS (a) Until the first
anniversary of the Closing Date, Purchaser will provide, or cause the Surviving
Corporation to provide, to Employees of the Graco Companies (other than
non-employee directors of any of the Graco Companies; provided that such
non-employee directors shall be entitled to the benefits referred to in Section
7.10) employee benefits (including severance benefits as in effect at the
Closing Date) that in the aggregate are substantially comparable to those
currently provided (other than stock option or equity-based plans) by the Graco
Companies to such Employees. Purchaser will, and will cause the Surviving
Corporation to, honor pursuant to their terms all Employee Benefit Plans and
Employment Agreements in existence immediately prior to the Effective Time.
(b) In the event that Employees are or become eligible to
participate in any plans maintained by the Purchaser or its Subsidiaries
("Purchaser Benefit Plans"), Purchaser or its Subsidiary shall grant such
Employees credit for purposes of eligibility and vesting only, for all service
credited for comparable such purposes under the Employee Benefit Plan, other
than with
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respect to new Purchaser Benefit Plans which do not grant past service credit to
Purchaser's employees generally.
(c) Any pre-existing condition exclusion under any Purchaser
Benefit Plan providing medical or dental benefits shall be waived for any
Employee who, immediately prior to commencing participation in such Purchaser
Benefit Plan, was participating in an Employee Benefit Plan providing medical or
dental benefits and had satisfied any pre-existing condition provision under
such Employee Benefit Plan. Any expenses that were taken into account under an
Employee Benefit Plan providing medical or dental benefits in which the Employee
participated immediately prior to commencing participation in a Purchaser
Benefit Plan providing medical or dental benefits shall be taken into account to
the same extent under such Purchaser Benefit Plan, in accordance with the terms
of such Purchaser Benefit Plan, for purposes of satisfying applicable
deductible, coinsurance and maximum out-of-pocket provisions and life-time
benefit limits.
Section 7.12. GAAP EXCLUSIONS Purchaser acknowledges that the
Predecessor Financial Statements shall not be deemed to breach any
representation or warranty contained in this Agreement by reason of the adequacy
of the reserves reported thereon for product liability claims or the failure of
Graco (a) to establish therein IBNR Reserves or Return Reserves or (b) to write
down to fair market value the book value certain assets formerly used in Graco
PA's former Mexican operations.
Section 7.13. EXCLUSIVITY From the date of this Agreement to
the Closing Date, the Company will not, and will cause its Related Persons not
to, directly or indirectly, solicit, entertain or consider proposals or
indications of interest from, enter into negotiations with, provide information
to, or approve a transaction with, any other person looking toward a transaction
with the Company or any Subsidiary with respect to the acquisition, by whatever
means, of the Company or any Subsidiary, or any material assets of the Company
or any Subsidiary.
Section 7.14. WORKING CAPITAL The Company and each of its
Subsidiaries will not (i) delay payment of any accounts payable beyond normal
and customary terms, (ii) fail to maintain adequate inventory or replenish
inventory consistent with past practice, and (iii) accelerate payment of any
accounts receivable other than in the ordinary course.
Section 7.15. CERTAIN AGREEMENTS Until the earlier of (i) the
expiration or termination of the waiting period applicable to the consummation
of the Merger under the HSR Act or (ii) the termination of this Agreement,
Purchaser and Merger Sub agree not to, and each agrees to cause its Related
Persons not to, enter into any agreement to acquire all or a material portion of
the business of any person engaged in the same business as the Business or any
business competitive with the Business.
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ARTICLE 8
CONDITIONS
Section 8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER The respective obligation of the Company, Purchaser and Merger Sub to
effect the Merger shall be subject to the fulfillment at or prior to the Closing
Date of the following conditions:
(a) The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated, and the other
required consents of Governmental Bodies set forth in Schedules 5.3 and 6.2
shall have been obtained.
(b) None of the parties hereto shall be subject to any order
or injunction of a court of competent jurisdiction which prohibits the
consummation of the transactions contemplated by this Agreement.
(c) The Stockholder Approval shall have been received.
Section 8.2. CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT
THE MERGER The obligation of the Company to effect the Merger shall be subject
to the fulfillment of the conditions that, at or prior to the Closing Date, (i)
Purchaser and Merger Sub shall have performed in all material respects their
agreements contained in this Agreement required to be performed at or prior to
the Closing Date and that the representations and warranties of Purchaser and
Merger Sub contained in this Agreement and in any certificate delivered in
connection herewith shall be true and correct in all material respects as of the
Closing Date and the Company shall have received a certificate of the President
or a Vice President of Purchaser and Merger Sub, dated the Closing Date,
certifying to such effect, (ii) no proceeding attempting to prohibit or enjoin
the transactions contemplated hereby shall have been commenced by any
stockholder of Purchaser and (iii) Purchaser shall have entered into the Escrow
Agreement.
Section 8.3. CONDITIONS TO OBLIGATION OF PURCHASER AND MERGER
SUB TO EFFECT THE MERGER The obligations of Purchaser and Merger Sub to effect
the Merger shall be subject to the fulfillment of the conditions that (i) at or
prior to the Closing Date, the Company shall have performed in all material
respects its agreements contained in this Agreement required to be performed at
or prior to the Closing Date, (ii) the representations and warranties of the
Company contained in this Agreement and in any certificate delivered in
connection herewith shall be true and correct as of the Closing Date (except
with respect to representations and warranties made as of a specific time which
shall be true and correct as of such time); provided that the condition set
forth in this Section 8.3(ii) shall be deemed satisfied unless the effect of all
failures of the representations and warranties of the Company to be true and
correct, in the aggregate, could reasonably be expected to result in a Material
Adverse Effect (the failure to be true and correct to be determined, for this
purpose, without regard to any qualification as to, or exception for,
materiality contained in the representations and warranties of the Company
contained in this Agreement, and without giving effect to the word "materially"
or "material" individually or as it appears in the phrase "Material Adverse
Effect"), (iii) Purchaser shall have received a certificate of the President or
a Vice President of the Company, dated the Closing Date, certifying to such
effect, (iv) other than with respect to 2% or less of the Shares, there shall
not be any Dissenting
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Stockholders, (v) the Company shall have given all notices and obtained all
Consents identified on SCHEDULE 5.3(C) with an asterisk, (vi) Purchaser shall
have received a certificate, signed by the Chief Executive Officer, the Chief
Operating Officer and the Chief Financial Officer of the Company, setting forth
the Indebtedness as of the Closing Date, the Selling Expenses, the Merger
Consideration, the Series B Merger Consideration, the Option Consideration, and
the Warrant Consideration, (vii) no proceeding attempting to prohibit or enjoin
the transactions contemplated hereby shall have been commenced by any
stockholder of the Company, (viii) Purchaser shall have received a customary
opinion from Fried, Frank, Harris, Shriver and Jacobson with respect to the
corporate authorization of this Agreement and the transactions contemplated
hereby and confirming that the representations set forth in Sections 5.2(a) and
(b) are correct, (ix) Purchaser shall have received written confirmation from
the Graco Companies' professional advisors that amounts included in Selling
Expenses reflects all amounts of professional fees and expenses referred to in
the definition of Selling Expenses owed to such advisor, and (x) the Escrow
Parties shall have entered into the Escrow Agreement and funded the Escrow
Amount as provided in Section 4.5.
