Exhibit 2.1
ACQUISITION AGREEMENT
by and among
WORLD KITCHEN (GHC), LLC
WKI HOLDING COMPANY, INC.,
WORLD KITCHEN, INC.
XXXXX OF XXXX LIMITED (Barbados)
and
XXXXX OF XXXX LIMITED (Bermuda)
April 29, 2004
TABLE OF CONTENTS
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(not part of Agreement)
Page
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ARTICLE I PURCHASE AND SALE
Section 1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . 6
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Section 1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . 8
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Section 1.3 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . 10
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Section 1.4 Prorations. . . . . . . . . . . . . . . . . . . . . . . . . 11
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Section 1.5 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . 11
Section 1.6 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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Section 1.7 Allocation of Purchase Price. . . . . . . . . . . . . . . . 13
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Section 1.8 Assignment of Contracts and Rights. . . . . . . . . . . . . 14
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ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER
Section 2.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . 14
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Section 2.2 Authorization; Validity of Agreement. . . . . . . . . . . . 15
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Section 2.3 Consents and Approvals; No Violations . . . . . . . . . . . 16
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Section 2.4 Income Statement. . . . . . . . . . . . . . . . . . . . . . 16
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Section 2.5 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . 18
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Section 2.6 Absence of Certain Changes. . . . . . . . . . . . . . . . . 18
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Section 2.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 18
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Section 2.8 No Default; Compliance with Applicable Laws; Permits. . . . 18
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Section 2.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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Section 2.10 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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Section 2.11 Intellectual Property. . . . . . . . . . . . . . . . . . . 21
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Section 2.12 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . 23
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Section 2.13 Title to Assets. . . . . . . . . . . . . . . . . . . . . . 23
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Section 2.14 Legal Compliance . . . . . . . . . . . . . . . . . . . . . 23
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Section 2.15 Real Property. . . . . . . . . . . . . . . . . . . . . . . 24
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Section 2.16 Affiliate Transactions . . . . . . . . . . . . . . . . . . 24
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Section 2.17 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . 24
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2
Section 2.18 Sufficiency of Assets. . . . . . . . . . . . . . . . . . . 25
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Section 2.19 Brokers or Finders . . . . . . . . . . . . . . . . . . . . 25
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Section 2.20 No Other Representations or Warranties . . . . . . . . . . 25
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 3.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . 25
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Section 3.2 Authorization; Validity of Agreement. . . . . . . . . . . . 26
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Section 3.3 Consents and Approvals; No Violations . . . . . . . . . . . 26
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Section 3.4 Sufficient Funds; Solvency. . . . . . . . . . . . . . . . . 27
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Section 3.5 Brokers or Finders. . . . . . . . . . . . . . . . . . . . . 27
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Section 3.6 Investigation by Purchaser. . . . . . . . . . . . . . . . . 28
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ARTICLE IV COVENANTS
Section 4.1 Interim Operations. . . . . . . . . . . . . . . . . . . . . 28
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Section 4.2 Access to Information; Books and Records. . . . . . . . . . 30
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Section 4.3 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . 32
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Section 4.4 Approvals and Consents; Cooperation; Notification . . . . . 32
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Section 4.5 Further Assurances. . . . . . . . . . . . . . . . . . . . . 33
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Section 4.6 Supplements to the Disclosure Schedule. . . . . . . . . . . 33
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Section 4.7 Insurance Coverage. . . . . . . . . . . . . . . . . . . . . 34
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Section 4.8 Seller's Names. . . . . . . . . . . . . . . . . . . . . . . 34
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Section 4.9 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . 35
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Section 4.10 Employees. . . . . . . . . . . . . . . . . . . . . . . . . 35
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Section 4.11 Release of Liens . . . . . . . . . . . . . . . . . . . . . 36
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Section 4.12 Financing. . . . . . . . . . . . . . . . . . . . . . . . . 37
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Section 4.13 Non-Competition; No Solicitation . . . . . . . . . . . . . 37
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Section 4.14 Financial Statements . . . . . . . . . . . . . . . . . . . 39
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ARTICLE V CONDITIONS
Section 5.1 Conditions to Each Party's Obligation to Effect the Closing 40
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Section 5.2 Conditions to the Obligations of Purchaser. . . . . . . . . 41
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Section 5.3 Conditions to the Obligations of Seller . . . . . . . . . . 42
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3
ARTICLE VI INDEMNIFICATION
Section 6.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . 43
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Section 6.2 Adjustment to Purchase Price. . . . . . . . . . . . . . . . 46
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Section 6.3 Exclusive Remedies. . . . . . . . . . . . . . . . . . . . . 56
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ARTICLE VII TERMINATION
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 47
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Section 7.2 Procedure and Effect of Termination . . . . . . . . . . . . 48
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ARTICLE VIII MISCELLANEOUS
Section 8.1 Amendment and Modification. . . . . . . . . . . . . . . . . 49
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Section 8.2 Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . 49
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Section 8.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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Section 8.4 Interpretation. . . . . . . . . . . . . . . . . . . . . . . 50
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Section 8.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 51
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Section 8.6 Entire Agreement; Third Party Beneficiaries . . . . . . . . 51
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Section 8.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . 52
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Section 8.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 52
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Section 8.9 Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . 52
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Section 8.10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 52
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Section 8.11 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 53
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Section 8.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 53
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Section 8.13 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . 53
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Section 8.14 Schedules. . . . . . . . . . . . . . . . . . . . . . . . . 53
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Section 8.15 Representations and Warranties Joint and Several . . . . . 53
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Section 8.16 Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . 54
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Section 8.17 Bulk Sales Act . . . . . . . . . . . . . . . . . . . . . . 54
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EXHIBITS
Exhibit A Transitional Services Agreement
Exhibit B Supply Agreement Term Sheet
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SCHEDULES
Schedule 1.1(a)(iv) Contracts
Schedule 1.1(a)(v) Real Property Lease
Schedule 1.1(a)(vii) Transferred Intellectual Property
Schedule 1.3(w) Product Liability Suits
Schedule 2.4(a) OXO Income Statement
Schedule 2.4(b) OXO Interim Income Statement
Schedule 2.4(c) WKI Financial Statements
Schedule 2.4(d) WKI Interim Financial Statements
Schedule 2.5 Undisclosed Liabilities
Schedule 2.6 Absence of Certain Changes
Schedule 2.7 Litigation
Schedule 2.9 Taxes
Schedule 2.10 ERISA
Schedule 2.12 Contracts
Schedule 2.13 Title to Assets
Schedule 2.16 Affiliate Transactions
Schedule 2.18 Sufficiency of Assets
Schedule 4.1(j) Permitted Hires
Schedule 4.8 Seller's Names
Schedule 4.10 Affected Employees
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ACQUISITION AGREEMENT
ACQUISITION AGREEMENT, dated as of April 29, 2004 (this "Agreement"),
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by and among World Kitchen (GHC), LLC, a Delaware limited liability company, WKI
Holding Company, Inc., a Delaware corporation, World Kitchen, Inc., a Delaware
corporation (collectively, "Seller"), Xxxxx of Xxxx Limited, a Barbados company
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("Purchaser") and Xxxxx of Xxxx Limited, a Bermuda company ("Guarantor").
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WHEREAS, Seller owns OXO International (the "Business"), a division of
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Seller that is a provider of tools and gadgets, including food preparation,
cleaning, storage & organization and garden products;
WHEREAS, on the terms and subject to the conditions of this Agreement,
Purchaser desires to purchase and acquire, and Seller desires to sell and
transfer, or cause to be sold and transferred, the Purchased Assets (as defined
herein); and
WHEREAS, on the terms and subject to the conditions of this
Agreement, Purchaser is willing to assume, and Seller desires to assign to
Purchaser, the Assumed Liabilities (as defined herein).
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound hereby, agree as
follows:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Purchase and Sale. Upon the terms and subject to the
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conditions set forth in this Agreement, at the Closing (as defined below),
Seller shall sell, assign, transfer, convey and deliver to Purchaser, and
Purchaser shall purchase, assume and accept all right, title and interest of
Seller in only the following rights, properties and assets (collectively, the
"Purchased Assets"):
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(i) all inventories, including work-in-process, re-work and
items in transit, used in the operation of the Business, but excluding any
inventories that are excluded in Section 1.2 below or
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have been transferred, consumed or disposed of prior to the Closing in the
ordinary course of business (the "Inventory");
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(ii) goods that are subject to an open purchase order in the
ordinary course of business but not yet received;
(iii) all molds and tooling used in the manufacturing of
products for sale by the Business (to the extent owned by Seller);
(iv) all rights and incidents of interest as of the Closing
in and to all leases, agreements, contracts and commitments (other than the
Transferred Intellectual Property (as defined below) or the Real Property
Lease (as defined below)) for use in the Business that are listed on
Schedule 1.1(a)(iv) or that arise for use in the Business after the date
hereof in the ordinary course of business but excluding all Plans (as
defined below) and all of such contracts that have terminated, expired or
been fully performed prior to the Closing (the "Contracts");
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(v) all rights and incidents of interest to the real
property leases listed on Schedule 1.1(a)(v) (the "Real Property Lease");
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(vi) all rights and interests of Seller in and to any owned
property used exclusively in the Business, including finished goods that
are not inventory;
(vii) to the extent transferable, all of Seller's right,
title and interest in and to (a) to the extent used in the Business, all
inventions (whether patentable or unpatentable and whether or not reduced
to practice), all improvements thereto, and all patents, patent
applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (b) to the extent used primarily in the Business,
all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated therewith
and all applications, registrations and
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renewals in connection therewith, (c) to the extent used primarily in the
Business, all copyrights, and all applications, registrations and renewals
in connection therewith, (d) to the extent used exclusively in the
Business, all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier
lists, pricing and cost information and business and marketing plans and
proposals), (e) to the extent used exclusively in the Business, all
computer software (including data and related documentation), (f) to the
extent used exclusively in the Business, all other proprietary rights and
(g) all copies and tangible embodiments thereof (in whatever form or
medium), any goodwill associated therewith, licenses and sublicenses
granted and obtained with respect thereto and rights thereunder, remedies
against infringements thereof and rights to protection of interests therein
under the laws of all jurisdictions (collectively, the "Intellectual
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Property Rights") including those listed or described on Schedule
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1.1(a)(vii) (collectively, the "Transferred Intellectual Property"), as
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well as any Intellectual Property Rights that arise for use in the Business
after the date hereof, but excluding all of such Intellectual Property
Rights that have terminated, expired or been fully performed prior to the
Closing;
(viii) originals or copies of all books and records of
Seller exclusively relating to the operation of the Business (the "Business
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Books and Records");
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(ix) to the extent transferable, franchises, approvals,
permits, licenses, orders, registrations, certificates, variances and
similar rights obtained from a Governmental Entity relating to the
operation of the Business;
(x) all deposits (including security deposits) deposited by
or on behalf of any Seller as lessee or sublessee under the Real Property
Lease or with respect to any Contract;
(xi) all prepaid expenses of the business; and
(xii) the goodwill of the Business.
Section 1.2 Excluded Assets. Seller shall not sell, assign,
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transfer, convey or deliver to Purchaser, and Purchaser shall not purchase, and
the Purchased
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Assets shall not include, any right, title or interest in any property, asset
(tangible or intangible), claim, contract, lease, license, right or power of
Seller which is not specifically included in the Purchased Assets, including the
following (collectively, the "Excluded Assets"):
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(i) all accounts receivable and notes receivable of the
Business as of the Closing (whether or not arising under Contracts included
in the Purchased Assets);
(ii) all cash, cash equivalents and marketable securities of
Seller;
(iii) all inventories that are located in or are in
transit to the retail stores of Seller or its affiliates, including the
CorningWare Corelle Revere Factory Stores;
(iv) any of Seller's right, title and interest in any monies
due Seller under any supplier, retail, distributor or license agreements
related to the Business, including any clawbacks, allowances, rebates,
royalties and commissions under such agreements, to the extent such items
are related to sales of products occurring prior to the Closing;
(v) any of Seller's right, title and interest in any of the
litigation or contested matters (i) referred to in Section 1.3(w) and (ii)
referred to in Schedule 2.7;
(vi) any rights of Seller under this Agreement, the Xxxx of
Sale (as defined below) (or any other instrument of transfer) or the
Assumption Agreement (as defined below) or any other agreement entered into
by and among Seller and Purchaser or their respective affiliates in
connection with this Agreement and the transactions contemplated hereby
(collectively, the "Ancillary Agreements");
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(vii) any of Seller's right, title and interest in any
insurance policy or coverage;
(viii) any Plans (as defined below) and any pension, profit
sharing or deferred plans or arrangements and trusts
9
and assets thereof and any other employee pension and benefit plan or
arrangement and the assets thereof, if any, maintained by Seller; and
(ix) any right Seller has with respect to Tax credits, Tax
refunds, Tax attributes or any other Tax benefits.
Section 1.3 Assumed Liabilities. Purchaser shall assume and
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thereafter pay, perform or otherwise discharge, as and when the same shall
become due and payable, and shall hold Seller and its affiliates harmless from,
any liabilities, obligations or expenses relating to, arising out of, or in
connection with (a) all obligations arising under the Contracts and the Real
Property Lease which relate to facts, occurrences or circumstances occurring
from and after the Closing Date, and (b) the liabilities recorded in accordance
with GAAP in a manner consistent with the presentation on Schedule 2.5 for the
following balance sheet accounts for the Business: (i) accrued incentive, (ii)
accrued wages, (iii) accrued legal fees, (iv) accrued commissions, (v) customer
allowances - 2003, (vi) customer allowances - 2004 and (vii) accrued royalty
payments (clause (i) through (vii) collectively, the "Closing Date Accruals")
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(clause (a) and (b) collectively, the "Assumed Liabilities"). Notwithstanding
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anything to the contrary contained in this Section 1.3, the Assumed Liabilities
shall not include (s) accounts payable; (t) any obligation or liability
whatsoever arising under or relating to any Plan (except to the extent included
in the Closing Date Accruals or otherwise provided in Section 4.10), including
but not limited to, the WKI Holding Company, Inc. Long Term Incentive Plan, WKI
and OXO Guidelines; (u) amounts payable to Dresdner Kleinwort Xxxxxxxxxxx under
Section 2.19; (v) any claims or suits relating to product liability with respect
to the Business arising out of facts or circumstances occurring prior to the
Closing Date, (w) any obligations of Seller under this Agreement or any of the
Ancillary Agreements, (x) any liabilities or obligations of Seller for Taxes
arising out of the operation of the Business or the ownership of the Purchased
Assets for any period (or portion thereof) ending on or before the close of
business on the Closing Date, (y) any liabilities or obligations relating
primarily to the Excluded Assets or (z) Closing Date Accruals in excess of $5
million on the Closing Date (collectively, the "Excluded Liabilities"). Except
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for the Assumed Liabilities or as otherwise expressly provided herein, Purchaser
shall not assume by virtue of this Agreement, and shall have no liability for,
any liabilities of any Seller (including, without limitation, those related to
the Business) of any kind, character or description to the extent arising out of
facts, occurrences or circumstances occurring prior to the Closing Date.
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Section 1.4 Prorations. All real property taxes, personal property
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taxes and similar ad valorem obligations levied with respect to the Purchased
Assets for a taxable period which includes (but does not end on) the Closing
Date shall be apportioned between Seller and Purchaser as of the Closing Date,
and Seller and Purchaser shall each be responsible for their respective
proportionate shares of such taxes or similar ad valorem obligations (which
proportionate shares shall be determined based on the number of days in such
taxable period at the close of business on the Closing Date, on the one hand,
and the remaining number of days in such taxable period, on the other hand).
Seller shall be liable for the proportionate amount of such taxes or similar ad
valorem obligations that is attributable to the portion of the taxable period
ending at the close of business on the Closing Date, and Purchaser shall be
liable for the proportionate amount of such taxes or obligations that is
attributable to the portion of the taxable period beginning after the Closing
Date. In the case of any Taxes (other than any real property taxes, personal
property taxes and similar ad valorem obligations) that are payable for a
taxable period that includes (but does not end on) the Closing Date, the amount
of such Taxes attributable to the portion of the taxable period that ends on the
Closing Date shall be deemed equal to the amount which would be payable if the
relevant taxable period ended on the Closing Date.
Section 1.5 Purchase Price. The aggregate purchase price for the
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Purchased Assets shall be (i) $275,000,000 in cash (the "Cash Purchase Price")
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plus (ii) the Assumed Liabilities, as adjusted below, plus (iii) the amount, if
any, by which the Closing Date Accruals are less than $4,000,000. On the
Closing Date, Seller shall deliver to Purchaser a statement of the Inventory of
the Business (the "Closing Inventory Statement") as of one (1) business day
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prior to the Closing Date. The Closing Inventory Statement shall be prepared in
accordance with generally accepted accounting principles in a manner consistent
with that used in determining the Interim Inventory Amount (as defined herein).
The quantities of Inventory used to determine the Inventory amount to be
included in the Closing Inventory Statement will be based on the results of a
physical inventory of the Business to be taken one (1) business day prior to the
Closing Date in accordance with generally accepted accounting principles
consistently applied. The physical inventory will be taken by Seller and/or
Seller's representatives and may be observed by Purchaser and/or Purchaser's
representatives. If the Inventory amount on the Closing Inventory Statement
(the "Closing Inventory Amount") is greater than $17,555,000 (the "Interim
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Inventory Amount"), then the Cash Purchase Price will be increased by the amount
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the Closing Inventory Amount exceeds the Interim Inventory Amount. If the
Closing Inventory Amount is less than the Interim Inventory Amount, then the
Cash Purchase Price will be decreased by the amount the Interim Inventory Amount
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exceeds the Closing Inventory Amount. For the avoidance of doubt, the Interim
Inventory Amount does not, and the Closing Inventory Amount will not, include
any Excluded Assets. From and after completion of the physical inventory
referred to above and prior to the Closing, Seller will not ship any Inventory
unless appropriate adjustments are made to the Closing Inventory Amount.
Section 1.6 Closing
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(a) The sale and purchase of the Purchased Assets and the
consummation of the other transactions contemplated by this Agreement shall take
place at a closing (the "Closing") to be held at the offices of Skadden, Arps,
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Slate, Xxxxxxx & Xxxx LLP, 4 Times Square, New York, New York, at 10:00 a.m. New
York time on the second business day following the satisfaction or waiver of all
conditions to the obligations of the parties set forth in Article V hereof or at
such other place, time or date as Seller and Purchaser may mutually agree upon
in writing (the day on which the Closing takes place being the "Closing Date").
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Seller and Purchaser shall use their commercially reasonable efforts to
consummate the transactions contemplated hereby on or before June 1, 2004.
(b) At the Closing, Seller shall deliver or cause to be
delivered to Purchaser:
(i) a xxxx of sale and assignment documents for the
Transferred Intellectual Property, in forms reasonably acceptable to
Purchaser and Seller (the "Xxxx of Sale"), and such other instruments as
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may be reasonably requested by Purchaser to transfer or assign the
Purchased Assets to Purchaser;
(ii) the Transitional Services Agreement (the "Transitional
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Services Agreement"), substantially in the form of Exhibit A attached
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hereto;
(iii) the Real Property Lease Assignment and Assumption
Agreement, in a form reasonably acceptable to Purchaser and Seller (the
"Real Property Lease Assignment and Assumption Agreement');
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(iv) a supply agreement, having the terms set forth in the
term sheet attached as Exhibit B attached hereto and
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otherwise in form and substance reasonably acceptable to the parties (the
"Supply Agreement");and
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(v) a certificate of non-foreign status (as provided by
Treasury Regulations section 1.1445-2(b)(2)) for each of WKI Holding
Company, Inc. and World Kitchen, Inc.
(c) At the Closing, Purchaser shall deliver or cause to be
delivered to Seller:
(i) the Cash Purchase Price by wire transfer in immediately
available funds to an account or accounts designated by Seller;
(ii) an assumption agreement, in a form reasonably
acceptable to Purchaser and Seller (the "Assumption Agreement");
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(iii) the Transitional Services Agreement;
(iv) the Real Property Lease Assignment and Assumption
Agreement; and
(v) the Supply Agreement.
Section 1.7 Allocation of Purchase Price. The parties agree that,
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for all tax and other reporting purposes, Purchaser shall provide Seller with a
proposed allocation of the Cash Purchase Price and the Assumed Liabilities among
the Purchased Assets within 90 days after the Closing Date in accordance with
Section 1060 of the Internal Revenue Code of 1986, as amended. In the event
that Seller and Purchaser cannot agree on an allocation, Seller and Purchaser
shall jointly select a national independent accounting firm (the "Accountant")
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to resolve the differences. The Accountant will be requested to resolve the
dispute and determine the correct allocation in accord with Section 1060 of the
Code, and issue its report within 30 days of engagement, in writing to Seller
and Purchaser. One-half of the fees of the Accountant shall be borne by
Purchaser, and one-half of such fees shall be borne by Seller. Seller and
Purchaser shall cooperate in determining the final allocation of the Cash
Purchase Price and the Assumed Liabilities among the Purchased Assets. Seller
and Purchaser shall be bound by such allocation (and if necessary, any adjusted
allocation), and shall file, or cause to be filed, a Form 8594 and all
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applicable federal, state, local and foreign income, franchise and excise Tax
Returns (as defined below) in a manner that is consistent with such allocation.
If the allocation is disputed by any Taxing Authority (as defined below), the
party receiving notice of such dispute shall promptly notify the other party
hereto concerning the existence of such dispute and the parties shall consult
with each other with respect to all issues related to the allocation in
connection with such dispute.
Section 1.8 Assignment of Contracts and Rights. Anything in this
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Agreement to the contrary notwithstanding, this Agreement shall not constitute
an agreement to assign any Contract or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment thereof, without
the consent of a third party, would constitute a breach or other contravention
thereof or in any way adversely affect the rights of Seller thereunder. Each
party hereto will use its commercially reasonable efforts (but without any
payment of money) to cooperate in obtaining the consent of the other parties to
any such Contract or any claim or right or any benefit arising thereunder or
resulting therefrom for the assignment thereof to Purchaser as Purchaser may
request. If such consent is not obtained on or before the Closing, or if an
attempted assignment thereof would be ineffective or would adversely affect the
rights of Seller thereunder so that Purchaser would not in fact receive all such
rights, Seller and Purchaser will cooperate in a mutually agreeable arrangement
under which Purchaser would obtain the benefits and assume the obligations
thereunder in accordance with this Agreement. Seller will promptly pay to
Purchaser when received all monies received by Seller (less the actual costs to
Seller of cooperating in such arrangements) under any Contract or any claim or
right or any benefit arising thereunder, except to the extent the same
represents an Excluded Asset.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as disclosed in the written statement identified as the
disclosure schedule to this Agreement and delivered by Seller to Purchaser at or
prior to the execution of this Agreement (the "Disclosure Schedule"), Seller
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represents and warrants to Purchaser as follows:
Section 2.1 Organization. Seller is duly organized, validly
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existing and in good standing (or its equivalent) under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and
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operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so existing and in good standing or to
have such power and authority would not have a Business Material Adverse Effect
(as defined below). Seller has heretofore made available to Purchaser a complete
and correct copy of the articles of incorporation and by-laws of Seller, as
currently in effect. As used in this Agreement, "Business Material Adverse
-------------------------
Effect" means any material adverse effect on, the business, financial condition
------
or results of operations of the Business, taken as a whole; provided, however,
-------- -------
that the effects of changes that (i) affect industries and markets in which the
Business operates or the United States economy and which do not
disproportionately affect the Business or (ii) result from changes in GAAP (as
defined below) or interpretations thereof shall, in each case, be excluded from
the determination of Business Material Adverse Effect; and provided, further,
-------- -------
that any adverse change in or effect on the Business, taken as a whole,
resulting from the execution of this Agreement, the announcement of this
Agreement and the transactions contemplated by this Agreement or the compliance
by the parties with the terms of this Agreement shall also be excluded from the
determination of Business Material Adverse Effect. Seller is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
have a Business Material Adverse Effect.