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ARTICLE 8A
INDEMNIFICATION
Section 8A.1 CERTAIN ENVIRONMENTAL MATTERS Notwithstanding
anything to the contrary in this Agreement:
(a) Subject to Section 8A.3, Section 8A.4 and Section 8A.5,
Purchaser and its Related Persons ("Purchaser Indemnitees") shall be entitled to
indemnification from the Escrow Fund (as hereinafter defined) from and against
all Covered Environmental Losses (as hereinafter defined) to the extent that
such Losses are incurred (i) in compliance with the provisions of this Section
8A.1, (ii) at the request of any Governmental Body having jurisdiction over the
Site (it being understood that, in responding to any such request, Purchaser
shall exercise reasonable efforts to persuade any such Governmental Body that
only commercially reasonable requests need be implemented), or (iii) as a result
of any Third Party Claims (as hereinafter defined).
(b) Subject to prior consultation with the Representative, on
behalf of the Escrow Parties, Purchaser shall have the right to plan, implement
and control actions taken to investigate and remediate conditions, or to contest
a proposed remediation (all such actions referred to herein as "Remedial
Actions") subject to indemnification hereunder.
(c) Purchaser and the Merger Sub agree to undertake all such
Remedial Actions in a commercially reasonable manner.
(d) Promptly following the Closing Date, Purchaser shall cause
the Purchaser's Consultant to propose a plan for conducting a Phase II
environmental review of the Site (the "Phase II Plan"). Purchaser shall deliver
a copy of the Phase II Plan to the Representative promptly after receiving it
from the Purchaser's Consultant. The Representative, together with the
Representative's Consultant, shall have a period of 30 days following the
Representative's receipt of the Phase II Plan to provide written objections, if
any, to the Phase II Plan. If the Representative does not provide a written
objection within the 30-day period provided in the preceding sentence, the
Purchaser shall be permitted to implement the Phase II Plan. If the
Representative does provide a written objection to the Phase II Plan within such
30-day period, then Purchaser shall implement the Phase II Plan (i) only after
such objections have been resolved in accordance with the provisions of
subsections (f) or (g) of this Section and (ii) with such modifications thereto,
if any, as shall have been determined in accordance with the provisions of
subsections (f) or (g) of this Section (if applicable, the "Modified Phase II
Plan").
(e) In conjunction with or promptly following completion of
the Phase II Plan or Modified Phase II Plan, as the case may be, the Purchaser
shall cause the Purchaser's Consultant to develop a list of Remedial Actions (if
any) that respond to the Phase II Plan or the Modified Phase II Plan, as the
case may be, in order to cause the Site to comply with the Environmental Laws
(the "Purchaser's Report"). Purchaser shall deliver a copy of the Purchaser's
Report to the Representative promptly after receiving it from the Purchaser's
Consultant. The Representative, together with the Representative's Consultant,
shall have a period of 45 days following the Representative's receipt of the
Purchaser's Report to provide written objections, if any, to the Remedial
Actions proposed in the Purchaser's Report. If the Representative does not
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provide a written objection to the Remedial Actions proposed in the Purchaser's
Report within the 45-day period provided in the preceding sentence, the
Purchaser shall be permitted to implement the Remedial Actions contained in the
Purchaser's Report. If the Representative does provide a written objection to
the Remedial Actions proposed in the Purchaser's Report within such 45-day
period, then Purchaser shall implement the Remedial Actions contained in the
Purchaser's Report (i) only after such objections have been resolved in
accordance with the provisions of subsections (f) or (g) of this Section and
(ii) then only with such modifications thereto, if any, as shall have been
determined in accordance with the provisions of subsections (f) or (g) of this
Section.
(f) To the extent that the Representative delivers a written
objection to the Phase II Plan within the 30-day period provided in subsection
(d) of this Section, or to the extent that the Representative delivers a written
objection to the Purchaser's Report within the 45-day period provided in
subsection (e) of this Section, or both, Purchaser and the Purchaser's
Consultant, on the one hand, and the Representative and the Representative's
Consultant, on the other hand, shall in good faith attempt to resolve any
disagreement on a reasonable basis within a period of 30 days following the date
on which any such disagreement shall arise. To the extent that an agreement is
reached as aforesaid, the Purchaser shall be permitted to implement the Phase II
Plan or the Remedial Actions contained in the Purchaser's Report, as the case
may be, as modified pursuant to such agreement.
(g) Any and all remaining disagreements that cannot be
resolved as aforesaid shall be referred to the Third Party Consultant who shall,
within 30 days following its appointment, evaluate the facts and circumstances
at issue and shall recommend a course of action which it believes in good faith
should be taken (but shall not itself perform such course of action). The
Purchaser's Consultant and the Representative's Consultant shall each provide
all reasonable assistance as may be requested by the Third Party Consultant. The
recommendation of the Third Party Consultant shall be final and binding upon the
Purchaser and the Representative. The Purchaser shall be permitted to implement
the Phase II Plan or the Remedial Actions contained in the Purchaser's Report,
as the case may be, as modified pursuant to the recommendation of the Third
Party Consultant.
(h) Purchaser shall provide the Representative, the
Representative's Consultant and the Third Party Consultant access to all
information and data obtained from or in connection with the Phase II Plan, the
Modified Phase II Plan or the Purchaser's Report, as the case may be, or
reviewed by Purchaser's Consultant in connection therewith, or otherwise
reasonably available or reasonably relevant to Remedial Actions.
(i) For purpose of this Section 8A.1, "commercially
reasonable" shall be determined from the perspective of a reasonable business
person acting (without regard to the availability of indemnification hereunder)
to achieve compliance with Environmental Laws or avoid or mitigate a loss or
liability in respect of Environmental Laws or Environmental Matters.
Section 8A.2 PRODUCT LIABILITY MATTERS Subject to Section
8A.3, and Section 8A.4 and Section 8A.5, Purchaser Indemnitees shall be entitled
to indemnification for any and all Losses arising from or related to Product
Liability Claims (all Losses covered by this Section 8A.2 are referred to in
this Agreement as "IBNR Product Liability Losses").
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Section 8A.3 LIMITATIONS OF INDEMNIFICATION (a) TIME.