Section 2.2 Authorization; Validity of Agreement. Seller has full
------------------------------------
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Seller of this Agreement and the Ancillary Agreements to which it is a party,
and the consummation of the transactions contemplated hereby and thereby, have
been duly authorized and no other corporate proceedings on the part of Seller
are necessary to authorize the execution and delivery by Seller of this
Agreement or the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby. This Agreement has been, and upon execution
thereof, each Ancillary Agreement executed by it will be, duly executed and
delivered by Seller and (assuming due and valid authorization, execution and
delivery hereof and thereof by Purchaser) is a valid and binding obligation of
Seller enforceable against Seller in accordance with its terms, except that (a)
such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be
15
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
Section 2.3 Consents and Approvals; No Violations. Except for
-------------------------------------
consents that will have been received prior to the Closing and those set forth
on Schedule 2.12 and filings pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), neither the execution,
-------
delivery or performance of this Agreement or the Ancillary Agreements by Seller
nor the consummation by Seller of the transactions contemplated hereby or
thereby will (a) violate any provision of the articles of incorporation or
by-laws of Seller; (b) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or consent under
any agreement, contract, lease, license, instrument, or other arrangement to
which any of the Purchased Assets is subject; (c) result in the creation of any
liens, charges, mortgages, security interest or other encumbrance (other than
encumbrances arising out of this Agreement or restrictions imposed by federal or
state securities or other Law) (collectively, "Encumbrances") upon any of the
------------
Purchased Assets, under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Seller is a party or by which any of them or
any of their properties or assets may be bound; (d) violate any order, writ,
judgment, injunction, decree, law, statute, rule or regulation (collectively,
"Law") applicable to Seller or any of the properties or assets of the Business
---
or (e) require on the part of Seller any filing or registration with,
notification to, or authorization, consent or approval of, any federal, state,
local or foreign court, legislative, executive or regulatory authority or agency
(each of the foregoing, a "Governmental Entity"); except in the case of clauses
-------------------
(b), (c), (d) or (e) for such violations, breaches or defaults that, or filings,
registrations, notifications, authorizations, consents or approvals the failure
of which to obtain, would not have a Business Material Adverse Effect.
Section 2.4 Income Statement
----------------
(a) Presented in Schedule 2.4(a) is an income statement for the
Business for the year ended December 31, 2003 (the "OXO Income Statement"),
--------------------
which has been derived from the audited, consolidated statement of operations of
WKI Holding Company, Inc. prepared in accordance with accounting standards
generally accepted in the United States of America ("GAAP") and filed in the
----
Annual Report on Form 10-K with the Securities and Exchange Commission on
16
March 30, 2004. The OXO Income Statement is unaudited and gives effect to
certain pro forma adjustments as described in Schedule 2.4(a). The OXO Income
Statement does not purport to be indicative of the results of operations which
would actually have occurred if the Business operated on a stand-alone basis or
which may be obtained in the future.
(b) Presented in Schedule 2.4(b) is an income statement for the
Business for the quarterly period ending March 28, 2004 (the "OXO Interim Income
------------------
Statement"), which has been derived from the unaudited, consolidated statement
---------
of operations of WKI Holding Company, Inc. as of March 28, 2004 prepared in
accordance with GAAP. The OXO Interim Income Statement is unaudited and gives
effect to certain pro forma adjustments as described in Schedule 2.4(b). The
OXO Interim Income Statement does not purport to be indicative of the results of
operations which would actually have occurred if the Business operated on a
stand-alone basis or which may be obtained in the future.
(c) Presented in Schedule 2.4(c) are the audited consolidated
balance sheet of WKI Holding Company, Inc. and its consolidated subsidiaries as
of December 31, 2003 and the audited consolidated statements of operation and
cash flow of WKI Holding Company, Inc. and its consolidated subsidiaries for the
twelve month period ended December 31, 2003 (collectively, with the notes
thereto, the "WKI Financial Statements") filed in the Annual Report on Form 10-K
------------------------
with the Securities and Exchange Commission on March 30, 2004. The WKI
Financial Statements present fairly, in all material respects, the financial
position, cash flows and results of operations of WKI Holding Company, Inc. and
its consolidated subsidiaries as of and for the period set forth therein and
have been prepared, in all material respects, in accordance with GAAP applied on
a basis consistent with past practice, except as otherwise noted therein.
(d) Presented in Schedule 2.4(d) are the unaudited consolidated
balance sheet of WKI Holding Company, Inc. and its consolidated subsidiaries as
of March 28, 2004 and the unaudited consolidated statements of operation and
cash flow of WKI Holding Company, Inc. and its consolidated subsidiaries for the
quarterly period ended March 28, 2004 (the "WKI Interim Financial Statements").
--------------------------------
Except for any notes to the WKI Interim Financial Statements, the WKI Interim
Financial Statements present fairly, in all material respects, the financial
position, cash flows and results of operations of WKI Holding Company, Inc. and
its consolidated subsidiaries as of and for the period set forth therein and has
been prepared, in all material respects, in accordance with GAAP
17
applied on a basis consistent with past practice, except as otherwise noted
therein, and subject to normal, recurring year-end adjustments.
Section 2.5 No Undisclosed Liabilities. The liabilities and
--------------------------
obligations set forth on Schedule 2.5 are the accrued liabilities, as of March
28, 2004, that would be reflected or reserved against in a balance sheet of the
Business prepared in accordance with GAAP, consistently applied, as of such
date. Except for liabilities (a) incurred in the ordinary course of business
after March 28, 2004; (b) disclosed, reflected or reserved for on Schedule 2.5
or disclosed in any other section of the Disclosure Schedule; (c) incurred as a
result of or in connection with the transactions contemplated hereby or (d) that
represent executory obligations under any Contract, as of the date hereof, the
Assumed Liabilities do not, and as of the Closing Date will not, include, any
liabilities or obligations that would be required to be reflected or reserved
against in a balance sheet of the Business prepared in accordance with GAAP.
Section 2.6 Absence of Certain Changes. Except as (a) disclosed or
--------------------------
reflected on Schedule 2.6 or (b) contemplated by the transactions pursuant to
this Agreement, from March 28, 2004 to the date hereof, (i) there has been no
Business Material Adverse Effect and (ii) Seller has not, with respect to the
Business, except with respect to any of the Excluded Assets or Excluded
Liabilities, taken any action, which, if taken after the date hereof, would
violate the provisions of Section 4.1.
Section 2.7 Litigation. Except as disclosed or reflected on
----------
Schedule 2.7, as of the date hereof, there is no action, suit, hearing or
proceeding pending or, to the knowledge of Seller, threatened, or, to the
knowledge of Seller, no investigation pending, to which Seller is a party and
relating to the Business, by or before any Governmental Entity that would have a
Business Material Adverse Effect.
Section 2.8 No Default; Compliance with Applicable Laws; Permits
----------------------------------------------------
(a) Seller is not, with respect to the Business, in default or
violation of any term, condition or provision of any applicable Law or Permit
(as defined below), except for defaults or violations that would not have a
Business Material Adverse Effect.
18
(b) Except as would not have a Business Material Adverse Effect,
Seller currently holds, with respect to the Business, all permits, licenses,
authorizations, certificates, exemptions and approvals of Governmental Entities
(collectively, "Permits") necessary for the current use, occupancy and operation
-------
of its assets and the conduct of its business, and all such Permits are in full
force and effect. Except as would not have a Business Material Adverse Effect,
as of the date hereof, Seller has not received, with respect to the Business,
any written notice from any Governmental Entity revoking, modifying or refusing
to renew any Permit or providing notice of violations under any Permit.
Section 2.9 Taxes. Except as disclosed on Schedule 2.9:
-----
(a) Seller, with respect to the Business, (i) has timely filed,
or there have been timely filed on its behalf, all Tax Returns required to be
filed by it and all such Tax Returns were true, correct and complete in all
material respects when filed and (ii) has timely paid or accrued (in accordance
with GAAP) all Taxes shown to be due on such Tax Returns other than such Taxes
as are being contested in good faith and listed on Schedule 2.9.
(b) There are no pending federal, state, local or foreign audits
or examinations of any Tax Return of Seller, with respect to the Business and
Seller has not received any written notice of such an audit or examination and
no deficiencies for any Taxes have been proposed, threatened or assessed in
writing against Seller with respect to the Business.
(c) There are no liens for Taxes upon the Purchased Assets,
except for (i) liens for Taxes not yet due and payable and (ii) liens for Taxes
that are being contested in good faith and listed on Schedule 2.9.
(d) Seller has timely paid all Taxes payable by it which arise
from or with respect to the Purchased Assets or the Business and are incurred in
or attributable to the taxable period (or portion thereof) ending on or before
the close of business on the Closing Date which will have been required to have
been paid on or prior to the Closing Date, the non-payment of which could result
in the imposition of a lien on any Purchased Asset, could otherwise adversely
affect the Purchased Assets or the Business or could result in Purchaser
becoming liable or responsible therefor.
(e) No written claim has been received by Seller from any Taxing
Authority in a jurisdiction where Seller does not file tax returns that it is
subject to taxation in such jurisdiction with respect to the Business.
19
(f) "Tax" or "Taxes" shall mean any and all taxes, fees, levies
--- -----
or other assessments, including, without limitation, federal, state, local, or
foreign income, gross receipts, excise, real or personal property, sales,
withholding, social security, occupation, use, service, value added, license,
net worth, payroll, franchise or similar taxes, imposed by any Taxing Authority
together with any interest, penalties or additions to tax and additional amounts
imposed with respect thereto. "Taxing Authority" shall mean any governmental
----------------
entity responsible for the imposition or collection of any Taxes. "Tax Return"
----------
shall mean any report, return, document, declaration or other information or
filing required to be supplied to any Taxing Authority or jurisdiction (foreign
or domestic) with respect to Taxes.
(g) The representations and warranties set forth in this Section
2.9 shall constitute Seller's only representations with respect to Taxes.
Section 2.10 ERISA
-----
(a) Each "employee benefit plan" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended,
("ERISA"), and each agreement, plan, program, fund, policy, contract or
-----
arrangement (whether written or unwritten) providing compensation, benefits,
pension, retirement, profit sharing, stock bonus, stock option, stock purchase,
phantom or stock equivalent, bonus, incentive, deferred compensation,
hospitalization, medical, dental, vision, vacation, life insurance, death
benefit, sick pay, disability, termination indemnity or severance, educational
assistance, holiday pay, housing assistance, moving expense reimbursement,
fringe benefit or similar employee benefits covering any employee or former
employee of the Business, or the beneficiaries and dependents of any employee or
former employee of the Business (individually, a "Plan" and collectively, the
----
"Plans"), has been listed on Schedule 2.10.
-----
(b) Seller has made available to Purchaser copies of each of the
Plans or summaries thereof, including all amendments thereto to date. Except as
required by applicable law or as disclosed on Schedule 2.10, since December 31,
2003, there have been no amendments or other changes in such Plans which would
increase coverage or benefits thereunder in any material respect. Neither Seller
nor any person that is treated as a single employer with Seller under Section
414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended (the
"Code") (an "ERISA Affiliate") (i) is, or has, participated in any multiemployer
---- ---------------
plan within the meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Plan")
------------------
or (ii) has
20
incurred any liability to a Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan.
(c) There does not now exist, nor do any circumstances exist
that would reasonably be expected to result in, any liability under (i) Title IV
of ERISA, (ii) Section 302 of ERISA or (iii) Sections 412 and 4971 of the Code
that would be a liability of the Business or Purchaser following the Closing.
Further, Seller and the ERISA Affiliates have complied with the provisions of
ERISA Section 601 et seq. and Code Section 4980B ("COBRA"), the provisions of
------- -----
Section 701 et seq. of ERISA and Subtitle K of the Code, Sections 1171 through
-------
1179 of the Social Security Act (relating generally to privacy, security and
electronic transfer of health information) and the Health Insurance Portability
and Accountability Act of 1996, except where such non-compliance would not give
rise to a Business Material Adverse Effect.
(d) No work stoppage or labor strike against the Business or
Seller, with respect to the Business, is pending, threatened or reasonably
anticipated. There is no collective bargaining agreement or union contract
which Seller or the Business is presently a party to, or bound by (or which is
currently being negotiated) with respect to employees who exclusively work for
the Business.
(e) The representations and warranties set forth in this Section
2.10 shall constitute Seller's only representations with respect to the Plans
and employee benefits matters.
Section 2.11 Intellectual Property
---------------------
(a) Except as set forth on Schedule 1.1(a)(vii) and Schedule
2.13, Seller owns and possesses all right, title and interest in, free and clear
of all Encumbrances, or has a license or other right to use, all of the
Transferred Intellectual Property. Schedule 1(a)(vii) sets forth a list of (i)
all patented and registered Transferred Intellectual Property; (ii) all pending
patent applications and applications for the registration of other Transferred
Intellectual Property; (iii) all material trade and corporate names owned or
used, in each case, exclusively, by the Business and included in the Transferred
Intellectual Property; and (iv) all computer software (other than mass-marketed
software subject to "click-through" or "shrinkwrap" licenses or having a license
fee of less than $50,000) owned or used, in each case, exclusively, by the
Business and included in the Transferred Intellectual Property. Except as set
forth on Schedule 1.1(a)(vii) and Schedule 2.13, there is not pending, or to
Seller's knowledge, threatened against Seller and affecting the
21
Business any claim by any third party contesting the validity, enforceability,
use or ownership of any Transferred Intellectual Property. Except as set forth
on Schedule 1.1(a)(vii) and Schedule 2.13, Seller has not received any written
notice, within the two (2) years prior to the date hereof, from any third party
of any infringement or misappropriation by any third party with respect to any
of the Transferred Intellectual Property. Except as set forth on Schedule
1.1(a)(vii) and Schedule 2.13, with respect to the Business, and to Seller's
knowledge, Seller has not materially infringed or misappropriated any
intellectual property rights of any third party, and no third party is
infringing or misappropriating any material Transferred Intellectual Property.
Except as set forth on Schedule 1.1(a)(vii) and Schedule 2.13, with respect to
the Business, and to Seller's knowledge, Seller has not infringed, upon,
misappropriated, or violated any material intellectual property rights of third
parties in any material respect, and, within the two (2) years prior to the date
hereof, Seller has not received any written charge, complaint, claim, demand, or
notice alleging any such infringement, misappropriation or violation (including
any written claim that any of Seller must license or refrain from using any
intellectual property rights of any third party). Except as set forth on
Schedule 1.1(a)(vii), to the knowledge of Seller, no third party has interfered
with, infringed upon, misappropriated or violated any of the Transferred
Intellectual Property in any material respect.
(b) To the knowledge of Seller, all patents set forth in
Schedule 1.1(a)(vii) have been duly filed or registered (as applicable) with the
applicable Governmental Entity, and maintained, including the submission of all
necessary filings and fees in accordance with the legal and administrative
requirements of the appropriate Governmental Entity and have not lapsed, expired
or been abandoned.
(c) Except as set forth on Schedule 1.1(a)(vii) and Schedule
2.13, to the knowledge of Seller, (i) there are no inventorship challenges to
any of the patents set forth in Schedule 1.1(a)(vii), (ii) no interference has
been declared or provoked relating to any such patents and (iii) all maintenance
and annual fees have been fully paid, and all fees paid during prosecution and
after issuance of any such patent have been paid in the correct entity status
amounts, with respect to such patents that have issued.
(d) Seller has taken commercially reasonable and customary
measures and precautions necessary to protect and maintain the confidentiality
of all trade secrets.
(e) All current and former consultants and independent
contractors who are material to the Business who are or were involved in the
creation
22
of or development of any Transferred Intellectual Property have entered into
commercially reasonable agreements relating to the confidentiality of such
matters and that assign the consultant's or independent contractor's inventions
developed for the Business to Seller.
Section 2.12 Contracts. Each of the Contracts is in full force and
---------
effect, except where the failure to be in full force and effect would not have a
Business Material Adverse Effect, and there are no existing defaults by Seller
thereunder, which default would result in a Business Material Adverse Effect.
Except as set forth on Schedule 2.12 or to the extent it would not result in a
Business Material Adverse Effect, the execution of this Agreement and the
consummation of the transactions contemplated hereby will not result in a
violation, or breach of, or constitute (with or without due notice or lapse of
time) a default under any of the terms, conditions or provisions of any
Contract.
Section 2.13 Title to Assets. Seller has good and valid title to
---------------
or, in the case of leased properties and assets, valid leasehold interests in
all of its properties and assets (tangible and intangible) included in the
Purchased Assets, in each case free and clear of all Encumbrances, except for
(a) the items listed on Schedule 2.13; (b) zoning laws and other land use
restrictions that do not materially impair the present use or occupancy of the
property subject thereto; (c) any Encumbrances for Taxes, assessments and other
governmental charges not yet due and payable; (d) any mechanics', workmen's,
repairmen's, warehousemen's, carriers' or other similar Encumbrances arising in
the ordinary course of business, consistent with past practice or being
contested in good faith; and (e) any Encumbrances that, individually or in the
aggregate, are less than $50,000 ((a) through (e) collectively, the "Permitted
---------
Encumbrances").
------------
Section 2.14 Legal Compliance. With respect to the operations of
----------------
the Business, Seller has complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing, investigation
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply, except where the failure to
comply would not have a Business Material Adverse Effect.
23
Section 2.15 Real Property
-------------
(a) Seller owns no real property that is used exclusively in
connection with the Business.
(b) The real property leased under the Real Property Lease is
the only real property that is leased by Seller and such leased premises are
used exclusively by the Business. With respect to the Real Property Lease:
(i) the lease is valid, binding, in full force and effect
in all material respects and enforceable in accordance with its terms
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally;
(ii) to Seller's knowledge, (i) no party to the Real
Property Lease is in material breach or default thereunder and (ii) no
event has occurred which, with notice or lapse of time, would constitute a
material breach or default thereunder; and
(iii) Seller has not assigned, transferred, conveyed or
mortgaged any of its interest in the Real Property Lease.
Section 2.16 Affiliate Transactions. Except as disclosed in
----------------------
Schedule 2.16 and 2.18, (a) neither Seller nor any of its subsidiaries
(excluding the Business) provides or causes to be provided any material assets,
goods, services or facilities used or held for use in connection with the
Business, and (b) the Business does not provide or cause to be provided any
material assets, goods, services or facilities to Seller or any of its
subsidiaries (excluding the Business).
Section 2.17 Inventory. The value of the Inventory as of March 28,
---------
2004, computed in accordance with GAAP, consistently applied, was $17,555,000.
24
Section 2.18 Sufficiency of Assets. Other than the assets,
---------------------
properties and services identified on Schedule 2.18, the Purchased Assets
include all of the assets and properties that are presently used by Seller in
the conduct of the Business, subject to obtaining the required consents listed
on Schedule 2.12.
Section 2.19 Brokers or Finders. No agent, broker, investment
------------------
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Dresdner
Kleinwort Xxxxxxxxxxx, whose fees and expenses will be paid by Seller in
accordance with the agreement with such firm.
Section 2.20 No Other Representations or Warranties. EXCEPT AS
--------------------------------------
SPECIFICALLY AND EXPRESSLY SET FORTH IN THIS ARTICLE II, (A) SELLER MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, RELATING TO
THE PURCHASED ASSETS, THE ASSUMED LIABILITIES OR THE BUSINESS, INCLUDING,
WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY AS TO VALUE, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR FOR ORDINARY PURPOSES, OR ANY OTHER MATTER,
(B) SELLER MAKES NO, AND HEREBY DISCLAIMS ANY, OTHER REPRESENTATION OR WARRANTY
REGARDING THE PURCHASED ASSETS, THE ASSUMED LIABILITIES OR THE BUSINESS AND (C)
THE PURCHASED ASSETS, THE ASSUMED LIABILITIES AND THE BUSINESS BEING TRANSFERRED
TO PURCHASER ARE CONVEYED ON AN "AS IS, WHERE IS" BASIS AS OF THE CLOSING, AND
PURCHASER SHALL RELY UPON ITS OWN EXAMINATION THEREOF.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 3.1 Organization. Each of Purchaser and Guarantor is duly
------------
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted,
25
except where the failure to be so existing and in good standing or to have such
power and authority would not reasonably be expected to hinder, impair or delay
Purchaser's ability to consummate the transactions or Guarantor's obligations
contemplated by this Agreement. Each of Purchaser and Guarantor is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing would not reasonably be expected to hinder, impair or delay Purchaser's
ability to consummate the transactions or Guarantor's obligations contemplated
by this Agreement.
Section 3.2 Authorization; Validity of Agreement. Each of
------------------------------------
Purchaser and Guarantor has full corporate power and authority to execute and
deliver this Agreement and, to the extent applicable, the Ancillary Agreements
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by each of Purchaser and Guarantor of this
Agreement and, to the extent applicable, the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized and no other corporate proceedings on the part of Purchaser and
Guarantor are necessary to authorize the execution and delivery by Purchaser and
Guarantor of this Agreement or, to the extent applicable, the Ancillary
Agreements and the consummation by it of the transactions contemplated hereby
and thereby. This Agreement has been, and upon execution thereof, to the extent
applicable, each Ancillary Agreement will be, duly executed and delivered by
each of Purchaser and Guarantor and (assuming due and valid authorization,
execution and delivery hereof and thereof by Seller), to the extent applicable,
is a valid and binding obligation of each of Purchaser and Guarantor enforceable
against it in accordance with its terms, except that (a) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally and (b) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 3.3 Consents and Approvals; No Violations. Except for
-------------------------------------
filings pursuant to the HSR Act, neither the execution, delivery or performance
of this Agreement or, to the extent applicable, the Ancillary Agreements by
Purchaser and Guarantor nor the consummation by Purchaser and Guarantor of the
transactions contemplated hereby or thereby will (a) violate any provision of
the articles of
26
incorporation or by-laws of Purchaser or Guarantor; (b) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Purchaser or Guarantor is a party or by which it or any of its
properties or assets may be bound; (c) violate any Law applicable to Purchaser
or Guarantor or any of their properties or assets or (d) require on the part of
Purchaser or Guarantor any filing or registration with, notification to, or
authorization, consent or approval of, any Governmental Entity; except in the
case of clauses (b), (c) or (d) for such violations, breaches or defaults that,
or filings, registrations, notifications, authorizations, consents or approvals,
the failure of which to obtain would not reasonably be expected to hinder,
impair or delay Purchaser's ability to consummate the transactions or
Guarantor's obligations contemplated by this Agreement.
Section 3.4 Sufficient Funds; Solvency. Purchaser has available to
--------------------------
it funds, which together with the amount of the financing contemplated by the
commitment letter of Bank of America, N.A,. and Banc of America Securities LLC,
dated the date hereof, a copy of which has been provided to Seller (together
with the related fee letter, the "Commitment Letter") are sufficient (assuming
-----------------
such financing arrangements are funded in full) to enable Purchaser to
consummate the transactions contemplated hereby. Prior to the execution of this
Agreement, Purchaser has delivered to Seller a true and complete copy of the
Commitment Letter which has been fully executed by the parties and which is in
full force and effect as of the date hereof. Upon the consummation of the
transactions contemplated hereby, (i) Purchaser will not be insolvent as defined
in Section 101 of Title 11 of the United States Code, (ii) Purchaser will not be
left with unreasonably small capital, (iii) Purchaser will not have incurred
debts beyond its ability to pay such debts as they mature and (iv) the capital
of Purchaser will not be impaired. The Purchase Price is a reasonably
equivalent value in exchange for the Purchased Assets.
Section 3.5 Brokers or Finders. No agent, broker, investment
------------------
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finders' fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Banc of
America Securities LLC, whose fees and expenses will be paid by Purchaser in
accordance with the agreement with such firm.
27
Section 3.6 Investigation by Purchaser. In entering into this
--------------------------
Agreement, Purchaser:
(a) acknowledges that, except as otherwise expressly provided
herein, neither Seller nor any of its directors, officers, employees,
affiliates, agents, advisors or representatives make or shall be deemed to have
made any representation or warranty, either express or implied, as to the
accuracy or completeness of any of the information (including, without
limitation, any estimates, projections, forecasts or other forward-looking
information) provided or made available to Purchaser or its agents or
representatives (including, without limitation, in any management presentations,
information, offering or descriptive memorandum, supplemental information or
other materials or information with respect to any of the above);
(b) agrees, to the fullest extent permitted by Law, that neither
Seller nor any of its directors, officers, employees, shareholders, affiliates,
agents, advisors or representatives shall have any liability or responsibility
whatsoever to Purchaser on any basis (including, without limitation, in contract
or tort, under federal or state securities laws or otherwise) based upon any
information provided or made available, or statements made, to Purchaser, except
that the foregoing limitations shall not apply to Seller to the extent Seller
makes the specific representations and warranties set forth in Article II of
this Agreement, but always subject to the limitations and restrictions contained
herein; and
(c) acknowledges that it has had the opportunity to visit Seller
and meet with its officers and other representatives to discuss the Business and
the assets, liabilities, financial condition, cash flow and operations of the
Business; and that all materials and information provided to Purchaser to date
have been provided to Purchaser's reasonable satisfaction.