Purchaser Indemnitees shall have no right to indemnification pursuant to
Sections 8A.1 and 8A.2 unless, on or before the expiration of the five year
period immediately following the Closing Date, the Representative is given
written notice from Purchaser of a bona fide indemnity claim specifying the
factual basis of that claim in reasonable detail (a "Claim Notice"). Subject to
Section 8A.4(b), with respect to any claim for which a Claim Notice has been
given to the Representative prior to the expiration of the five year time
period, the right of the Purchaser Indemnitees to indemnification for such claim
shall survive without limitation as to time until such claim is resolved.
(b) ENVIRONMENTAL RESERVES; SHARING OF LOSSES IN EXCESS OF
RESERVES. No Purchaser Indemnitee shall have any entitlement to indemnification
pursuant to Section 8A.1 until the total of all Losses with respect to Covered
Environmental Losses exceeds the reserves, if any, for Environmental Costs that
are specifically allocated to the Site on the books and records of the Company
on July 31, 1996 (the "Environmental Reserve"). Thereafter, a Purchaser
Indemnitee shall be entitled to indemnification from the Escrow Fund (A) for
100% of the excess of Covered Environmental Losses over the Environmental
Reserve, but only to the extent that the excess of Covered Environmental Losses
over the Environmental Reserve does not exceed $3,250,000 (which excess over
$3,250,000 shall be subject to clause (B) of this sentence) and (B) for 80% of
the excess of Covered Environmental Losses over the Environmental Reserve, but
only to the extent that the excess of Covered Environmental Losses over the
Environmental Reserve exceeds $3,250,000 and does not exceed $7,250,000, and no
Covered Environmental Losses in excess of $7,250,000 shall be indemnified
hereunder.
(c) IBNR PRODUCT LIABILITY RESERVES; SHARING OF LOSSES IN
EXCESS OF RESERVES. No Purchaser Indemnitee shall have any entitlement to
indemnification pursuant to Section 8A.2 until the total of all Losses with
respect to such IBNR Product Liability Losses exceeds the IBNR Product Liability
Reserve recorded on the books and records of the Company on July 31, 1996 (the
"IBNR Product Liability Reserve"). Thereafter, a Purchaser Indemnitee shall be
entitled to indemnification from the Escrow Fund for all IBNR Product Liability
Losses in excess of the IBNR Product Liability Reserve to the extent that the
excess does not exceed $2,000,000, and no IBNR Product Liability Losses in
excess of $2,000,000 shall be indemnified hereunder.
Section 8A.4 ESCROW ACCOUNT (a) Following the Closing Date,
the Purchaser Indemnitees' right to indemnification out of funds held in the
Escrow Account (the "Escrow Fund") shall be the Purchaser's Indemnitees' sole
and exclusive remedy for any and all claims, after Losses or Liabilities.
(b) On the fifth anniversary of the Closing Date all monies
remaining in the Escrow Account shall be paid to the Representative for
distribution to the Escrow Parties in accordance with their respective
interests, provided, however, that if on the fifth anniversary of the Closing
Date, there is outstanding any unresolved claim or claims under one or more
Claim Notices delivered in accordance with Section 8A.3, then all monies
remaining in the Escrow Fund shall be paid to the Representative as described
above, except that there will be maintained in the Escrow Account (x) in the
case of unresolved Third Party Claims, that amount that would reasonably be
required to be reserved by the Purchaser on its balance sheet with respect to
such
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claims or (y) in the case of claims related to Remedial Action, that amount
which is the "net present value" (as agreed in good faith between Purchaser and
the Representative) of the Environmental Costs that Purchaser reasonably expects
to expend on such Remedial Action. In the event of a disagreement between the
parties regarding the amount of funds to be maintained in the Escrow Account,
Purchaser and the Representative will each in good faith attempt to resolve the
disagreement. If the Representative and Purchaser are unable to resolve their
disagreement, each agrees that such dispute shall be submitted to arbitration
before the American Arbitration Association under such association's rules. The
ruling of such arbitration shall be final and binding upon the parties hereto.
Any amounts remaining in the Escrow Account after the resolution of all
outstanding claims will be paid to the Representative for distribution to the
Escrow Parties in accordance with their respective interests.
Section 8A.5 THIRD PARTY CLAIMS When a Purchaser Indemnitee
receives notice of any claims made by third parties ("Third Party Claims"),
which is or may be the basis for a claim for indemnification hereunder, the
Purchaser Indemnitee shall promptly deliver a Claim Notice to the
Representative. The Purchaser Indemnitees shall have the right to defend,
compromise or settle any Third Party Claims in its discretion provided that the
Purchaser Indemnitees shall, prior to any such compromise or settlement, provide
the Representative with written notice of any such compromise or settlement. In
its defense, compromise or settlement of any Third Party Claims, Purchaser shall
observe practices and standards consistent with those utilized by Purchaser in
defending, compromising or settling third party claims asserted against
Purchaser for which indemnification is not available.
Section 8A.6 INSURANCE AND TAX RECOVERIES If, at the time
Purchaser submits a claim or indemnification hereunder, Purchaser has not
received the proceeds of any insurance available to Purchaser in respect of the
matter for which indemnification is claimed or has not realized any tax benefits
arising from related Losses, the amount of Losses to be indemnified hereunder in
respect of such claim shall not be reduced but shall be paid without regard to
such insurance and tax benefits and Purchaser shall return to the Escrow Agent
for deposit to the Escrow Fund the amount of such insurance benefits when
received or the amount of such tax benefits when realized. Purchaser shall
pursue recovery of available insurance proceeds in the normal course.
Section 8A.7 CERTAIN DEFINITIONS For purposes of this Article
8A:
"COVERED ENVIRONMENTAL LOSSES" shall mean any and all Losses based upon
or resulting or arising from the Environmental Matters set forth in paragraph
(ii) of Schedule 5.18(a), including, without limitation, all of the costs
incurred by Purchaser in performing the Phase II Plan or Modified Phase II Plan,
as the case may be.
"ESCROW AGENT" shall mean the bank or other financial institution
reasonably satisfactory to the Purchaser and the Company designated as the
escrow agent under the Escrow Agreement.
"ESCROW AGREEMENT" shall mean an escrow agreement in form and substance
reasonably satisfactory to Purchaser, the Escrow Agent and the Company which
shall be prepared, negotiated and finalized as promptly as practicable and prior
to the Closing Date.
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"ESCROW AMOUNT" shall mean $8,450,000.
"LOSSES" shall mean each and all of the following items to the extent
actually incurred: all claims, liabilities, obligations, losses, damages
(including, without limitation, any actual or punitive damages under any
statutory laws, common law causes of action, contractual obligations or
otherwise, Environmental Costs, and damages (i) to third parties for personal
injury or property damage or (ii) to natural resources), deficiencies,
assessments, encumbrances, judgments or causes of action, fines, penalties,
costs, expenses (including, without limitation, reasonable attorneys' fees and
costs and expenses incurred in investigating, preparing or defending against any
litigation, claim, action, suit or other proceeding or demand related to the
foregoing), in each case, subject to Section 8A.6 hereof, net of available
insurance proceeds and tax benefits.