ARTICLE IV
COVENANTS
Section 4.1 Interim Operations. Seller covenants and agrees that,
------------------
except (i) as contemplated by this Agreement; (ii) as required by Law; (iii) as
disclosed in the Disclosure Schedule; or (iv) with the prior written consent of
28
Purchaser, such consent not to be unreasonably withheld, after the date hereof
and prior to the Closing Date:
(a) Seller shall use reasonable efforts consistent with Seller's
past practices to preserve the Business intact in all material respects and
generally conduct the Business in the ordinary course of the Business consistent
with past practice;
(b) Seller shall not sell, lease or dispose of any assets or
properties included in the Purchased Assets (other than Inventory in the
ordinary course of business consistent with past practices);
(c) Seller shall not, with respect to the Business, do any act
or omit to do any act whereby any Transferred Intellectual Property may lapse,
become abandoned, dedicated to the public, or unenforceable, or enter into any
material commitment, transaction, contract or agreement concerning the
Transferred Intellectual Property;
(d) Seller shall not grant any bonus, salary increase, severance
or termination pay to, or otherwise increase the compensation or benefits of,
any employees of the Business, except obligations pursuant to any existing
Plans;
(e) Seller shall not, with respect to the Business, change in
any material respect any of the accounting principles, methods or practices used
by it (except as required by GAAP);
(f) Seller shall not, with respect to the Business, modify,
amend or terminate, or waive, release or assign any material rights or claims
with respect to, any Contract;
(g) Seller shall not permit any of the Purchased Assets to
become subjected to any Encumbrance other than the Permitted Encumbrances;
(h) Seller shall not, with respect to the Business, enter into
any lease or sublease of real property (whether as a lessor, sublessor, lessee
or sublessee) other than the Real Property Lease or modify, amend, terminate or
fail to exercise any right to renew the Real Property Lease;
(i) Seller shall not, with respect to the Business, commit to
make as of a date subsequent to the Closing any capital expenditure which
individually is in excess of $100,000, except capital expenditures reasonably
29
required in the event of exigent circumstances or which are funded by insurance
or other third parties;
(j) Except for the persons listed on Schedule 4.1(j), with
respect to the Business, Seller shall not hire any new employee with an annual
base salary in excess of $75,000, promote any employee except in order to fill a
position vacated after the date of this Agreement, or engage any consultant or
independent contractor pursuant to a binding commitment that is non-terminable
without the payment of fees in excess of a minimum of $75,000;
(k) Seller shall not, with respect to the Business, adopt, enter
into, or amend any Plan, except (i) as required pursuant to contractual
arrangements in effect as of the date hereof or as required or permitted under
this Agreement, (ii) as required by applicable law or (iii) as may apply to any
employee other than employees or former employees of the Business;
(l) Seller shall not, with respect to the Business, change in
any material respect any of its co-op advertising policies, product return
policies, product maintenance policies, service policies, product modification
or upgrade policies, or personnel policies;
(m) Seller shall not, with respect to the Business, authorize or
enter into an agreement to do any of the foregoing.
Notwithstanding the provisions of this Section 4.1, nothing in this
Agreement shall prevent Seller from engaging in any activity with respect to any
of its businesses other than the Business.
Section 4.2 Access to Information; Books and Records
----------------------------------------
(a) Seller shall afford Purchaser's officers, employees,
accountants and counsel reasonable access during normal business hours
throughout the period prior to the Closing Date or the date of termination of
this Agreement, to the properties, contracts, commitments, books and records
related exclusively to the Business (other than tax and accounting records) and
to use its reasonable efforts to cause its representatives to furnish promptly
to Purchaser such additional financial and operating data and other information
exclusively related to the Business and the Purchased Assets as Purchaser or its
duly authorized representatives may from time to time reasonably request;
provided, however, that nothing herein shall require Seller to disclose any
-------- -------
information to Purchaser if such disclosure (i) would cause
30
significant competitive harm to Seller or its affiliates if the transactions
contemplated by this Agreement are not consummated, (ii) would contravene any
Law, fiduciary duty or agreement entered into prior to the date of this
Agreement or the provisions of any confidentiality agreement to which Seller is
or becomes a party, or (iii) jeopardize any attorney-client or other similar
privilege. All requests for such access shall be made to such representatives of
Seller as Seller shall designate in writing to Purchaser. It is further
understood and agreed that neither Purchaser nor its representatives shall
contact any of the employees, customers or suppliers of the Business in
connection with the transactions contemplated hereby without the prior
authorization of Seller; provided, however, that with respect to a request by
-------- -------
Purchaser to Seller regarding contacting employees of the Business, such
authorization shall not be unreasonably withheld.
(b) Purchaser will hold any such information in accordance with
the provisions of the Confidentiality Agreement between WKI Holding Company,
Inc. and Purchaser, dated as of February 5, 2004 (the "Confidentiality
---------------
Agreement"), without regard to the time limit set forth in paragraph (11)
---------
thereof; provided, Seller acknowledges that Purchaser shall be permitted to file
a copy of the Agreement with the Securities and Exchange Commission.
(c) Both parties agree that they shall preserve and keep all the
Business books and records (together with the other books and records of the
Business, the "Books and Records") in their possession for a period of at least
-----------------
five years from the Closing Date. Both parties agree that they will, to the
extent permitted by Law and existing agreements, cooperate with and make
available to the other party, during normal business hours, all Books and
Records, information and employees (without substantial disruption of
employment) after the Closing Date which are necessary or useful in connection
with the preparation of any financial statements and the audit or review by
Purchaser's or Seller's independent auditors, any Tax inquiry, audit,
investigation or dispute or any claim, litigation or investigation (including
any claim or litigation between Purchaser and Seller) or any other matter
requiring any such Books and Records, information or employees for any
reasonable business purpose. The party reviewing such Books and Records shall
bear all of the out-of-pocket costs and expenses (excluding reimbursement for
salaries and employee benefits) reasonably incurred in connection with providing
such Books and Records, information or employees. Seller may require certain
financial information relating to the Business for periods prior to the Closing
Date for the purpose of filing federal, state, local and foreign Tax Returns and
other governmental reports, and Purchaser agrees to furnish such information to
Seller at Seller's request and expense. Purchaser and Seller shall cooperate
with each other in
31
the conduct of any audit or other proceeding relating to Taxes involving the
Business or the Purchased Assets for any taxable period (or portion thereof)
prior to the Closing Date.
Section 4.3 Publicity. Prior to the Closing, neither Purchaser nor
---------
Seller nor any of their respective affiliates, representatives or financial
advisors shall issue or cause the publication of any press release with respect
to the transactions contemplated hereby or this Agreement without the prior
agreement of the other party, except as may be required by Law. The initial
press releases with respect to the execution of this Agreement shall be
reasonably acceptable to Purchaser and Seller.
Section 4.4 Approvals and Consents; Cooperation; Notification
-------------------------------------------------
(a) The parties hereto shall use their respective commercially
reasonable efforts, and cooperate with each other, to obtain as promptly as
practicable all governmental and third party authorizations, approvals, consents
or waivers required in order to consummate the transactions contemplated by this
Agreement. Each party further agrees to use its reasonable best efforts to
ensure that the conditions set forth in Article V are satisfied insofar as such
matters are within the control of such party.
(b) Seller and Purchaser shall take all actions necessary to
file as soon as practicable, but in no event more than ten (10) days after the
signing of this Agreement, all notifications, filings and other documents
required to obtain all governmental authorizations, approvals, consents or
waivers, including, without limitation, with the Federal Trade Commission, the
Antitrust Division of the Department of Justice and any other Governmental
Entity and under the HSR Act and to respond as promptly as practicable to all
inquiries and requests received from any State Attorney General or other
Governmental Entity in connection therewith. Notwithstanding anything to the
contrary contained in this Agreement, Purchaser shall not have any obligation
under this Agreement: (i) to dispose, transfer or hold separate, or cause any of
its affiliates to dispose, transfer or hold separate any material assets or
material operations, or to commit to dispose of any material Purchased Assets;
(ii) to discontinue or cause any of its affiliates to discontinue offering any
material product or material service, or to commit to cause the Business to
discontinue offering any material product or material service; or (iii) to make
any commitment (to any Governmental authority or otherwise) to limit in any
material
32
respect, or place any material conditions on, the ownership or operation by
Purchaser or any of its affiliates of any portion of the Business or any product
of the Business.
(c) Seller shall give prompt notice to Purchaser of the
occurrence of any Business Material Adverse Effect, and Purchaser shall give
prompt notice to Seller of any circumstances that would reasonably be expected
to hinder, impair or delay Purchaser's ability to consummate the transactions
contemplated by this Agreement. Each of Seller and Purchaser shall give prompt
notice to the other of the occurrence or failure to occur of an event that
would, or, with the lapse of time would, cause any condition to the consummation
of the transactions contemplated hereby not to be satisfied.
Section 4.5 Further Assurances. Each of the parties hereto agrees
------------------
to use its commercially reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws to consummate and make effective the
transactions contemplated by this Agreement; provided, however, that with
-------- -------
respect to Intellectual Property transferred and owned by Seller, Seller's
obligation shall be limited to execution of an assignment or assignments
relating thereto, and, for the avoidance of doubt, shall not include the
transfer of any registrations. All remittances, mail and other communications
relating to the Excluded Assets or Excluded Liabilities received by Purchaser or
the officers and directors of Purchaser, at any time after the Closing Date
shall be immediately turned over to Seller. All remittances, mail and other
communications relating to the Purchased Assets or Assumed Liabilities received
by Seller or the officers and directors of Seller, at any time after the Closing
Date shall be immediately turned over to Purchaser.
Section 4.6 Supplements to the Disclosure Schedule. From time to
--------------------------------------
time prior to the Closing, Seller will promptly supplement or amend the sections
of the Disclosure Schedule with respect to any matter, condition or occurrence
hereafter arising which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described therein. Except with
respect to a supplement or amendment objected to in writing by Purchaser within
five (5) business days thereof in its sole and absolute discretion, such
supplement or amendment shall be deemed to qualify or amend any representation
or warranty or cure any breach of any representation or warranty made in this
Agreement.
33
Section 4.7 Insurance Coverage. Effective as of the Closing, the
------------------
Purchased Assets shall cease to be insured by Seller's insurance policies, and
Purchaser and its affiliates shall have no rights or obligations with respect to
any such policies.
Section 4.8 Seller's Names. Notwithstanding any other provision of
--------------
this Agreement to the contrary, no interest in or right to use the name "World
Kitchen" or "World Kitchen (GHC), LLC", "General Housewares Corp.", or any other
corporate name of Seller or its affiliates (other than those listed on Schedule
4.8), or any logo, trademark, service xxxx, domain name or trade name or any
derivation thereof of Seller or its affiliates with respect to, or associated
with, the foregoing or any not included in the Transferred Intellectual Property
(collectively, the "Retained Names and Marks") is being transferred to Purchaser
------------------------
pursuant to the transactions contemplated hereby, and, except as expressly
provided below, the use of any Retained Names and Marks in connection with the
Business shall cease as of the Closing Date. Purchaser will, and will cause its
affiliates to as promptly as reasonably practicable following the Closing Date,
but in any event within twelve (12) months thereafter, remove or obliterate all
the Retained Names and Marks from its labels and packaging. For a period of
twelve (12) months after the Closing Date, Purchaser may use any labels or
packaging existing on the Closing Date that bear any Retained Name or Xxxx or
any name, xxxx or logo similar thereto, including, labels on any inventory or
packaging on hand as of the Closing Date or ordered within a reasonable period
following the Closing Date. Purchaser will, and will cause its affiliates to as
promptly as reasonably practicable following the Closing Date, but in any event
within 60 days thereafter, remove or obliterate all the Retained Names and Marks
from its signs, purchase orders, invoices, sales orders, letterheads, shipping
documents and other items and materials of the Business and otherwise.
Notwithstanding the foregoing, for a period of sixty (60) days after the Closing
Date, Purchaser may use any purchase orders, invoices, sales orders,
letterheads or shipping documents existing on the Closing Date that bear any
Retained Name or Xxxx or any name, xxxx or logo similar thereto; provided,
however, that such items shall be stickered or otherwise marked to clearly
indicate that none of Seller or any of its affiliates are party to such
documents. Notwithstanding the foregoing, Purchaser agrees that Seller shall
have no responsibility for claims by third parties arising out of, or relating
to, the use by Purchaser or any affiliate thereof of any Retained Name or Xxxx
after the Closing Date, and Purchaser agrees to indemnify and hold harmless
Seller from any and all Losses (as defined herein) that may arise out of the use
thereof by Purchaser or any affiliate thereof. For the avoidance of
34
doubt, any use of the Retained Names and Marks in connection with the
Transitional Services Agreement shall not be deemed to be a violation of this
provision.
Section 4.9 [Intentionally Omitted]
-----------------------
Section 4.10 Employees
---------
(a) No later than five (5) days prior to the Closing Date,
Purchaser shall offer employment, in writing, to each of the employees of the
Business listed on Schedule 4.10 (the "Affected Employees") on substantially
------------------
similar terms and conditions as the terms and conditions of similarly situated
employees of Purchaser. Affected Employees who accept the foregoing offer of
employment with Purchaser and are employed by Purchaser immediately after the
Closing shall be referred to as "Transferred Employees". Notwithstanding
---------------------
anything in this Agreement to the contrary, Purchaser shall be responsible for
payment of any severance costs or payments arising in connection with the
termination of employment of any Affected or Transferred Employee who does not
accept Purchaser's offer of employment or is terminated by Seller on the Closing
Date or by Purchaser on or after the Closing Date pursuant to the Seller's
severance plan described on Schedule 4.10.
(b) Effective as of the Closing Date, Purchaser shall provide
the Transferred Employees with employee benefits which are substantially similar
to those provided to similarly situated employees of Purchaser. Such benefits
shall be provided either under new or existing employee benefit plans and
arrangements established by Purchaser or any Affiliate of Purchaser for the
Transferred Employees (individually, a "Purchaser's Plan and collectively, the
"Purchaser's Plans"). Each Transferred Employee shall be given service credit
-----------------
under the Purchaser's Plans for all service prior to the Closing Date with
Seller or its subsidiaries for purposes of: (i) determining eligibility and
vesting but not for purposes of benefit accrual under the Purchaser's Plans that
are intended to meet the requirements of Code Section 401(a); (ii) satisfying
any waiting periods under the Purchaser's Plans that provide health care
benefits, group term life insurance or disability insurance; (iii) determining
severance pay benefits and, subject to Section 4.10(g) below with respect to
calendar year 2004, available vacation days under the respective Purchaser's
Plan that provides such benefits.
35
(c) Purchaser will provide each Transferred Employee with credit
for any co-payments and deductibles paid under the Seller's Plans that contain
health care benefits for purposes of satisfying any applicable deductible or
out-of-pocket requirements under the Purchaser's Plans that contain health care
benefits for the Purchaser's Plan year that includes the Closing Date; provided,
such co-payments and deductibles were paid during the Seller's Plan year that
includes the Closing Date and were paid prior to the Closing Date.
(d) Immediately prior to the Closing, Seller shall cause the
account balances and accrued benefits of the Transferred Employees in each Plan
that is intended to meet the requirements of Code Section 401(a) to be fully
vested.
(e) Purchaser shall only be responsible for providing the
notices and making available the health care continuation coverage required by
COBRA for Transferred Employees and their respective covered dependents, whose
qualifying events (as defined in Code Section 4980B) occur on or after the
Closing Date.
(f) As soon as practicable after the Closing, Seller will
provide Purchaser with such employee information and census data as is
reasonably necessary for Purchaser to comply with its obligations under this
Agreement and the Purchaser's Plans.
(g) For calendar year 2004, Purchaser shall credit each
Transferred Employee with a number of vacation days equal to the number of
vacation days such Transferred Employee had earned under the vacation pay policy
of Seller for calendar year 2004 which remain unused and unpaid as of the
Closing Date. The vacation days so credited may be used by Transferred
Employees during calendar year 2004 under Purchaser's general vacation policies,
subject to applicable law. From and after December 31, 2004, Transferred
Employees will be granted vacation days in accordance with Purchaser's general
vacation policy applicable to similarly situated employees of Purchaser.
Section 4.11 Release of Liens. Concurrently with the Closing,
----------------
Seller shall at its sole cost and expense use its reasonable best efforts to
obtain a full and unconditional release of any Encumbrances on the Purchased
Assets under Seller's current credit agreements and facilities identified on
Schedule 2.13 from the lenders and trustees under such credit agreements.
Seller shall use its reasonable best efforts to obtain and file prior to or
concurrently with Closing UCC-3 financing statements or similar filings in
non-US jurisdictions and provide such other
36
documents, and take such further action, as may be reasonably required in order
to release the Encumbrances created under such credit agreement.
Section 4.12 Financing
---------
..
(a) Seller shall, and shall cause its officers and directors to,
reasonably cooperate in connection with Purchaser obtaining the financing
necessary to consummate the transactions contemplated hereby (the "Financing"),
including by (i) providing direct contact between prospective lenders and
certain of the officers and directors of Seller, (ii) providing reasonable
assistance in preparation of confidential information, memoranda and other
materials to be used in connection with obtaining the Financing and (iii)
providing assistance in the preparation for, and participating in, meetings, due
diligence sessions, and similar presentations to and with, among others,
prospective lenders.
(b) Purchaser shall use its reasonable best efforts to obtain,
as promptly as possible and on or before June 1, 2004, and have available at the
Closing, the Financing, on the terms set out in the Commitment Letter (including
any adjustments contemplated by the fee letter with respect thereto) or on terms
no less favorable to Purchaser than those set forth in the Commitment Letter, or
substantially equivalent financing, so as to have available at the Closing all
funds necessary to consummate the transactions contemplated by this Agreement.
Subject to the terms and conditions of this Agreement, Purchaser covenants that
it will use the Financing and its own funds as contemplated by the Commitment
Letter to consummate the transactions contemplated by this Agreement.
Purchaser will not, and will cause its affiliates not to, waive or amend any of
its or its affiliates' material rights under the Commitment Letter if such
waiver or amendment would adversely impact or delay in any material respect the
satisfaction of the condition set forth in Section 5.2.
(c) Purchaser will from time to time provide such information as
Seller may reasonably request regarding the status of the Financing and related
negotiations.
Section 4.13 Non-Competition; No Solicitation
--------------------------------
(a) For a period of two (2) years after the Closing Date, Seller
will not, and will not permit any of its direct or indirect subsidiaries to,
engage, directly or indirectly, in the manufacture and sale of products which
are substantially comparable as to design, quality, function and anticipated
retail selling price (which in no event shall be deemed to be less than the
current normal retail selling price of such products) to those products bearing
the OXO GoodGrips
37
trademark presently sold or marketed by the Business (the "Restricted
----------
Activities") in any geographic area in which the Business presently
----------
sells OXO GoodGrips products, as of the date hereof (the "Restricted
----------
Territory"). Notwithstanding anything in this Section 4.13 to the contrary,
---------
none of the following shall be deemed Restricted Activities or shall otherwise
violate the provisions of this Section 4.13:
(i) ownership of securities having no more than five
percent (5%) of the outstanding voting power of any company listed on any
national securities exchange or traded actively in the national
over-the-counter market;
(ii) ownership and/or operation of any business, less than
25% of the revenues of which are comprised of business activities that
could constitute Restricted Activities and the aggregate revenues from the
Restricted Activities do not exceed $5,000,000 in any 12 month period;
provided that Seller or its affiliates may make an acquisition of any
business, the revenues of which are comprised of 25% or more of business
activities which are competitive with the Restricted Activities (a
"Relevant Acquisition"), so long as within six(6)
--------------------
months of the consummation of such Relevant Acquisition, Seller or its
affiliates have disposed of (or ceased operating) the entity or portion
thereof whose business constituted the Restricted Activities; or
(iii) the sale of any products by Seller's retail stores
which are in the inventory of such stores or in transit thereto as of the
Closing Date or which are sold to Seller by Purchaser (or its affiliates)
or any transferee of the Business from and after the Closing Date.
Notwithstanding anything in this Agreement to the contrary, this Section 4.13(a)
shall not be binding on any person or entity who acquires all or a substantial
part of the assets or capital stock of the Seller by means of a merger, purchase
of assets, purchase of stock or otherwise in respect of the businesses owned by
such Person and its affiliates as of the date of such acquisition.
(b) For a period of two (2) years after the Closing Date, Seller
will not, and will not permit any of its affiliates to, employ, hire or retain
as a consultant or independent contractor any of the Transferred Employees;
provided that (x) this Section 4.13(b) shall not apply to any employee if such
employee's
38
employment has been terminated for a period of at least twelve (12) months, and
(y) non-directed newspaper or internet help wanted advertisements shall not be
considered solicitations under this Section 4.13(b).
(c) For a period of two (2) years after the Closing Date, the
Purchaser will not, and will not permit any of its affiliates to, employ, hire
or retain as a consultant or independent contractor any employee of Seller;
provided that (x) this Section 4.13(b) shall not apply to any employee if such
employee's employment has been terminated for a period of at least twelve (12)
months, and (y) non-directed newspaper or internet help wanted advertisements
shall not be considered solicitations under this Section 4.13(b).
(d) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 4.13 is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
Section 4.14 Financial Statements
--------------------
(a) Seller shall commence, promptly following the execution of
this Agreement, and Seller will use its reasonable efforts to provide to
Purchaser within sixty (60) days after the Closing Date, financial statements of
the Business and related documents that meet the requirements of Item 7(a) of
Securities and Exchange Commission Form 8-K, as may be limited as set forth
below, including the following documents:
(i) Financial statements of the Business for the periods
specified in Rule 3-05(b) of Regulation S-X promulgated by the Securities
and Exchange Commission, which shall be prepared pursuant to Regulation
S-X, except that supporting schedules need not be prepared (the "Business
--------
Financial Statements");
--------------------
(ii) a manually signed accountants' report from Deloitte &
Touche LLP meeting the requirements of Section 2-02 of Regulation S-X; and
39
(iii) a manually signed consent of Deloitte & Touche LLP to
the inclusion of all financial statements pursuant to Section 4.14(a)(i)
and Deloitte & Touche LLP's report thereon referred to in Section
4.14(a)(ii).
Purchaser shall use its reasonable efforts to take any actions Seller may
reasonably request to reduce the scope and content of the Business Financial
Statements and other information required to be provided by Purchaser to the
Securities and Exchange Commission in connection with the transactions
contemplated by this Agreement.
(b) Seller shall cooperate with, and provide all information and
documents reasonably requested by, Purchaser regarding the Business in order to
assist Purchaser in the preparation of the pro forma financial information
required by Item 7(b) of Securities and Exchange Commission Form 8-K.
(c) Purchaser agrees to reimburse Seller for all third party
fees, costs and expenses incurred in connection with this Section 4.14,
including, but not limited to, the fees and expenses of Deloitte & Touche LLP.
Section 4.15 Transitional Services. Seller agrees to provide
---------------------
transitional services pursuant to the form of Transitional Services Agreement in
the form attached as Exhibit A. Purchaser and Seller shall negotiate in good
faith prior to the Closing Annex A to the Transitional Services Agreement which
services shall be, except as set forth on Exhibit A, consistent with the nature
and type of services provided by Seller for the Business prior to the date
hereof, including, but not limited to, the services described on Schedule 4.15.
ARTICLE V
CONDITIONS
Section 5.1 Conditions to Each Party's Obligation to Effect the Closing.