"PRODUCT LIABILITY CLAIMS" means any claims, Losses or Liabilities
arising from or related to any injury, death or damage to individuals or
property that occurred on or before the Closing Date by reason of the ownership,
possession or use of or otherwise arising from or relating to any product
designed, manufactured or sold by any of the Graco Companies, but which incident
of injury, death or damage was not, as of the Closing Date, reported to the
Company; PROVIDED, HOWEVER, "Product Liability Claims" shall not include claims
arising from incidents of injury, death or damages to individuals or property
occurring after the Closing Date, regardless of the date of design, manufacture
or sale of the applicable product of the Graco Companies.
"PURCHASER'S CONSULTANT" shall mean a nationally recognized
environmental consultant selected by Purchaser who or which shall not have been
previously engaged by Purchaser or the Company in respect of the Site.
"REPRESENTATIVE" shall mean AEA Investors Inc.
"REPRESENTATIVE'S CONSULTANT" shall mean a nationally recognized
environmental consultant selected by the Representative who or which shall not
have been previously engaged by Purchaser or the Company in respect of the Site.
"SITE" shall mean the Real Property located in Elverson, Pennsylvania.
"THIRD PARTY CONSULTANT" shall mean an independent, nationally
recognized environmental consultant selected as follows: Within 10 days after
the occurrence of the events giving rise to the need to select a Third Party
Consultant, the Purchaser's Consultant and the Representative's Consultant shall
mutually select the Third Party Consultant; if the Purchaser's Consultant and
the Representative's Consultant are not able to agree to the selection of such
consultant within such 10-day period, then they shall refer the matter to the
American Arbitration Association with instructions to select the Third Party
Consultant within 10 days thereafter.
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ARTICLE 9
TERMINATION
Section 9.1. TERMINATION BY MUTUAL CONSENT This Agreement may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time by the mutual written consent of Purchaser and the Company.
Section 9.2. TERMINATION BY EITHER THE COMPANY OR PURCHASER
This Agreement may be terminated and the Merger may be abandoned by either the
Company or Purchaser if (a) the Closing shall not have occurred on or before
October 31, 1996, (b) a court of competent jurisdiction or governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the Merger contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable or (c)
the Stockholder Approval shall not have been obtained within 7 days of the date
of this Agreement; and provided, in the case of a termination pursuant to clause
(a) above, that the terminating party shall not have breached its obligations
under this Agreement in any manner that shall have proximately contributed to
the occurrence of the failure referred to in said clause.
Section 9.3. TERMINATION BY THE COMPANY This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Closing by
the Company, if (a) there has been a material breach of any representation or
warranty of Purchaser or Merger Sub contained in this Agreement or (b) there has
been a material breach of any of the covenants or agreements contained in this
Agreement on the part of Purchaser or Merger Sub, which (in the case of clauses
(a) and (b)) breach is not curable or, if curable, is not cured within 30 days
after written notice of such breach is given by the Company to Purchaser.
Section 9.4. TERMINATION BY PURCHASER This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Closing by
Purchaser, (a) if there has been a breach of any representation or warranty of
the Company contained in this Agreement the effect of which together with all
other breaches of representations and warranties, in the aggregate, could
reasonably be expected to result in a Material Adverse Effect (the existence of
a breach to be determined, for this purpose, without regard to any qualification
as to, or exception for, materiality contained in the representation and
warranties of the Company contained in this Agreement and without giving effect
to the word "materially" or "material" individually or as it appears in the
phrase "Material Adverse Effect"), (b) if there has been a material breach of
any of the covenants or agreements contained in this Agreement on the part of
the Company, which (in the case of clauses (a) and (b)) breach is not cured
within 30 days after written notice of such breach is given by Purchaser to the
Company, or (c) any time before the Closing in accordance with Section 7.9 of
this Agreement.
Section 9.5. EFFECT OF TERMINATION AND ABANDONMENT In the
event of termination of this Agreement and the abandonment of the Merger
pursuant to this ARTICLE 9, all obligations of the parties hereto shall
terminate, except the obligations of the parties pursuant to this SECTION 9.5
and except for the last sentence of SECTION 7.3 and the provisions of SECTIONS
7.6, 7.8, 11.3, 11.4, 11.5, 11.6, 11.8, 11.9, 11.10, 11.11 and 11.12 and the
Confidentiality Agreement
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referred to in SECTION 11.4. Moreover, in the event of termination of this
Agreement pursuant to SECTION 9.3 or 9.4, nothing herein shall prejudice the
ability of the non-breaching party to seek damages from any other party for any
breach of this Agreement, including without limitation, attorneys' fees, or to
pursue any remedy at law or in equity.
ARTICLE 10
CERTAIN DEFINITIONS
Section 10.1. DEFINITIONS
For purposes of this Agreement the following terms shall have the
meanings specified or referred to below, unless the context otherwise requires:
"ACQUISITION AGREEMENT" - the agreement and plan of merger, dated as of
March 25, 1995, among GCP Acquisition Inc., Graco PA and Edward H. Cone and
Robert L. Cone, as amended on June 23, 1995.
"AFFILIATE" - with respect to a specified person, any other person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such person.
"AGENCY AGREEMENT" - an agreement in form and substance satisfactory to
Purchaser, the Company and the Paying Agent providing for the disbursement of
the Merger Consideration, the Series B Merger Consideration, the Option
Consideration and the Warrant Consideration.
"BALANCE SHEET" - the unaudited interim balance sheet of the Company as
of June 29, 1996, a copy of which is attached hereto as SCHEDULE 10.1.1.
"BUSINESS" - the business of the Graco Companies, which includes
manufacturing, marketing, importing, distributing and selling strollers, play
yards, walkers, high chairs and other durable juvenile goods on an international
basis.
"CODE" - the Internal Revenue Code of 1986, as amended, or any
successor law, and any regulations promulgated or proposed by the Internal
Revenue Service pursuant to that code or any successor law.
"CONSENT" - any approval, consent, ratification, waiver, or other
authorization or release under any Contract or otherwise (including any
Governmental Authorization).
"CONTRACT" - any agreement or contract (whether written or oral).
"DEPARTMENT" - as defined in Section 5.12(b).
"DGCL" - as defined in SECTION 1.1.
"DISSENTING STOCKHOLDERS" - as defined in SECTION 4.1(A).
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"EMPLOYEE" - each current, former or retired employee, officer, or
director of the Graco Companies.
"EMPLOYEE BENEFIT PLAN" - each plan, program, policy, payroll practice,
contract (other than an Employment Agreement) or other arrangement providing for
compensation, severance, termination pay, performance awards, bonuses, stock or
stock-related awards, fringe benefits or other employee benefits of any kind,
whether formal or informal, funded or unfunded, written or oral and whether or
not legally binding, including, without limitation, each "employee benefit
plan," within the meaning of section 3(3) of ERISA, which is now or previously
has been sponsored, maintained, contributed to, or required to be contributed
to, by any of the Graco Companies or any ERISA Affiliate for the benefit of any
Employee and pursuant to which any of the Graco Companies or any ERISA Affiliate
has or may have any liability contingent or otherwise.
"EMPLOYMENT AGREEMENT" - each management, employment, severance,
consulting, non-compete, confidentiality, or similar agreement or contract
between one of the Graco Companies and any Employee pursuant to which one of the
Graco Companies has or may have any liability, contingent or otherwise.
"ENCUMBRANCE" - any charge, claim, equitable interest, lien, option,
pledge, security interest, or right of first refusal, restriction, covenant,
easement, license, lease, mortgage, obligation, title defect or imperfection or
other encumbrance or right of others.
"ENVIRONMENTAL COSTS" - without limitation, any cleanup costs,
remediation, removal, or other response costs (which without limitation shall
include costs to cause the Business, the Real Property or the Leased Real
Property to come into compliance with Environmental Laws), investigation costs
(including, without limitation, the reasonable fees and expenses of consultants,
counsel, and other experts in connection with any environmental investigation,
testing, audits or studies), losses, liabilities or obligations (including,
without limitation, liabilities or obligations under any lease or other
contract), payments, damages, civil or criminal fines or penalties, judgments,
and amounts paid in settlement arising out of or relating to or resulting from
any Environmental Matter.
"ENVIRONMENTAL LAW" - without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss.ss. 9601 et
seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
ss.ss. 11001 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
ss.ss. 6901 et seq., the Toxic Substances Control Act, 15 U.S.C. ss.ss. 2601 et
seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. ss.ss.
136 et seq., the Clean Air Act, 42 U.S.C. ss.ss. 7401 et seq., the Clean Water
Act (Federal Water Pollution Control Act), 33 U.S.C. ss.ss. 1251 et seq., the
Safe Drinking Water Act, 42 U.S.C. ss.ss. 300f et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. ss.ss. 1801, et seq., as any of the above statutes
have been or may be amended from time to time through the Closing Date, all
rules and regulations promulgated through the Closing Date pursuant to any of
the above statutes, and any other foreign, federal, state or local law, statute,
ordinance, rule or regulation governing Environmental Matters, as the same have
been or may be amended from time to time through the Closing Date, including any
common law cause of action providing any right or remedy with
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respect to Environmental Matters, and all applicable judicial and administrative
decisions, orders, and decrees made through the Closing Date relating to
Environmental Matters.
"ENVIRONMENTAL MATTER" - any matter (i) arising out of, relating to, or
resulting from pollution or contamination, (ii) relating to emissions,
discharges, disseminations, releases or threatened releases, of Hazardous
Substances into the air, surface water, ground water, soil, land surface or
subsurface, buildings, facilities, real or personal property or fixtures, (iii)
otherwise arising out of, relating to, or resulting from the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
handling, release or threatened release of Hazardous Substances or (iv)
affecting human health and related to the foregoing.
"ERISA" - the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, and regulations and rules issued or proposed
pursuant to that act or to any successor law.
"ERISA AFFILIATE" - each business or entity which is a member of a
"controlled group of corporations," under "common control" or an "affiliated
service group" with the Graco Companies within the meaning of sections 414(b),
(c) or (m) of the Code, or required to be aggregated with Graco or Hong Kong
Company under section 414(o) of the Code, or is under "common control" with any
of the Graco Companies, within the meaning of section 4001(a)(14) of ERISA.
"FINANCIAL STATEMENTS" - collectively, (A) Graco's audited balance
sheets as of December 30, 1995, and related audited statements of income and
accumulated earnings and cash flows for, the period from June 23, 1995 to
December 30, 1995, including the notes thereto and the reports prepared in
connection therewith by the independent certified public accountants reporting
thereon, (B) Graco's unaudited interim balance sheet as of June 29, 1996, and
Graco's unaudited interim statements of income and accumulated earnings and
changes in cash flows for the period from December 31, 1995 to June 29, 1996,
copies of which financial statements are attached hereto as SCHEDULE 10.1.2.
"FULLY DILUTED SHARES OUTSTANDING" - the number of Shares outstanding
immediately prior to the Effective Time plus the number of shares of the
Company's common stock issuable upon the exercise of all outstanding Employee
Options and Warrants immediately prior to the Effective Time.
"GAAP" - at any particular time, generally accepted accounting
principles as in effect in the United States at such time; PROVIDED, HOWEVER,
that, if it was permissible to use more than one principle at such time in
respect of a particular accounting matter and one of such permissible principles
was employed by the Company (or Graco), "GAAP" shall refer to the principle
which was then so employed.
"GOVERNMENTAL AUTHORIZATION" - any Consent, license or permit issued,
granted or given by or under the authority of any Governmental Body or pursuant
to any Legal Requirement.
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"GOVERNMENTAL BODY" - any federal, state, local, municipal, foreign or
other governmental or quasi-governmental entity or authority of any nature.
"GRACO" - Graco Children's Products Inc., a Delaware corporation.
"GRACO COMPANIES" - collectively, the U.S. Graco Companies, and Hong
Kong Company.
"HAZARDOUS SUBSTANCES" - any substance that is now or heretofore
regulated by, defined or listed in, or otherwise classified pursuant to, or
forms the basis for liability under, any applicable Environmental Law or Legal
Requirement or Order, as a "pollutant," "contaminant," "hazardous substance,"
"hazardous material," "hazardous air pollutant," "extremely hazardous
substance," or "hazardous waste," "toxic substance," "toxic pollutant," or any
other formulation intended to define, list or classify substances by reason of
their potentially deleterious properties such as ignitability, flammability,
corrosivity, reactivity, combustibility, dispersability, volatility,
carcinogenicity, or toxicity including, without limitation, asbestos,
polychlorinated biphenyls and also including petroleum products, byproducts and
wastes or byproducts associated with the extraction, refining or use of
petroleum, petroleum products or other hydrocarbons, whether or not any such
petroleum products, byproducts, wastes or other hydrocarbons are listed or
classified in such laws or regulations.
"HONG KONG COMPANY" - Graco Children's Products Hong Kong, Limited, a
corporation organized and existing under the laws of Hong Kong.
"HSR ACT" - the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
"IBNR RESERVES" - accounting reserves for incurred but not reported
products liability or employee benefit claims.
"INDEBTEDNESS" - shall mean, without duplication, all obligations of
the Company or any of its Subsidiaries (i) with respect to borrowed money, (ii)
with respect to the subordinated promissory notes issued as merger consideration
pursuant to the Acquisition Agreement, (iii) with respect to reimbursement
obligations relating to letters of credit or similar credit enhancements, (iv)
with respect to Indebtedness of others guaranteed by the Company or any
Subsidiary or for which security interests on the assets of the Company or any
Subsidiary has been granted, (v) with respect to capitalized lease obligations
of the Company or its Subsidiaries or (vi) with respect to accrued interest of
any Indebtedness. In addition, the amount of Indebtedness shall be increased by
any and all costs, fees and expenses (if any) and shall be decreased by any and
all profits, gains or income recognized, in each case, that would be payable to
lenders or other credit parties or recognized by the Company, respectively, as
of the Closing Date if each loan agreement, swap agreement, foreign exchange
contract or other derivative agreement were terminated or settled, as
appropriate, on the Closing Date.
"INTELLECTUAL PROPERTY" - collectively, the following intangible assets
that are owned or used by the Graco Companies in connection with the Business:
(i) the names "Graco Children's Products Inc." and "Graco" and
any derivation thereof, all fictitious business names, and any trade names,
registered and unregistered
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trademarks, servicemarks, and logos, together with all translations,
adaptations, derivations and combinations thereof and used in connection
therewith and including all goodwill associated therewith and any applications,
registrations therefor, and renewals in connection therewith (collectively, the
"MARKS");
(ii) all patents, patent applications and patent disclosures,
together with all reissuances, continuations (in whole or in part), revisions
and reexaminations (collectively, the "PATENTS");
(iii) all copyrights in both published works and unpublished
works that are material to conducting the Business and all applications,
renewals, and registrations thereof (collectively, the "Copyrights");
(iv) all inventions (whether or not patentable), all
proprietary rights and all business information (including without limitation,
ideas, research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer/subscriber lists, supplier lists, pricing and cost
information, and business and marketing plans and proposals), in each case, that
(A) is confidential, (B) is proprietary to the Graco Companies and (C) provides
the Graco Companies with a competitive advantage (collectively "TRADE SECRETS");
and
(v) all computer software (including data and related
documentation) ("SOFTWARE").
"INTERIM FINANCIAL STATEMENTS" - as defined in Section 7.3.
"IRS" - the Internal Revenue Service.
"KNOWLEDGE" - a person will be deemed to have "Knowledge" of a
particular fact or matter if such person is, following due inquiry, actually
aware of such fact or matter, and the Company will be deemed to have "Knowledge"
of a particular fact or matter if any of the individuals listed on SCHEDULE
1.10.3 is actually aware, following due inquiry, of such fact or matter.
"LEASED REAL PROPERTY" - collectively, all real estate described on
SCHEDULE 1.10.4 together with all of the buildings and improvements erected on,
and improvements and asset additions made by the Graco Companies which are
affixed to, such real estate.
"LEASES" - the leases identified on SCHEDULE 1.10.5.
"LEGAL REQUIREMENT" - any federal, state or local law, ordinance,
principle of common law, regulation or statute, domestic or foreign, including,
without limitation, the United States Foreign Corrupt Practices Act, as amended,
and the Occupational Safety and Health Act, as amended.
"LIABILITIES" - collectively, any claim, cost, expenses (including,
without limitation, reasonable attorneys' fees and costs and expenses incurred
in investigating, preparing, defending against or prosecuting any litigation,
claim, action, suit or other proceeding or demand),
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debt, fine, obligation, penalty or liability, whether or not absolute, accrued,
contingent, determined or determinable.
"MATERIAL ADVERSE EFFECT" - a material adverse effect on the business,
assets, current assets, current liabilities, properties, condition (financial or
otherwise), operations or results of operations or prospects of all or any
material part of the Graco Companies or the Business, other than any such
effect, to the extent relating to "prospects", which arises as a result of
general economic or financial conditions or other developments which are not
unique to the Graco Companies, but also affect others who participate in or are
engaged in the lines of business in which the Graco Companies participate or are
engaged.
"MERGER CONSIDERATION" - a cash amount equal to the Purchase Price
divided by the number of Fully Diluted Shares Outstanding.
"OCCUPATIONAL SAFETY AND HEALTH LAW" - any Legal Requirement or
governmental program designed to provide safe and healthful working conditions,
and to reduce occupational safety and health hazards.
"ORDER" - any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body.
"OUTSTANDING DEBT" - an amount equal to the amount of Indebtedness of
the Company and its Subsidiaries outstanding as of the time of measurement, less
the amount of cash and cash equivalents of the Company and its Subsidiaries as
of such time and less Selling Expenses to the extent funded from cash of the
Company or its Subsidiaries or by Indebtedness.
"PERMITTED ENCUMBRANCES" - any non-monetary Encumbrances that would
not, individually or in the aggregate, materially interfere with the present use
of any material asset of the Company or any of its Subsidiaries to which such
Encumbrance attaches, and (ii) any mechanic's, materialmen's, workmen's,
repairmen's, warehousemen's or carrier's lien or other similar Encumbrance which
has arisen or been incurred in the ordinary course.
"PREDECESSOR FINANCIAL STATEMENTS" - Graco's audited balance sheets
for, and related audited statements of income and accumulated earnings and cash
flows for, the fiscal years ended January 2, 1993, January 1, 1994 and December
31, 1994, including the notes thereto and the reports prepared in connection
therewith by the independent certified public accountants reporting thereon.
"PURCHASE PRICE" - $342,693,964 minus the sum of: (i) Outstanding Debt
as of the Closing Date, (ii) the Selling Expenses, and (iii) the aggregate
Series B Merger Consideration.
"REAL PROPERTY" - collectively, the real estate owned by the Graco
Companies and described on SCHEDULE 5.7, together with all right, title and
interest of the Graco Companies in and to all buildings and improvements erected
thereon and all fixtures and appliances installed in, attached to, or situated
in or upon, such real estate and any and all appurtenances relating to such real
estate.
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<PAGE> 55
"RELATED PERSON" - with respect to any specified person shall mean:
(i) any affiliate of such specified person; and
(ii) each person that serves as a director, officer,
partner, or trustee (or in a similar capacity) of
such person.
"RELEASE" - any spilling, leaching, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, dumping or other dissemination.
"RETURN RESERVES" - accounting reserves for the possible future return
of merchandise.
"SELLING EXPENSES" - all costs, fees, and expenses incurred by the
Company, or any of its Subsidiaries (i) relating to the sale of the Company
(whether incurred prior to or after the date hereof and whether incurred in
connection with this Agreement or otherwise and whether or not paid on or prior
to the Closing Date) including, without limitation, all legal fees, accounting
and investment banking fees, and the transaction fee payable to AEA Investors
Inc. or (ii) relating to any proposed or abandoned material business acquisition
by the Company to the extent, in the case of this clause (ii), unpaid as of the
date of this Agreement.
"SUBSIDIARY" - each corporation or other entity with respect to which
the Company, directly or indirectly, owns or controls more than 50% of its
issued and outstanding voting securities.
"TAX" or "TAXES" - any income, gross receipts, value added, profits,
severance, capital, net worth, franchise, license, transfer, sales, use,
payroll, employment, withholding, social security, workers and unemployment
compensation, property (real or personal), gains, occupation, excise and all
other taxes and similar assessments, customs, duties, charges and fees
(including interest, penalties or additions to such taxes and any interest in
respect of such penalties or additions) imposed by the United States or any
state or local taxing authority thereof or therein or by any other country or
jurisdiction or any political subdivision thereof or therein.
"TAX RETURN" - any return, report, form or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with any Tax.
"THREATENED" - a proceeding, claim, dispute or other matter will be
deemed to have been "Threatened" with respect to any person (including the Graco
Companies when such proceeding, claim, dispute or other matter related to the
Graco companies or their respective property or assets), if such person has
received any written demand, statement or other written notice with respect to
such proceeding, claim, dispute or other matter, or otherwise has knowledge
thereof.
"U.S. GRACO COMPANIES" - collectively, the Company, GCP Holdings Inc.,
a Delaware corporation, and Graco.
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<PAGE> 56
ARTICLE 11
GENERAL PROVISIONS
Section 11.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS The representations and warranties contained in this Agreement or in
any instrument delivered pursuant to this Agreement shall not survive beyond the
Closing, and none of the parties nor their respective officers, directors or
shareholders shall have any liability with respect thereto. Covenants or
agreements which by their terms contemplate performance by or at the Closing
Date shall not survive the Closing Date. This SECTION 11.1 shall not limit,
however, any covenant or agreement which by its terms contemplates performance
after the Closing Date (including, without limitation, the provisions of Article
8A hereof).
Section 11.2. NOTICES Any notice required to be given
hereunder shall be sufficient if in writing, and sent by facsimile transmission
and by courier service (with proof of service), hand delivery or certified or
registered mail (return receipt requested and first-class postage prepaid),
addressed as follows:
<TABLE>
<CAPTION>
If to the Company: If to Purchaser or Merger Sub:
<S> <C>
Henry F. Skelsey Rubbermaid Incorporated
GCP Investors Inc. 1147 Akron Road
c/o AEA Investors Inc. Wooster, Ohio 44691-2340
65 East 55th Street Attn: Corporate Secretary
New York, NY 10022 Facsimile: (330) 287-2340
Facsimile: (212) 888-1459
With a copy to: With a copy to:
Frederick H. Fogel, Esq. Jones, Day, Reavis & Pogue
Fried, Frank, Harris, 901 Lakeside Avenue
Shriver & Jacobson Cleveland, Ohio 44114
One New York Plaza Attn: Lyle G. Ganske
New York, NY 10004-1980 Facsimile: (216) 579-0212
Facsimile: (212) 859-4000
</TABLE>
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
Section 11.3. ASSIGNMENT; BINDING EFFECT; BENEFIT Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of ARTICLE 4 and
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<PAGE> 57
SECTION 7.10 (which are for the express benefit of the parties referred to
therein), nothing in this Agreement, express or implied, is intended to confer
on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
Section 11.4. ENTIRE AGREEMENT This Agreement, the exhibits
and schedules hereto, the confidentiality agreement dated, August 14, 1996 (as
amended) as between the Company and Purchaser and any certificate delivered by
the parties in connection herewith constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings (oral and written) among the parties with respect
thereto. The disclosure of any matter in any schedule to this Agreement shall be
deemed disclosed in all other schedules hereto without the necessity of any
specific incorporation by reference, provided that any disclosure under one
schedule (the "Express Disclosure") shall not be deemed disclosed with respect
to any other schedule unless sufficient information is given in the Express
Disclosure to reasonably enable Purchaser to determine its applicability to such
other schedule. The disclosure of any such matter shall expressly not be deemed
to constitute an admission by the Company or to otherwise imply that any such
matter is material for the purposes of this Agreement.
Section 11.5. AMENDMENT This Agreement may be amended by the
parties hereto at any time, provided that no amendment shall be made which by
law requires the further approval of stockholders of the Company without
obtaining such further approval. This Agreement may not be amended or modified
except by an instrument in writing signed by or on behalf of each of the parties
hereto.
Section 11.6. GOVERNING LAW This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to its rules of conflict of laws, except that Article 1 of this Agreement
shall be governed by the laws of the State of Delaware. Each of the Company,
Merger Sub and Purchaser hereby irrevocably and unconditionally consents to
submit to the exclusive jurisdiction of the courts of the State of New York and
of the United States of America located in the Southern District of the State of
New York (the "NEW YORK COURTS") for any litigation arising out of or relating
to this Agreement and the transactions contemplated hereby (and agrees not to
commence any litigation relating thereto except in such courts), waives any
objection to the laying of venue of any such litigation in the New York Courts
and agrees not to plead or claim that such litigation brought in any New York
Court has been brought in an inconvenient forum.
Section 11.7. COUNTERPARTS This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies of this Agreement, each of which may be signed by less than all of the
parties hereto, but together all such copies are signed by all of the parties
hereto.
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<PAGE> 58
Section 11.8. HEADINGS Headings of the Articles and Sections
of this Agreement are for the convenience of the parties only, and shall be
given no substantive or interpretive effect whatsoever.
Section 11.9. INTERPRETATION In this Agreement, unless the
context otherwise requires, words describing the singular number shall include
the plural and vice versa, and words denoting any gender shall include all
genders and words denoting natural persons shall include corporations and
partnerships and vice versa.
Section 11.10. INCORPORATION OF EXHIBITS AND SCHEDULES All
exhibits and schedules hereto are hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein.
Section 11.11. SEVERABILITY Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or otherwise affecting the validity or
enforceability of any of the terms or provisions of this Agreement 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.
Section 11.12. ENFORCEMENT OF AGREEMENT The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with its specific
terms or was otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any New
York court, this being in addition to any other remedy to which they may be
entitled at law or in equity.
Section 11.13. PERFORMANCE BY MERGER SUB Purchaser hereby
agrees to cause Merger Sub to (and, following the Effective Time, to cause the
Company to) comply with its obligations hereunder and to cause Merger Sub to
consummate the Merger as contemplated herein.
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<PAGE> 59
IN WITNESS WHEREOF, the parties have executed this Agreement
and caused the same to be duly delivered on their behalf as of the day and year
first written above.
GCP INVESTORS INC.
By: /S/ HENRY F. SKELSEY
--------------------------------
Name: Henry F. Skelsey
Title: Vice President
RUBBERMAID INCORPORATED
By: /S/ RICHARD D. GATES
--------------------------------
Name: Richard D. Gates
Title: Senior Vice President
RUBBERMAID ACQUISITION CORP.
By: /S/ GEORGE C. WEIGAND
--------------------------------
Name: George C. Weigand
Title: Senior Vice President
-54-
<PAGE> 60
SUMMARY OF DISCLOSURE SCHEDULES
<TABLE>
<CAPTION>
SCHEDULE TITLE TAB
<S> <C> <C>
Schedule 5.1 Subsidiaries 1
Schedule 5.2 Capitalization 2
Schedule 5.3(b) Conflicts 3
Schedule 5.3(c) Necessary Consents 4
Schedule 5.4 Financial Statements 5
Schedule 5.6 Accounts Receivable 6
Schedule 5.7 Equipment; Significant; 7
Interruptions Due to Equipment
Schedule 5.9 Exceptions to Marketable Title to 8
Real Property; Violations or
Proceedings Relating to Real
Property and Leased Real
Property
Schedule 5.10(a) Recall, Replacement or Repair 9
Claims; Express Warranty or
Repair
Schedule 5.10(b) Product Liability 10
Schedule 5.11 Tax Matters 11
Schedule 5.12(a) List of Employee Benefit Plans 12
Schedule 5.12(c) Exceptions Regarding Employee 13
Benefit Plans
Schedule 5.12(d) Employee Pension Benefit or 14
Multiemployer Plans
Schedule 5.12(e) List of Post-Employment Employee 15
Benefit Plans
Schedule 5.12(f) Payment Event 16
Schedule 5.12(g) Parachute Payments 17
Schedule 5.12(h) Employment Agreements 18
Schedule 5.13(a) Exceptions to Compliance with 19
Legal Requirements;
Governmental Authorizations
Schedule 5.13(b) List of Material Governmental 20
Permits; Compliance
Exceptions
Schedule 5.14 Legal Proceedings; Orders; 21
Workers' Compensation Claims
Schedule 5.15 Significant Events Material 22
Adverse Changes
Schedule 5.16(a) Material Contracts 23
Schedule 5.16(b) Exceptions Regarding Material 24
Contracts
</TABLE>
<PAGE> 61
<TABLE>
<S> <C> <C>
Schedule 5.16(c) Prepayment Provisions 25
Schedule 5.17(a) Insurance 26
Schedule 5.17(b) Contracts and Arrangements 27
Regarding Third Party
Insurance Coverage
Schedule 5.18(a) Environmental Matters 28
Schedule 5.18(b) Waste Sites 29
Schedule 5.18(c) Environmental Reports 30
Schedule 5.19 Certain Employees 31
Schedule 5.20 Labor Matters 32
Schedule 5.21(a) Intellectual Property Contracts- 33
Disputes
Schedule 5.21(b) Patents 34
Schedule 5.21(c) Marks 35
Schedule 5.21(d) Copyrights 36
Schedule 5.21(e) Trade Secrets 37
Schedule 5.22 Relationships with Related Persons 38
Schedule 5.24(a) Customers, Suppliers, Holders, etc. 39
Schedule 5.24(c) 1995 Resin Purchases 40
Schedule 5.24(d) Resin Purchase Contracts 41
Schedule 6.3(b) Purchaser Conflicts 42
Schedule 6.3(c) Purchaser's Consents 43
Schedule 7.2 Forebearances by the Company 44
Schedule 10.1.1 June 29, 1996 Balance Sheet 45
Schedule 10.1.2 Financial Statements 46
Schedule 10.1.3 Knowledge 47
Schedule 10.1.4 Leased Real Property 48
Schedule 10.1.5 Leases 49
Schedule 10.1.6 Real Property 50
</TABLE>
-2-
<PAGE> 1
EXHIBIT (2)(ii)
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT, dated as of September 30, 1996, by and
among GCP Investors Inc., a Delaware corporation (the "Company"), Rubbermaid
Incorporated, an Ohio corporation ("Purchaser"), and Rubbermaid Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of Purchaser
("Merger Sub").
Reference is made to the Agreement and Plan of Merger (the
"Merger Agreement"), dated as of August 30, 1996, by and among the Company,
Purchaser and Merger Sub. The parties hereto desire, and hereby agree, for
good and sufficient consideration, to amend the Merger Agreement as hereinafter
set forth.
1. PURCHASE PRICE. The definition of "Purchase Price"
contained in Section 10.1 of the Merger Agreement is amended to delete the
figure $342,693,964 contained therein and replace it with the figure
$337,693,964.
2. INDEBTEDNESS. The definition of "Indebtedness"
contained in the Merger Agreement is amended by the addition of the following
sentence at the end thereof:
"The term "Indebtedness" shall include the outstanding amount
of drafts payable to foreign suppliers (and accrued interest
thereon) and notes payable in respect of deferred payment of
insurance policy premiums (and accrued interest thereon)
solely to the extent that the aggregate of such items as of
the date of determination exceeds $14,100,000."
3. FULL FORCE AND EFFECT. As amended hereby, the Merger
Agreement remains in full force and effect.
4. COUNTERPARTS. This Amendment Agreement may be
executed by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all such counterparts
one and the same instrument.
<PAGE> 2
IN WITNESS WHEREOF, the parties have executed this Amendment
Agreement and caused the same to be duly delivered on their behalf as of the
date and year first written above.
GCP INVESTORS INC.
By:______________________
Name:
Title:
RUBBERMAID INCORPORATED
By:______________________
Name:
Title:
RUBBERMAID ACQUISITION CORP.
By:______________________
Name:
Title:
2
<PAGE> 1
EXHIBIT (99)
RUBBERMAID COMPLETES ACQUISITION OF GRACO CHILDREN'S PRODUCTS
WOOSTER, Ohio, October 3, 1996 -- Rubbermaid Incorporated (NYSE:RBD)
today announced it has completed the acquisition of Graco Children's Products
Inc. Rubbermaid will treat the $320-million cash acquisition as a purchase
transaction and expects no dilution of earnings.
Graco is the largest juvenile furnishings company in the United
States, with the leading market position in early childhood products such as
strollers, play yards and infant swings. The company previously was owned by a
group of investors, including AEA Investors and management.
Graco brings a complementary addition of infant furnishings to
Rubbermaid's existing juvenile products business, The Little Tikes Company.
Little Tikes manufactures and markets traditional toys, furniture and play
equipment for early childhood and commercial use. Common interests of both
companies include:
- Customers and channels of distribution
- Target markets, enlarging the company's relationship
with parents, grandparents, families and related
adults purchasing products for infants and pre-school
children
- Similar outside-U.S. expansion opportunities
- Opportunities for cross-marketing between Graco and
Little Tikes
- Shared focus on product quality and innovative new
product development
Graco's net sales annualized for 1996 are expected to be approximately
$270 million. The company is headquartered in Elverson, Pennsylvania.
Rubbermaid Incorporated, headquartered in Wooster, Ohio, is a
multi-national company which manufactures and markets essential consumer and
commercial products with universal appeal, including housewares, recreational
and agricultural products; institutional and home-health care products; office
and computer furniture and accessories; Little Tikes(R) traditional toys and
commercial play systems; and Graco(R) infant furnishings.
# # #
Analysts' contact: Media contact:
William H. Pfund Lorrie Paul Crum
330/264-6464, Ext. 2477 330/264-6464, Ext.2970