-----------------------------------------------------------
The obligations of Seller, on the one hand, and Purchaser, on the other hand, to
consummate the Closing are subject to the satisfaction (or, if permissible,
waiver by the party for whose benefit such conditions exist) of the following
conditions:
40
(a) no Governmental Entity shall have issued any order, decree
or ruling, and there shall not be any statute, rule or regulation, restraining,
enjoining or prohibiting the consummation of the material transactions
contemplated by this Agreement; and
(b) any waiting period applicable to the transactions
contemplated hereby under the HSR Act shall have expired or been terminated.
Section 5.2 Conditions to the Obligations of Purchaser The obligations
------------------------------------------
of Purchaser to consummate the transactions contemplated hereby are subject to
the satisfaction (or waiver by Purchaser) of the following further conditions:
(a) the representations and warranties of Seller shall be true
and accurate as of the Closing Date as if made at and as of such time (other
than those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time, which need
only be true and accurate as of such date or with respect to such period),
except where the failure of such representations and warranties to be so true
and accurate would not have a Business Material Adverse Effect (it being
understood that, for purposes of determining the accuracy of representations and
warranties, (i) for purpose of this Section 5.2(a) all "Business Material
Adverse Effect" qualifications and other materiality qualifications contained in
such representations and warranties shall be disregarded and (ii) any update of
or modification to the Disclosure Schedule made or purported to have been made
after the date of this Agreement and which is objected to by Purchaser pursuant
to Section 4.6 shall be disregarded);
(b) Seller shall have performed in all material respects its
obligations hereunder required to be performed by it at or prior to the Closing
Date;
(c) Purchaser shall have received a certificate signed by an
officer of each Seller, dated as of the Closing Date, to the effect that the
conditions set forth in Section 5.2(a) and Section 5.2(b) have been satisfied;
(d) Purchaser shall have received the proceeds of the financing
arrangements contemplated by the Commitment Letter (taking into account any
adjustments contemplated by the fee letter with respect thereto) or other
financing on terms and conditions no less favorable in any material respect to
41
Purchaser than those contained in the Commitment Letter (taking into account any
adjustments contained in the fee letter with respect thereto);
(e) Seller shall have executed and delivered the Xxxx of Sale;
(f) Seller shall have executed and delivered the Transitional
Services Agreement;
(g) Seller shall have executed and delivered the Real Property
Lease Assignment and Assumption Agreement;
(h) Seller shall have executed and delivered the Supply
Agreement; and
(i) Seller shall have executed and delivered a certificate of
non-foreign status for each of WKI Holding Company, Inc. and World Kitchen, Inc.
Section 5.3 Conditions to the Obligations of Seller. The obligations of
---------------------------------------
Seller to consummate the transactions contemplated hereby are subject to the
satisfaction (or waiver by Seller) of the following further conditions:
(a) the representations and warranties of Purchaser shall be
true and accurate as of the Closing Date as if made at and as of such time
(other than those representations and warranties that address matters only as of
a particular date or only with respect to a specific period of time, which need
only be true and accurate as of such date or with respect to such period),
except where the failure of such representations and warranties to be so true
and accurate would not hinder, impair or delay Purchaser's ability to consummate
the transactions contemplated by this Agreement;
(b) Purchaser shall have performed in all material respects all
of the obligations hereunder required to be performed by Purchaser at or prior
to the Closing Date;
(c) Seller shall have received a certificate signed by an
officer of Purchaser, dated as of the Closing Date, to the effect that the
conditions set forth in Section 5.3(a) and Section 5.3(b) have been satisfied;
42
(d) Purchaser shall have executed and delivered the Supply
Agreement;
(e) Purchaser shall have executed and delivered the Assumption
Agreement; and
(f) The amendments to the Credit Agreement, dated as of January
31, 2003, among WKI Holding Company, Inc., the Lenders party thereto and
JPMorgan Chase Bank, as Administrative Agent and Collateral Agent and the
Revolving Credit Agreement, dated as of January 31, 2003, among WKI Holding
Company, Inc., the Lenders party thereto and JPMorgan Chase Bank, as
Administrative Agent and Collateral Agent, providing for the release of the
Purchased Assets and certain related matters shall be effective.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification
---------------
(a) Indemnification by Seller. Subject to the limits set forth
-------------------------
in this Section 6.1, Seller agrees to indemnify, defend and hold Purchaser, its
officers, directors and affiliates, harmless from and in respect of any and all
losses, damages, costs and reasonable expenses, including reasonable expenses of
investigation and reasonable fees and disbursements of counsel, but excluding
special damages, consequential damages, lost profits or punitive or similar
damages (collectively, "Losses"), that they may incur arising out of or due to
------
(i) any inaccuracy in any representation or the breach of any warranty,
covenant, undertaking or other agreement of Seller contained in this Agreement;
provided, however, that Seller shall have no liability as a result of the breach
-------- -------
of or inaccuracy in any representation or warranty to the extent that Purchaser
had actual knowledge that such representation or warranty was untrue or
incorrect prior to the Closing Date, or (ii) the Excluded Liabilities.
(b) Indemnification by Purchaser. Subject to the limits set
----------------------------
forth in this Section 6.1, Purchaser agrees to indemnify, defend and hold
Seller, its officers, directors and affiliates, harmless from and in respect of
any and all Losses that they may incur arising out of or due to (i) any
inaccuracy of any representation or the breach of any warranty, covenant,
undertaking or other agreement of
43
Purchaser contained in this Agreement; provided, however, that Purchaser shall
-------- -------
have no liability as a result of the breach of or inaccuracy in any
representation or warranty to the extent that Seller had actual knowledge that
such representation or warranty was untrue or incorrect prior to the Closing
Date, (ii) the Assumed Liabilities or (iii) the ownership or operation of the
Purchased Assets or the Business after the Closing Date.
(c) Representations and Warranties; Limits on Indemnification.
---------------------------------------------------------
The several representations and warranties of the parties contained in this
Agreement or in any instrument delivered pursuant hereto will survive the
Closing Date and will remain in full force and effect thereafter for a period of
one year from the Closing Date; provided that the representations and warranties
set forth in Section 2.13 shall survive indefinitely, and the representations
and warranties set forth in Section 2.9 and Section 2.10 shall survive for the
applicable statute of limitations. Anything to the contrary contained herein
notwithstanding, (i) (A) none of Purchaser or its officers, directors or
affiliates shall be entitled to recover from Seller for breaches of or
inaccuracies in representations or warranties unless and until the total of all
such persons' Losses with respect to such inaccuracies or breaches exceeds
$2,000,000 and then only for the amount by which the total of all such Losses
exceeds $2,000,000 and (B) none of Purchaser or its officers, directors, agents
or affiliates shall be entitled to recover from Seller for breaches of or
inaccuracies in representations or warranties, and Seller shall have no
liability to such persons for any such inaccuracies or breaches for, more than
$34,000,000 provided the limitations in Section 6.1(c)(i) shall not apply to the
indemnification for Losses in respect of matters described in Section 6.1(a)(ii)
or the representation and warranty contained in Section 2.13 and (ii) (A) none
of Seller or its officers, directors or affiliates shall be entitled to recover
from Purchaser for breaches of or inaccuracies in representations or warranties
unless and until the total of all such persons' Losses with respect to such
inaccuracies or breaches exceeds $2,000,000 and then only for the amount by
which the total of all such Losses exceeds $2,000,000 and (B) none of Seller or
its officers, directors, agents or affiliates shall be entitled to recover from
Purchaser for breaches of or inaccuracies in representations or warranties, and
Purchaser shall have no liability to such persons for such inaccuracies or
breaches for, more than $34,000,000 except with respect to the representation
made in Section 3.4, for which there shall be no such limitation on the
indemnification provided hereunder.
(d) Notice and Opportunity to Defend. If there occurs an event
--------------------------------
that a party (an "Indemnified Party") asserts is an indemnifiable event pursuant
-----------------
to Section 6.1(a) or 6.1(b), the Indemnified Party shall notify the other party
44
obligated to provide indemnification (an "Indemnifying Party") within 45 days of
------------------
such occurrence, with such written notice to (i) state the amount of the Loss,
if known, and the method of computation thereof, and (ii) contain a reference to
the specific section or sections of this Agreement in respect of which such
right to indemnification is asserted; provided, however, that if such event
-------- -------
involves any claim or the commencement of any action or proceeding by a third
person, the Indemnified Party will give such Indemnifying Party written notice
of such claim or the commencement of such action or proceeding within 30 days of
receiving notice of such claim or the commencement of such action or proceeding.
Such notice shall be a condition precedent to any liability of the Indemnifying
Party hereunder; provided, however, that the failure to provide notice as
-------- -------
provided herein will relieve the Indemnifying Party of its obligations hereunder
only to the extent that such failure prejudices the Indemnifying Party
hereunder. In case any such action shall be brought against any Indemnified
Party and it shall notify the Indemnifying Party of the commencement thereof,
the Indemnifying Party shall be entitled to participate therein and, to the
extent that it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to the Indemnified Party and, after notice from the
Indemnifying Party to the Indemnified Party of such election so to assume the
defense thereof, the Indemnifying Party shall not be liable to the Indemnified
Party for any legal expenses of other counsel or any other expenses subsequently
incurred by such party in connection with the defense thereof. The Indemnified
Party agrees to cooperate fully with the Indemnifying Party and its counsel in
the defense against any such asserted liability. The Indemnified Party shall
have the right to participate at its own expense in the defense of such asserted
liability. No Indemnifying Party shall consent to the entry of any judgment or
enter into any settlement without the consent of the Indemnified Party if such
judgment or settlement does not include as an unconditional term thereof the
giving by each claimant or plaintiff to each Indemnified Party of a release from
all liability in respect to such claim.
(e) Adjustment for Insurance and Taxes. The amount that an
----------------------------------
Indemnifying Party is required to pay to, for or on behalf of any Indemnified
Party pursuant to this Section 6.1 shall be adjusted (including, without
limitation, retroactively) (i) by any insurance proceeds, or indemnity,
contribution or similar payment, payable to any Indemnified Party in reduction
of the related indemnifiable loss (the "Indemnifiable Loss") and (ii) to take
------------------
account of any tax benefit available as a result of any Indemnifiable Loss.
Amounts required to be paid, as so reduced, are hereinafter sometimes called an
"Indemnity Payment." If an Indemnified Party shall have received or shall have
-----------------
had paid on its behalf an Indemnity Payment in respect of an Indemnifiable Loss
and shall subsequently become eligible for insurance proceeds, or indemnity,
contribution or similar payment, in respect of such Indemnifiable Loss,
45
or become eligible for any tax benefit as a result of such Indemnifiable Loss,
then the Indemnified Party shall pay to the Indemnifying Party the amount of
such insurance proceeds or tax benefit or, if lesser, the amount of the
Indemnity Payment.
(f) No Right of Set-Off. Neither Purchaser nor Seller shall
-------------------
have any right to set-off any payment due under this Agreement against any other
payments to be made pursuant this Agreement or otherwise (including against
indemnification payments).
(g) Mitigation. Each Indemnified Party shall consult and
----------
cooperate with the Indemnifying Party and shall take all other actions as may be
reasonably required or necessary to mitigate, to the extent practicable, Losses
in connection with claims for which an Indemnified Party seeks indemnification
under this Section 6.1.
(h) Subrogation. After any Indemnity Payment is made to any
-----------
Indemnified Party pursuant to this Section 6.1, the Indemnifying Party shall, to
the extent of such Indemnity Payment, be subrogated to all rights (if any) of
the Indemnified Party against any third party in connection with the Losses to
which such Indemnity Payment relates. Without limiting the generality of the
preceding sentence, any Indemnified Party receiving an Indemnity Payment
pursuant to Section 6.1 shall execute, upon the written request of the
Indemnifying Party, any instrument reasonably necessary to evidence such
subrogation rights.
Section 6.2 Adjustment to Purchase Price. Seller and Purchaser agree
----------------------------
that any Indemnity Payment hereunder shall be treated as an adjustment to the
Purchase Price.
Section 6.3 Exclusive Remedies. Purchaser and Seller acknowledge and
------------------
agree that (i) following the Closing, the indemnification provisions of this
Article VI shall be the sole and exclusive remedies of Purchaser and Seller for
any breach of or inaccuracy in any representation or warranty or any breach,
nonfulfillment or default in the performance of any of the covenants or
agreements contained in this Agreement or any Losses arising out of, or relating
to, or arising from the transactions contemplated by this Agreement (provided,
--------
however, that such indemnification shall not be the sole and exclusive remedy,
-------
and shall in no way limit the rights of the parties, with respect to the Supply
Agreement or the Transitional Services Agreement), and (ii) anything herein to
the contrary notwithstanding, no breach of any representation, warranty,
covenant, undertaking or other agreement
46
arising out of or related to this Agreement shall give rise to any right on the
part of Purchaser or Seller, after the consummation of the transactions
contemplated by this Agreement, to rescind this Agreement or any of the
transactions contemplated hereby or to any further indemnification rights or
claims of any nature whatsoever in respect thereof (whether by contract, common
law, statute, law, regulation or otherwise), all of which the parties hereby
waive; provided, however, that nothing herein is intended to waive any claims
-------- -------
for intentional fraud.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or elsewhere to the contrary
-----------
notwithstanding, this Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time prior to the Closing Date:
(a) by the mutual consent of Seller and Purchaser;
(b) by either Seller or Purchaser:
(i) if the Closing shall not have occurred on or prior to
October 29, 2004; provided, however, that the right to terminate this
-------- -------
Agreement under this Section 7.1(b)(i) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or prior
to such date; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action in each case permanently
restraining, enjoining or otherwise prohibiting the material transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and non-appealable.
(c) by Purchaser, by giving written notice to Seller in the
event Seller is in breach of any representation or warranty contained in this
Agreement, and such breach, individually or in combination with any other such
breach, (i) would cause the conditions set forth in clause (a) of Section 5.2
not to be satisfied (assuming, for purposes of such determination that the date
of any such
47
breach is the Closing Date) and (ii) is not cured within thirty (30) days
following delivery by Purchaser to Seller of written notice of such breach
(except in the case of a breach that is not curable or efforts to cure such
breach have ceased); or
(d) by Seller, by giving written notice to Purchaser in the
event Purchaser is in breach of any representation or warranty contained in this
Agreement, and such breach, individually or in combination with any other such
breach, (i) would cause the conditions set forth in clause (a) of Section 5.3
not to be satisfied (assuming, for purposes of such determination that the date
of any such breach is the Closing Date) and (ii) is not cured within thirty (30)
days following delivery by Seller to Purchaser of written notice of such breach
(except in the case of a breach that is not curable or efforts to cure such
breach have ceased).
Section 7.2 Procedure and Effect of Termination. In the event of the
-----------------------------------
termination and abandonment of this Agreement by Seller or Purchaser pursuant to
Section 7.1 hereof, written notice thereof shall forthwith be given to the other
party. If the transactions contemplated by this Agreement are terminated as
provided herein:
(a) each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same;
(b) all information received by any party hereto with respect to
the business of any other party or its subsidiaries or affiliates shall be
treated in accordance with the provisions of the Confidentiality Agreement,
which shall survive the termination of this Agreement; and
(c) no party to this Agreement will have any liability under
this Agreement to the other except (i) as stated in subparagraphs (a) and (b) of
this Section 7.2; (ii) for any breach of any provision of this Agreement and
(iii) as provided in the Confidentiality Agreement.
ARTICLE VIII
MISCELLANEOUS
48
Section 8.1 Amendment and Modification. This Agreement may be amended,
--------------------------
modified and supplemented in any and all respects by written agreement of the
parties hereto at any time with respect to any of the terms contained herein.
Section 8.2 Transfer Taxes. Purchaser and Seller shall each be
--------------
responsible for the payment of one-half of all sales (including, without
limitation, bulk sales), use, value added, documentary, stamp, gross receipts,
registration, transfer, conveyance, excise, recording, license and other similar
taxes and fees ("Transfer Taxes"), arising out of or in connection with or
--------------
attributable to the sale, conveyance, assignments, transfers and deliveries to
be made to Purchaser as contemplated by this Agreement. Purchaser shall prepare
and in a timely manner file all Tax Returns in respect of Transfer Taxes;
provided, however, that Purchaser shall submit any such Tax Returns to Seller
-------- -------
for Seller's approval (which approval shall not be unreasonably withheld or
delayed) no later than 14 days prior to the date such Tax Returns are due.
Seller and Purchaser shall cooperate with each other to the extent reasonably
requested and legally permitted to minimize any Transfer Taxes required to be
paid in connection with the transactions contemplated by this Agreement,
including, without limitation, timely signing and delivering such certificates
or forms as may be necessary or appropriate to establish an exemption from (or
otherwise reduce) any such Transfer Taxes.
Section 8.3 Notices. All notices, consents and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given (a)
when delivered by hand or by Federal Express or a similar overnight courier to;
(b) when successfully transmitted by telecopier (with a confirming copy of such
communication to be sent as provided in clause (a) above) to, the party for whom
intended, at the address or telecopier number for such party set forth below (or
at such other address or telecopier number for a party as shall be specified by
like notice; provided, however, that any notice of change of address or
-------- -------
telecopier number shall be effective only upon receipt):
(a) if to Purchaser or Guarantor, to:
Xxxxx of Xxxx Limited
c/o Xxxxx of Xxxx L.P.
One Xxxxx of Xxxx Xxxxx
00
Xx Xxxx, XX 00000
Telecopy No. (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxx & XxXxxxxx
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Telecopy No. (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
(b) if to Seller, to:
World Kitchen (GHC), LLC
WKI Holding Company, Inc.
World Kitchen, Inc.
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telecopy No. (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy No. (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
Section 8.4 Interpretation. The words "hereof," "herein" and "herewith"
-------------- ------ ------ --------
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, paragraph, exhibit and schedule references are
to the articles, sections, paragraphs, exhibits and schedules of this Agreement
unless otherwise specified. Whenever the words "include," "includes" or
------- --------
"including" are used in this Agreement they shall be deemed to be followed by
---------
the words "without
-------
50
limitation." The 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. The phrase "to the knowledge of Seller" or any similar phrase shall
--------------------------
mean such facts and other information which as of the date of determination are
actually known to the Chief Executive Officer, the Chief Financial Officer,
General Counsel and Deputy General Counsel of Seller after having made due
inquiry of the senior executives of the Business and, in respect of matters
described in Section 2.11, outside legal counsel responsible for legal matters
relating to the Transferred Intellectual Property. The phrase "made available"
--------------
in this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available. As used in this Agreement, the term "affiliate(s)" shall have the
------------
meaning set forth in Rule l2b-2 of the Securities Exchange Act of 1934, as
amended. As used in this Agreement, the term "business day" means a day, other
------------
than a Saturday or a Sunday, on which banking institutions in the City of New
York are required to be open. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
Section 8.5 Counterparts. This Agreement may be executed in multiple
------------
counterparts, all of which shall together be considered one and the same
agreement.
Section 8.6 Entire Agreement; Third Party Beneficiaries. This Agreement
-------------------------------------------
(including the documents and the instruments referred to herein), the
Confidentiality Agreement, the Supply Agreement[, the Transitional Services
Agreement] and the Disclosure Schedule (a) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, and (b) except as
provided herein, are not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
Section 8.7 Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other
51
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 8.8 Governing Law. This Agreement shall be governed and
-------------
construed in accordance with the laws of the State of Delaware applicable to
contracts to be made and performed entirely therein without giving effect to the
principles of conflicts of law thereof or of any other jurisdiction.
Section 8.9 Jurisdiction. Each of the parties hereto hereby expressly
------------
and irrevocably consents and submits to the exclusive personal jurisdiction of
the Courts of the State of Delaware, consents to service of process in the State
of Delaware and further agrees that venue shall be proper in Wilmington,
Delaware; provided, however, that each party hereto expressly preserves all of
his, her, or its rights of action in or removal to the United States District
Court for the District of Delaware (collectively, federal and state, trial and
appellate, law and chancery, the "Delaware Courts") under 28 U.S.C. Section 1441
---------------
or any other applicable statute, in connection with any and all disputes arising
out of, or in any way related to this Agreement or the transactions contemplated
hereby. Each of the parties hereto further agrees not to commence any
litigation relating to this Agreement except in the Delaware Courts, and hereby
irrevocably waives his, her, or its right to seek recourse to the courts or
arbitral forums of any other jurisdiction or venue for any litigation,
arbitration, or dispute resolution process arising out of, related to, or in
connection with this Agreement or the transactions contemplated hereby to which
any party or their privies is or may be entitled by reason of his, her, or its
present or future domicile. Notwithstanding the foregoing, each of the parties
hereto agrees that in aid of a judgment entered by a Delaware Court in
connection with this Agreement, a prevailing party or his, her, or its privies
shall have the right to bring in any other court of competent jurisdiction any
action or proceeding necessary or advisable to enforce that judgment. Each of
the parties hereto further agrees that this forum selection provision was
separately bargained for, and is a material term of this Agreement.
Section 8.10 Assignment. 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
52
of the other parties; provided, Purchaser can assign any of its rights or
obligations under this Agreement at any time to any affiliate of Xxxxx of Xxxx
Limited, a Bermuda corporation, which assignment shall not relieve Purchaser or
Guarantor of any of their obligations under this Agreement and provided further
that any such assignment does not hinder, impair or delay Purchaser's ability to
consummate the transactions contemplated by this Agreement. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective permitted successors and
assigns.
Section 8.11 Expenses. Except as otherwise provided herein, all costs
--------
and expenses incurred in connection with the transactions contemplated hereby,
this Agreement and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses, whether or not the
transactions contemplated hereby are consummated.
Section 8.12 Headings. Headings of the Articles and Sections of this
--------
Agreement, the Disclosure Schedule and the Table of Contents are for convenience
of the parties only, and shall be given no substantive or interpretative effect
whatsoever.
Section 8.13 Waivers. Except as otherwise provided in this Agreement,
-------
any failure of any of the parties to comply with any obligation, covenant,
agreement or condition herein may be waived by the party or parties entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
Section 8.14 Schedules. The Disclosure Schedule shall be construed with
---------
and as an integral part of this Agreement to the same extent as if the same had
been set forth verbatim herein. Any matter disclosed pursuant to the Disclosure
Schedule shall be deemed to be disclosed for all purposes under this Agreement
but such disclosure shall not be deemed to be an admission or representation as
to the materiality of the item so disclosed.
Section 8.15 Representations and Warranties Joint and Several. All of
------------------------------------------------
the representations, warranties, covenants and obligations of World Kitchen
53
(GHC), LLC, WKI Holding Company, Inc. and World Kitchen, Inc. shall be joint and
several.
Section 8.16 Guarantee. Guarantor irrevocably guarantees each and every
---------
representation, warranty, covenant, agreement and obligation of Purchaser and
the full and timely performance of its obligations under the provisions of this
Agreement. This is a guarantee of payment and performance, and not of
collection, and Guarantor acknowledges and agrees that this guarantee is full
and unconditional, and no release or extinguishments of Purchaser's obligations
or liabilities (other than in accordance with the terms of this Agreement),
whether by decree in any bankruptcy proceeding or otherwise, shall affect the
continuing validity and enforceability of this guarantee. Purchaser hereby
waives, for the benefit of Seller, (i) any right to require any Seller or
Company as a condition of payment or performance of Guarantor to proceed against
Purchaser or pursue any other remedies whatsoever and (ii) to the fullest extent
permitted by law, any defenses or benefits that may be derived from or afforded
by law that limit the liability of or exonerate guarantors or sureties, except
to the extent that any such defense is available to Purchaser. Guarantor
understands that Seller is relying on this guarantee in entering into this
Agreement.
Section 8.17 Bulk Sales Act. Each party hereto waives compliance with
--------------
any bulk sales, bulk transfer or similar laws of any applicable jurisdiction in
respect of the transactions contemplated by this Agreement. Seller agrees to
indemnify Purchaser for any Taxes for which Purchaser becomes liable as a result
of any failure to comply with any such bulk sales, bulk transfer or similar
laws.
54
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers as of the date first written above.
WORLD KITCHEN (GHC), LLC
By:
-------------------------------------------------
Name:
Title:
WKI HOLDING COMPANY, INC.
By:
-------------------------------------------------
Name:
Title:
WORLD KITCHEN, INC.
By:
-------------------------------------------------
Name:
Title:
XXXXX OF XXXX LIMITED (Barbados)
By:
-------------------------------------------------
Name:
Title:
XXXXX OF XXXX LIMITED (Bermuda)
By:
-------------------------------------------------
Name:
Title:
