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Exhibit (10)(i)
RECAPITALIZATION AGREEMENT
Recapitalization Agreement, dated as of October 14, 1997 (hereinafter
"Agreement"), among XXXXXX, INC., a New Jersey corporation ("Xxxxxx"), XXXXXX
DECORATIVE PRODUCTS HOLDINGS, INC., a Delaware corporation and an indirect
wholly owned subsidiary of Xxxxxx ("BDPH"), and BDPI HOLDINGS CORPORATION, a
Delaware corporation ("MergerCo").
W I T N E S S E T H:
WHEREAS, BDH One, Inc. ("BDH One"), a Delaware corporation, and certain
members of management of BDPH ("BDPH Management") (collectively, the
"Stockholders"), own all of the issued and outstanding shares of capital stock
of BDPH;
WHEREAS, Xxxxxx and certain of its direct and indirect subsidiaries are
presently engaged in the business of the development, production, marketing,
distribution and sale of certain paper and vinyl decorative surface products and
coordinating fabrics and accessories for residential, commercial and industrial
applications (the "Products") primarily in North America, the United Kingdom and
the Far East (which business, which does not include the commercial
wallcoverings and industrial decorative products businesses of Xxxxxx'x Columbus
Coated Fabrics division or Xxxxxx'x Orchard division (including The Orchard
Company), is hereinafter referred to as the "Business");
WHEREAS, the parties desire Xxxxxx to cause a newly formed unlimited
liability company organized under the laws of Nova Scotia, Canada (the "BDPH
Canadian
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Subsidiary"), that is a wholly owned subsidiary of Xxxxxx Company Limited, a
company organized under the laws of Canada ("BCL" or the "Asset Seller"),
subject to the terms and conditions of this Agreement, to own certain of the
assets and assume certain of the liabilities of BCL as provided in Article 2
hereof (such transfer, the "Asset Transfer");
WHEREAS, immediately following the Asset Transfer, Xxxxxx will cause
BCL to transfer all of the capital stock of the BDPH Canadian Subsidiary to BDPH
(the "Stock Transfer");
WHEREAS, immediately after the Stock Transfer, MergerCo and BDPH intend
to effect the merger of MergerCo with and into BDPH (the "Merger") in accordance
with the Delaware General Corporation Law (the "DGCL") and the provisions of
this Agreement, pursuant to which each share of common stock, par value $0.01
per share, of BDPH (the "BDPH Common Stock"), and each share of preferred stock,
par value $0.01 per share, of BDPH (the "BDPH Preferred Stock" and, together
with the BDPH Common Stock, the "BDPH Capital Stock"), issued and outstanding
immediately prior to the Effective Time of the Merger (as defined in Section
3.2) will be converted, retained or cancelled as set forth in Article 4 hereof;
and
WHEREAS, it is intended that the Merger be accounted for as a
recapitalization for financial reporting purposes.
NOW, THEREFORE, in consideration of the premises, representations and
warranties and the mutual covenants and agreements contained herein and other
good, valuable and sufficient consideration, the receipt of which is hereby
acknowledged, each of the parties, intending to be legally bound, hereby agrees
as follows:
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1. [Intentionally Omitted]
2. OWNERSHIP OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 Transfer of Assets
Subject to the satisfaction or waiver of the conditions set forth in
this Agreement, at the Closing and as of the Closing Date and immediately prior
to the Merger, Xxxxxx shall cause BCL to assign, transfer, convey and deliver to
the BDPH Canadian Subsidiary and the BDPH Canadian Subsidiary shall acquire all
of the assets, rights, properties, claims, contracts and business of BCL which
are principally utilized or held for use in the Business, of every kind, nature,
character and description, tangible and intangible, real, personal or mixed,
wherever located other than (i) the stock or assets of BDPH and the direct and
indirect subsidiaries of BDPH (such companies, which for purposes of Article 6
only shall be deemed to exclude the BDPH Canadian Subsidiary, the "Decorative
Products Companies") and (ii) the Excluded Assets described in Section 2.3
hereof (such assets, the "Acquired Assets"; and together with the assets of the
Decorative Products Companies, the "Assets"). As of the Closing, risk of loss as
to the Acquired Assets shall pass from the Asset Seller to the BDPH Canadian
Subsidiary.
2.2 Acquired Assets
Without limiting the generality or effect of the first sentence of
Section 2.1, the Acquired Assets include the following assets of BCL subject in
each case to the limitations set forth in clauses (i) and (ii) of Section 2.1(a)
hereof:
(a) Real Property. All Real Property (as defined in Section
6.7(b)) described or required by the terms hereof to be described on Part I of
Schedule 6.7(b) hereto, including all Facilities (as defined in Section 6.7(b))
thereon, and all buildings, improvements,
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fixtures, easements, privileges, rights-of-way, riparian and other water rights,
lands underlying any adjacent streets or roads and appurtenances pertaining to
or accruing to the benefit of such property, in each case subject to the
exceptions described on Schedule 6.7(a) hereto.
(b) Machinery and Equipment. All machinery, equipment and
other items of personal property which are located at the Facilities on the
Closing Date or otherwise principally related to the Business (the "Machinery")
and all warranties and guarantees, if any, express or implied, existing for the
benefit of the Machinery.
(c) Intangible Property.
(i) Patent Rights. All right, title and interest
including, without limitation, any causes of action in respect thereof in the
Patent Rights (as defined in Section 6.10(a)) described or required by the terms
hereof to be described on Part I of Schedule 6.10(a) hereto;
(ii) Trademark Rights. All right, title and interest
including, without limitation, any causes of action in respect thereof in the
Trademark Rights (as defined in Section 6.10(b)) described or required by the
terms hereof to be described on Part I of Schedule 6.10(b) hereto;
(iii) Copyrights. All right, title and interest including,
without limitation, any causes of action in respect thereof in the Copyright
Rights (as defined in Section 6.10(c)) described or required by the terms hereof
to be described on Part I of Schedule 6.10(c) hereto;
(iv) Technology. All right, title and interest including,
without limitation, any causes of action in respect thereof in the Technology
(as defined in Section 6.10(a)); and
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(v) Business Information. All written or electronic
business information, management systems and books, records and other
information relating principally to the operation of the Business, including,
but not limited to, any of the foregoing contained in the information systems
listed on Schedule 2.3(e) and advertising, marketing and sales programs,
business and strategic plans, supplier and employee information and customer
lists.
(d) Contracts. All Contracts (as defined in Section 6.8(a)) to
which BCL is a party or by which BCL is bound.
(e) Permits. All Permits (as defined in Section 6.14) which
relate principally to the Business.
(f) Inventories. The finished products (other than finished
products that have been billed and are being held for customers' accounts)
principally related to the Business and owned by BCL on the Closing Date and all
work-in-process, raw materials and packaging materials used in connection
therewith, principally related to the Business and owned by BCL on the Closing
Date.
(g) Receivables. All accounts receivable and other receivables
of BCL in existence on the Closing Date (whether or not billed) to the extent
related to the operations of the Business (the "Receivables").
(h) Related Assets. Rights arising in respect of or other
assets constituting prepaid expenses as of the Closing to the extent relating to
the Acquired Assets or the Business.
(i) Other Assets. All other assets of the Business (i)
included or reflected in (A) the Financial Statements (as defined in Section
6.5), to the extent still in existence on the Closing Date or (B) the Closing
Balance Sheet (as defined in Section 5.2(b)) including, in
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each case, the notes thereto, excluding the Excluded Assets (as defined in
Section 2.3) or (ii) owned or held by Xxxxxx or any of its affiliates and used
principally in the Business.
2.3 Excluded Assets
It is expressly agreed that BCL will retain and the BDPH Canadian
Subsidiary will not acquire the following assets (the "Excluded Assets"):
(a) Non-Acquired Assets. Any assets utilized by BCL
principally in connection with businesses other than the Business or used by BCL
at plants or distribution facilities which are not owned or used by BCL
principally in the operation of the Business as generically described on
Schedule 2.3(a).
(b) Cash and Cash Equivalents. Cash and cash equivalents,
including, without limitation, bank deposits, investments in so-called "money
market" funds, commercial paper funds, certificates of deposit, Treasury Bills
and accrued interest thereon ("Cash"), except to the extent arising out of any
Receivable or other asset reflected in the Closing Net Working Capital and
except for xxxxx cash on hand at any of the Facilities and cash and cash
equivalents arising out of or under any Asset following the Closing.
(c) Tax Refunds. Any refunds or credits for (including
interest thereon or claims therefor) Taxes (as defined in Section 6.12) relating
to the ownership of the Acquired Assets and the conduct of the Business prior to
the Closing, other than any Taxes assumed by MergerCo pursuant to Section 15.3
or for which any Decorative Products Company is directly liable.
(d) Insurance Contracts. Except as expressly provided in
Section 8.19, any contracts of insurance in respect of the Business; and any
reimbursement for, or other benefit associated with prepaid insurance, and any
rights associated with any prepaid expense for
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which BDPH will not receive the benefit after the Closing Date, including
without limitation any insurance proceeds with respect to events occurring prior
to the Closing Date to the extent BCL assumes or retains the cost of any such
event or indemnifies BDPH with respect to such event, provided, however, that
nothing herein will affect the rights of BDPH (as an additional insured or
otherwise) or any Decorative Products Company under any such insurance after the
Closing.
(e) Excluded Information Systems. Subject to Section
2.2(c)(v), the information systems of the Business identified in Schedule
2.3(e).
(f) Employee Benefit Assets. Assets relating to the Benefit
Plans (as defined in Section 6.13(b)) to the extent provided in Section 8.7.
(g) Transferred or Disposed Assets. Any assets transferred or
otherwise disposed of by BCL in the ordinary course of the Business prior to the
Closing and in accordance with this Agreement.
(h) Xxxxxx Name and Xxxxxx Trademarks. (i) All corporate
trademarks, servicemarks, trade names and logos owned by the Asset Seller
incorporating the word "Xxxxxx" or trade dress and logos used in connection
therewith; (ii) any translations, adaptations, derivations or combinations of
any of the items indicated in (i); and (iii) all goodwill associated with any of
the items indicated in (i) and (ii), except as otherwise provided in Section 8.6
or the License Agreement.
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2.4 Assumed Liabilities
On the terms and subject to the conditions hereof, as of the Closing
Date, Xxxxxx shall cause the BDPH Canadian Subsidiary to assume and agree to
pay, perform and discharge when due, all liabilities and obligations whatsoever,
other than Excluded Liabilities (as defined below), of BCL arising principally
out of or pertaining principally to the Business or the Acquired Assets whether
arising before or after the Closing, and whether known or unknown, fixed or
contingent, to the extent the same are unpaid, undelivered or unperformed on the
Closing Date, including, but not limited to, any such liability or obligation of
a type listed below (the "Assumed Liabilities"):
(a) all liabilities of BCL principally related to the Business
and included in (i) the Financial Statements, to the extent they are
still in existence on the Closing Date, and (ii) the Closing Balance
Sheet;
(b) all liabilities with respect to all actions, suits,
proceedings, disputes, claims or investigations but only to the extent
principally arising out of or principally related to the Business or
the Acquired Assets;
(c) all liabilities for claims, but only to the extent
principally relating to the Business under BCL's self-insurance
arrangements;
(d) all obligations and liabilities of BCL under the
Contracts, Leased Real Property (as defined in Section 6.7(b)) and
Permits relating principally to the Business;
(e) all obligations and liabilities of BCL for Product
returns, replacements or allowances or warranty given in the ordinary
course of business to the customers of the Business;
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(f) any obligations and liabilities of BCL for trade promotion
programs (including, without limitation, trade allowance programs),
rebates, coupons, non-coupon consumer promotions (including, without
limitation, sweepstakes) and other marketing programs and commitments
principally relating to the Business;
(g) all workers' compensation, product liability, automobile
liability and general liability claims of BCL relating principally to
the Business which occurred prior to the Closing Date, or any incident
arising prior to the Closing Date which results in any such claims
after the Closing Date;
(h) all obligations and liabilities of BCL arising as a result
of at any time being the owner or occupant of, or the operator of the
activities conducted at, any of the Facilities, including all such
obligations and liabilities relating to personal injury, property
damage and Environmental Liability (as defined in Section 6.16); and
(i) all obligations and liabilities for which MergerCo or BDPH
is expressly responsible under Sections 8.7, 12 and 15.3 hereof.
2.5 Excluded Liabilities
It is expressly agreed that BCL shall retain and the BDPH Canadian
Subsidiary shall not assume any of the following liabilities or obligations (the
"Excluded Liabilities"):
(a) all obligations and liabilities principally arising out of
or relating to (i) the Excluded Assets, (ii) any business other than the
Business, (iii) any property other than the Facilities, and (iv) any product
other than the Products;
(b) all liabilities or obligations of BCL that do not arise
out of or are not principally related to the Business or the Acquired Assets;
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(c) all obligations and liabilities of BCL retained pursuant
to Sections 8.7, 12 and 15.3 hereof and all obligations and liabilities under
the Benefit Plans expressly assumed or retained by the Asset Seller or any other
affiliate of Xxxxxx pursuant to Section 8.7 hereof or in respect of Taxes for
which Xxxxxx is or remains responsible hereunder;
(d) all obligations and liabilities for Taxes owed by BCL in
respect of the Business for which BCL is responsible pursuant to Section 12
hereof;
(e) all obligations and liabilities arising out of those
liabilities specifically set forth on Schedule 2.5(e);
(f) all obligations and liabilities under or relating to
Acquired Assets that cannot be assigned to BDPH;
(g) all obligations and liabilities incurred by BCL after the
Closing Date; and
(h) any other obligations and liabilities which BCL or Xxxxxx
has expressly assumed or retained pursuant to this Agreement.
2.6 Certain Definitions. For purposes of this Agreement, the term or
phrase "principally" or "principally related to" and similar phrases refers to
an asset or liability, as the case may be, that primarily is used in or
primarily arises out of the Business and is not primarily used in or does not
primarily arise out of any other business of BCL or Xxxxxx other than the
Business or the businesses of BCL or Xxxxxx generally.
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3. THE MERGER
3.1 The Merger
Subject to the satisfaction or waiver of the conditions set forth in
this Agreement, at the Closing and as of the Closing Date and immediately after
the consummation of the Asset Transfer, MergerCo shall be merged with and into
BDPH in accordance with the DGCL. Upon the Effective Time of the Merger (as
defined below), the separate existence of MergerCo shall cease, and BDPH shall
continue as the surviving corporation (the "Surviving Corporation") and shall
continue under the name "Royal Wall Fashions, Inc." or such other name as
MergerCo may designate prior to the Closing and may be reflected in the
Certificate of Merger (as defined below). After the Closing, all references in
this Agreement to "MergerCo" shall mean "BDPH", as successor by merger.
3.2 Effective Time of the Merger
On the Closing Date, immediately after the consummation of the Asset
Transfer, the parties shall file with the Secretary of State of the State of
Delaware a certificate of merger (the "Certificate of Merger") executed in
accordance with the relevant provisions of the DGCL and shall make all other
filings or recordings required under the DGCL. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware, or at such other time as is permissible in
accordance with the DGCL and as MergerCo and BDPH shall agree should be
specified in the Certificate of Merger (the time the Merger becomes effective
being the "Effective Time of the Merger").
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3.3 Effects of the Merger
The Merger shall have the effects set forth in the applicable
provisions of the DGCL, including without limitation, that BDPH will succeed to
all rights and obligations of MergerCo under the Transaction Documents (as
defined in Section 6.2).
3.4 Certificate of Incorporation; By-Laws; Purposes
(a) At the Effective Time of the Merger, and without any
further action on the part of BDPH or MergerCo, the Certificate of Incorporation
of BDPH, as in effect immediately prior to the Effective Time of the Merger,
shall be the certificate of incorporation of the Surviving Corporation following
the Merger until thereafter further amended as provided therein and under the
DGCL except that Article First thereof will be amended to read as follows: "The
name of the Corporation is Royal Wall Fashions, Inc." (or such other name as may
be designated by MergerCo pursuant to Section 3.1.) and except that, upon action
of the Board of Directors of the Surviving Corporation, the certificate of
incorporation of MergerCo may be substituted therefor, with such name change.
(b) At the Effective Time of the Merger, and without any
further action on the part of BDPH or MergerCo, the By-laws of MergerCo as in
effect at the Effective Time of the Merger shall be the By-laws of the Surviving
Corporation following the Merger until thereafter changed or amended as provided
therein and under the DGCL.
3.5 Directors
The directors of MergerCo at the Effective Time of the Merger and/or
such other persons as may be designated by MergerCo shall be the directors of
the Surviving Corporation following the Merger, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
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3.6 Officers
The officers of MergerCo at the Effective Time of the Merger shall be
the officers of the Surviving Corporation following the Merger, until the
earlier of their resignation or removal or until their respective successors are
duly elected or appointed and qualified, as the case may be.
4. EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF BDPH AND MERGERCO
4.1 Effect on Capital Stock
As of the Effective Time of the Merger, by virtue of the Merger and
without any action on the part of BDPH, MergerCo or any holder of any shares of
BDPH Capital Stock or any shares of capital stock of MergerCo:
(a) Common Stock of MergerCo. All of the shares of common
stock of MergerCo issued and outstanding immediately prior to the Effective Time
of the Merger shall be converted in the Merger into 5,284,375 shares of BDPH
Common Stock; provided that such number shall be reduced on a share for share
basis for each share of BDPH Common Stock, if any, held by Xxxxxxx & Xxxxxx
Products Co. ("C&A") as of the close of business on the Closing Date.
(b) Conversion (or Retention) of BDPH Common Stock. Except as
otherwise provided herein and subject to Section 4.2(e), all shares of BDPH
Common Stock issued and outstanding immediately prior to the Effective Time of
the Merger (other than shares cancelled pursuant to Section 4.1(e) and
Dissenting Shares) shall be converted into the right to receive the following
(the "Common Stock Merger Consideration") as follows:
(i)(A) 653,125 shares in aggregate of BDPH Common Stock shall
each be converted into the right to retain one fully paid and
non-assessable share of BDPH
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Common Stock following the Merger (such retained shares, in the
aggregate, the "Retained Shares"); and (B) all remaining shares of BDPH
Common Stock shall be converted into cash from BDPH following the
Merger in an amount equal to the Per Share Consideration (as calculated
by Xxxxxx in accordance with Exhibit I) (such cash consideration in the
aggregate, the "Cash Merger Consideration").
(ii) the right to retain Retained Shares and to receive Cash
Merger Consideration in the Merger shall each be allocated among the
holders of BDPH Common Stock on a consistent basis pro rata to the
number of shares of BDPH Common Stock which the holders of shares of
BDPH Common Stock held immediately prior to the Merger.
(c) Conversion of Preferred Stock of BDPH. Shares of BDPH
Preferred Stock issued and outstanding immediately prior to the Effective Time
of the Merger shall each be converted into the right to receive the Liquidation
Preference (as defined in the Xxxxxx Decorative Products MergerCo, Inc.
Certificate of Designations, as adopted on May 30, 1996) equal to the original
per share liquidation preference of $25.00, plus, if and to the extent
applicable, all accrued and unpaid dividends, whether or not declared. The
aggregate amount of merger consideration payable in connection with the
conversion of the Preferred Stock may be referred to as the "Preferred Stock
Merger Consideration" and together with the aggregate Common Stock Merger
Consideration may be referred to as the "Merger Consideration".
(d) [Intentionally omitted]
(e) Cancellation of Treasury Stock and MergerCo Owned BDPH
Capital Stock. Each share of BDPH Capital Stock that is owned by BDPH or by any
subsidiary of
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BDPH or each share of BDPH Capital Stock that is owned by MergerCo shall
automatically be cancelled and retired and shall cease to exist, and no cash,
share of BDPH Capital Stock or other consideration shall be delivered or
deliverable in exchange therefor.
(f) Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of BDPH Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger held by each holder (if
any) who has the right to demand payment for and an appraisal of such shares in
accordance with Section 262 of the DGCL (or any successor provision)
("Dissenting Shares") shall not be converted into a right to receive Merger
Consideration or any cash in lieu of fractional shares of BDPH Common Stock
following the Merger (but shall have the rights set forth in Section 262 of the
DGCL (or any successor provision)) unless such holder fails to perfect or
otherwise loses such holder's right to such payment or appraisal, if any. If,
after the Effective Time of the Merger, such holder fails to perfect or loses
any such right to appraisal, each such share held by such holder shall be
treated as a share that had been converted as of the Effective Time of the
Merger into the right to receive Merger Consideration in accordance with this
Section 4.1.
(g) Cancellation and Retirement of BDPH Capital Stock. As of
the Effective Time of the Merger, all shares of BDPH Capital Stock (other than
shares referred to in Sections 4.1(b)(i)(A) and 4.1(f)) issued and outstanding
immediately prior to the Effective Time of the Merger, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of BDPH
Capital Stock shall, to the extent such certificate represents such shares,
cease to have any rights with respect thereto, except the right to receive the
Merger Consideration, including cash in lieu of fractional shares of BDPH Common
Stock following the Merger, to
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be issued or paid in consideration upon surrender of such certificate in
accordance with Section 4.2.
4.2 Exchange of Certificates
(a) At or prior to the Effective Time, Xxxxxx, in its own
right to the extent entitled to payment and as exchange and disbursing agent for
its subsidiaries and BDPH Management, shall establish a separate bank account in
which the aggregate amount of the Merger Consideration, as well as the other
elements of the Aggregate Consideration, will be deposited (the "Disbursing
Account"). As soon as practicable after the Effective Time of the Merger, each
holder of an outstanding certificate or certificates which prior thereto
represented shares of BDPH Capital Stock shall, upon surrender to Xxxxxx of such
certificate or certificates and acceptance thereof by Xxxxxx, be entitled to a
certificate or certificates representing the number of full shares of BDPH
Common Stock, if any, to be retained by the holder thereof pursuant to this
Agreement and the amount of cash, if any, into which the number of shares of
BDPH Capital Stock previously represented by such certificate or certificates
surrendered shall have been converted pursuant to this Agreement. Xxxxxx shall
accept such certificates upon compliance with such reasonable terms and
conditions as Xxxxxx may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. If any certificate for such retained
BDPH Common Stock is to be issued in, or if cash is to be remitted to, a name
other than that in which the certificate for BDPH Common Stock surrendered for
exchange is registered, it shall be a condition of such exchange that the
certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise in proper form for transfer and that the person
requesting such exchange shall pay to the BDPH or its transfer agent any
transfer or other taxes required by reason of the issuance of
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certificates for such retained BDPH Common Stock in a name other than that of
the registered holder of the certificate surrendered, or establish to the
satisfaction of BDPH or its transfer agent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 4.2, each
certificate for shares of BDPH Capital Stock shall be deemed at any time after
the Effective Time of the Merger to represent only the right to receive upon
such surrender the Merger Consideration as contemplated by Section 4.1. No
interest will be paid or will accrue on any cash payable as Merger Consideration
or in lieu of any fractional shares of retained BDPH Common Stock, and Xxxxxx
shall retain any amounts earned or funds in the Disbursing Account and any
amounts or securities to which a holder of Dissenting Shares ceases to be
entitled. Notwithstanding the foregoing, none of BDPH, Xxxxxx or any other party
hereto shall be liable to a holder of shares of BDPH Capital Stock for any
Merger Consideration delivered pursuant hereto to a public official pursuant to
applicable abandoned property laws.
(b) The right of any holder of a certificate representing BDPH
Common Stock to receive the Merger Consideration shall be subject to and reduced
by the amount of any required Tax withholding obligation.
(c) Promptly after the Effective Time, Xxxxxx shall make
available to BDPH shareholders entitled to receive the Merger Consideration a
form of letter of transmittal and instructions for use in surrendering such
certificates and receiving the applicable Merger Consideration in exchange
therefor.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of BDPH of any shares of BDPH Capital Stock other than
Retained Shares and shares issued pursuant to Section 4.1(a). If, after the
Effective Time, certificates previously
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representing shares of BDPH Capital Stock are presented to BDPH, they shall be
cancelled and exchanged for the applicable Merger Consideration as provided in
this Article IV, subject to applicable law in the case of Dissenting Shares.
(e) (i) No certificates or scrip representing fractional
shares of BDPH Capital Stock shall be retained in connection with the Merger,
and such fractional share interests will not entitle the owner thereof to vote
or to any rights of a stockholder of BDPH after the Merger; and (ii)
notwithstanding any other provision of this Agreement, each holder of shares of
BDPH Common Stock converted pursuant to the Merger who would otherwise have been
entitled to receive a fraction of a share of BDPH Common Stock following the
Merger (after taking into account all shares of BDPH Common Stock delivered by
such holder) shall receive, in lieu thereof, a cash payment (without interest)
from Xxxxxx equal to the product of (x) such fraction, multiplied by (y) the Per
Share Consideration. Xxxxxx shall retain for its own account (or at its option,
the account of one or more Subsidiaries of Xxxxxx) all shares of BDPH Common
Stock constituted from fractional shares with respect to which Xxxxxx has made a
cash payment pursuant to this Section.
(f) Xxxxxx will indemnify BDPH against all liabilities,
obligations, claims and losses to the extent arising out of the failure of
Xxxxxx to fulfill its obligations to exchange shares of BDPH Common Stock
surrendered by BDPH Management into the Merger Consideration in accordance with
the terms and provisions of Section 4.2 of this Agreement.
5. AGGREGATE CONSIDERATION AND ADJUSTMENTS
5.1 (a) Payment of the Aggregate Consideration. The aggregate
consideration payable to Xxxxxx, Xxxxxx'x subsidiaries and BDPH Management at
Closing in connection with the transactions contemplated by this Agreement shall
equal $320,000,000 (the
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"Aggregate Consideration"). The Aggregate Consideration of $320,000,000 is
comprised of the Cash Amount (as defined below) in cash (subject to Section
8.13(b)) and the Retained Shares. The Aggregate Consideration shall be paid to
Xxxxxx, for its own account and as disbursing and exchange agent, at Closing.
The term "Cash Amount" shall mean (i) $320,000,000 less (ii) the product of (X)
0.123596 multiplied by (Y) the sum of (I) the cash amount of equity capital
provided to MergerCo prior to the Closing by Blackstone Capital Partners III
Merchant Banking Fund L.P. ("Blackstone") and made available as common equity to
the Surviving Corporation as a result of the Merger and (II) subject to the
proviso to Section 4.1(a) hereof, the amount of BDPH Common Stock, if any, held
as of the close of business on the Closing Date by C&A as a result of the C&A
Transaction (valued on a per share basis in the same manner as the shares of
BDPH Common Stock held by Blackstone on the Closing Date immediately following
the Merger); provided that in no event shall the Cash Amount be less than
$309,550,000; and provided, further, that as of the close of business on the
Closing Date, in no event shall the number of shares of BDPH Common Stock
outstanding after giving effect to both the Merger and the C&A Transaction (as
defined in Section 8.3(d)) be greater than 5,937,500.
The cash amount of the Aggregate Consideration shall be paid in
immediately available funds in U.S. dollars to the account or accounts
designated by Xxxxxx to MergerCo and BDPH no less than two business days prior
to the Closing Date. Subject to its receipt of the Aggregate Consideration,
Xxxxxx shall be solely responsible for allocating the Aggregate Consideration
among the Merger Consideration (and the various components thereof), the Xxxxxx
Transaction Fees (as defined in Exhibit I hereto) and any amounts paid prior to
or on
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the Closing Date in respect of the redemption, purchase or cancellation of any
BDPH Options (as defined in Section 9.3(l)) or any shares of capital stock of
BDPH.
(b) Management Options. Xxxxxx shall cause BDPH, acting
through its Board of Directors or a duly authorized committee thereof, to take
all required action under the 1996 Stock Purchase and Option Plan of BDPH (the
"Option Plan") and the outstanding options thereunder so that, at the Closing,
all such options shall be cancelled (unless otherwise agreed prior to Closing
with respect to a specific holder or specific holders among MergerCo, Xxxxxx and
each such holder). At or prior to the Closing, the Option Plan will be
terminated and no further stock awards, stock options or stock appreciation
rights will be granted thereunder subsequent to the Closing Date.
5.2 Working Capital Adjustment
(a) Calculation of the Working Capital Adjustment. In
accordance with the provisions of this Section 5.2, (x) BDPH shall pay Xxxxxx
the amount, if any, by which the Closing Working Capital (as defined in and
calculated in accordance with Schedule 5.2(a)) of the Business is finally
determined, accepted, deemed accepted or agreed pursuant to Section 5.2(c)
below, to be greater than the Target Working Capital (as defined below) and (y)
Xxxxxx shall pay BDPH the amount, if any, of any Balance Sheet Indebtedness and
the amount, if any by which the Closing Working Capital of the Business is
finally determined, accepted, deemed accepted or agreed pursuant to Section
5.2(c) below, to be less than the Target Working Capital. The term "Target
Working Capital" shall mean $82,000,000. "Balance Sheet Indebtedness" means the
amount of Indebtedness set forth on the Closing Balance Sheet in accordance with
GAAP (including (i) indebtedness for borrowed money, (ii) capitalized leases
required to be reflected as indebtedness in accordance with GAAP, (iii) so
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long as not duplicative of other items of Indebtedness, guarantees or similar
obligations with respect to items of the type covered by clauses (i) and (ii) of
this parenthetical and (iv) accrued and unpaid interest and all other amounts
due in connection therewith); provided that guarantees and similar obligations
addressed by clause (iii) of the preceding parenthetical shall be included in
Balance Sheet Indebtedness even if such guarantees and similar obligations would
not themselves be Indebtedness in accordance with GAAP so long as the items
covered by clauses (i) and (ii) of the preceding parenthetical to which such
guarantees and similar obligations relate are themselves Indebtedness in
accordance with GAAP; and provided, further, that to the extent borne by Xxxxxx,
the BLC Buy-Out Amount (as defined in Section 8.14) shall not be included as
Balance Sheet Indebtedness.
(b) Closing Balance Sheet. For purposes hereof, Closing
Working Capital will include only the items specified in Schedule 5.2(a) and
will be derived from a balance sheet for the Business as of the close of
business on the last business day immediately preceding the Closing Date (the
"Working Capital Measurement Date") and excluding any effects of the
transactions contemplated by this Agreement (the "Closing Balance Sheet")
prepared in accordance with U.S. generally accepted accounting principles,
consistently applied ("GAAP"), and using the same accounting policies and
practices used in the preparation of the balance sheet as of December 31, 1996
included in the Annual Financial Statements; provided, however, that the Closing
Balance Sheet and Closing Working Capital will exclude all Excluded Assets,
Excluded Liabilities and any Assets converted into Cash on, but neither prior to
nor after, the Closing Date; and provided, further, that the Closing Balance
Sheet will present fairly the financial position of the Business. Within 60 days
after the Closing, MergerCo, with the assistance of its independent accounting
firm ("MergerCo's
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Accountants"), shall prepare, or cause to be prepared, the Closing Balance
Sheet. Xxxxxx shall cooperate fully and shall provide MergerCo and MergerCo's
Accountants with all assistance and access to books and records necessary for
MergerCo to prepare the Closing Balance Sheet. Without limiting the generality
or effect of any other provision hereof, Xxxxxx shall (i) provide MergerCo and
its representatives access, during normal business hours, to the facilities,
personnel and accounting and other records of Xxxxxx and its affiliates to the
extent reasonably determined by MergerCo to be necessary to permit MergerCo to
prepare or have prepared the Closing Balance Sheet and to compute the Closing
Working Capital as herein provided; provided, however, that MergerCo will
conduct any such review in a manner that does not unreasonably interfere with
the conduct of the Business by Xxxxxx or any of its affiliates, and (ii) take
such actions as may be reasonably requested by MergerCo to close, or to assist
in closing, as of the close of business on the day immediately preceding the
Closing Date, the books and accounting records of the Business and otherwise
reasonably to cooperate with MergerCo and its representatives in the preparation
of the Closing Balance Sheet.
(c) Closing Calculation. (i) Xxxxxx shall be entitled to full
access to the relevant records and working papers prepared by or for MergerCo
and MergerCo's Accountants to aid in its review of the calculation of the
Closing Balance Sheet, provided, however, that any such review will be conducted
in a manner which does not interfere with the ongoing conduct of the Business.
If Xxxxxx believes that the Closing Working Capital calculation (hereinafter the
"Closing Calculation") has not been properly calculated in accordance with the
calculation methodologies set forth in this Section 5.2, it shall, within 30
days after receipt of the Closing Calculation, give written notice (the "Xxxxxx
Objection") to
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MergerCo, setting forth the basis of the Xxxxxx Objection in reasonable detail
and to the extent practicable the adjustments to the Closing Calculation which
Xxxxxx believes should be made. Failure so to notify MergerCo shall constitute
acceptance and approval of the Closing Calculation. If MergerCo agrees that any
change proposed by Xxxxxx is appropriate, the change shall be made to the
Closing Calculation. If the proposed change is disputed by MergerCo, then Xxxxxx
and MergerCo shall negotiate in good faith to resolve such dispute as
expeditiously as possible. If, after a period of 30 days following the date on
which Xxxxxx gives MergerCo notice of any such proposed change, any such
proposed change still remains disputed, then;
(ii) KPMG Peat Marwick LLP or, if KPMG Peat Marwick LLP is
unwilling so to serve, another accounting firm mutually acceptable to MergerCo
and Xxxxxx (the "Neutral Accounting Firm"), shall be engaged to resolve any
remaining disputes. The Neutral Accounting Firm shall act as an arbitrator to
determine, based solely on presentations by Xxxxxx and MergerCo, and not by
independent review, only those issues still in dispute. The Neutral Accounting
Firm's determination, based upon the calculation methodologies set forth in this
Section 5.2, shall be made within 30 days following the date on which the
dispute is submitted or as promptly as practicable thereafter, shall be set
forth in a written statement delivered to Xxxxxx and MergerCo, and shall be
final, binding and conclusive. The fees and any expenses of the Neutral
Accounting Firm shall be shared equally by Xxxxxx and MergerCo.
(d) Payment of Aggregate Consideration Adjustment. Payment of
any adjustment in the Aggregate Consideration pursuant to this Section 5.2 shall
be made, if applicable, by wire transfer to an account designated by Xxxxxx or
MergerCo, as the case
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may be, in United States Dollars, in immediately available federal funds within
three business days after (i) the Closing Calculation has been determined,
accepted or deemed accepted by Xxxxxx pursuant to Section 5.2(c) or (ii) any
proposed change made by Xxxxxx has been agreed upon by the parties or finally
determined by the Neutral Accounting Firm as described in Section 5.2(c)
together with interest from the Closing Date to the date of payment at the "base
rate" of LIBOR on the Closing Date plus 155 basis points, based on a 360-day
year.
5.3 Currency Exchange Values
In calculating any adjustments to the Aggregate Consideration under
this Section 5, non-U.S. currency values shall be converted to U.S. Dollar
values at the rate of exchange for foreign currencies per U.S. dollar on the day
immediately prior to the Closing Date, as reported in the Wall Street Journal
(Eastern Edition).
6. REPRESENTATIONS AND WARRANTIES OF XXXXXX
Xxxxxx represents and warrants to MergerCo and BDPH that:
6.1 Corporate Existence
Xxxxxx and the Subsidiaries (as defined below) are corporations duly
organized and validly existing and, where the concept exists, in good standing
under the laws of the jurisdiction of its incorporation and each of said
corporations has the requisite power and authority to own the Decorative
Products Company Stock, as applicable, and to own, lease and operate the Assets
and to carry on the Business as the same is now being conducted. Xxxxxx and the
Subsidiaries are each duly authorized, qualified or licensed to do business as a
foreign corporation and, where the concept exists, in good standing in every
jurisdiction wherein, by reason of the nature of the Business or the character
of the Assets, the failure to be so qualified or in good standing could be
reasonably expected to result in a material
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adverse effect on the results of operations, financial condition or business of
the Business taken as a whole or on the ability of Xxxxxx and the Subsidiaries
to consummate the transactions contemplated hereby (a "Material Adverse
Effect"). For purposes of this Agreement the term "Subsidiaries" shall mean,
collectively, the Decorative Products Companies and BCL. None of the Decorative
Products Companies or BCL is, or is required to be, a registered or reporting
company under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Complete and correct copies of the certificate of incorporation and
by-laws or other constituent documents, each as amended to date, of each
Decorative Products Company and BCL have heretofore been made available to
MergerCo.
6.2 Corporate Authority; Shareholder Authorization
This Agreement and the consummation of all of the transactions provided
for herein and each of the agreements and instruments contemplated to be
executed and delivered by Xxxxxx or any of the Subsidiaries hereunder
(collectively with this Agreement, the "Transaction Documents") have been duly
authorized by the Board of Directors of Xxxxxx and, where appropriate or
required, will be duly authorized by such Subsidiaries, by all requisite
corporate, shareholder (including without limitation shareholder approval of the
Merger) or other action prior to Closing, and Xxxxxx and every Subsidiary party
thereto have full power and authority to execute and deliver the Transaction
Documents and to perform their respective obligations thereunder. This Agreement
has been, and the other Transaction Documents will be, duly executed and
delivered by Xxxxxx and every Subsidiary party thereto, and constitutes, and in
the case of each other Transaction Document will constitute, a valid and legally
binding obligation of each such entity, enforceable in accordance with its terms
except as enforceability may be (i) limited by bankruptcy, insolvency or other
similar
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laws affecting the enforcement of creditor's rights, or (ii) subject to general
principles of equity. The execution and delivery of the Transaction Documents by
Xxxxxx and every Subsidiary party thereto and the consummation by Xxxxxx and
every Subsidiary party thereto of the transactions contemplated thereby, and the
fulfillment of the terms and compliance with the provisions thereof, will not
(a) conflict with or result in a breach of or a default (or in an occurrence
which with the lapse of time or action by a third party, or both, could result
in a default) with respect to any of the terms, conditions or provisions of, (b)
result in the termination of, accelerate the performance required by, (c) result
in the creation of any Lien (as defined in Section 6.3) upon the assets of the
Business in connection with, (d) impair Xxxxxx or any Subsidiary's ability to
consummate the transactions contemplated thereby, or (e) give rise to any right
of termination or renegotiation, or purchase or offer right, under: (x) any
statute, rule, regulation, code, order, writ or decree of any governmental
authority applicable to Xxxxxx or any Subsidiary or the Business, (y) the
certificate of incorporation or by-laws or other constituent documents of Xxxxxx
or any Subsidiary, or (z) any contract, lease, permit or other instrument to
which the Business or Xxxxxx or any Subsidiary is a party or subject or by which
any of Xxxxxx'x, any of the Subsidiary's or the Business' properties or assets
are bound, except in the cases of clauses (x) and (z) for those conflicts,
breaches, defaults, terminations, or accelerations which, individually or in the
aggregate, could not be reasonably expected to have a Material Adverse Effect
and except that no representation is made herein as to the effect of this
Agreement and the transactions contemplated hereby under antitrust laws.
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6.3 Decorative Products Company Stock
Except as set forth on Schedule 6.3 hereto and except for the
directors' qualifying shares and other nominal share interests issued to third
parties to comply with requirements of law described thereon, all of the shares
of capital stock of the Decorative Products Companies ("Decorative Products
Company Stock") shown as outstanding on Schedule 6.3 have been validly issued
and are fully paid and nonassessable and are owned by BDPH, BDH One or a wholly
owned subsidiary of BDPH free and clear of all liens, pledges, restrictions,
rights of reversion, defects, claims, charges, security interests, options or
other legal or equitable encumbrances ("Liens"). Schedule 6.3 sets forth for
each of the Decorative Products Companies the authorized capital stock, the
number of shares of outstanding capital stock, the number of shares of such
outstanding capital stock owned by each owner thereof and the name of each such
owner. Except as indicated on Schedule 6.3 hereto, there are no outstanding
options, warrants or other rights of any kind relating to the sale, issuance or
voting of any Decorative Products Company Stock which have been issued, granted
or entered into by Xxxxxx or any of the Subsidiaries or any securities
convertible into or evidencing the right to purchase any Decorative Products
Company Stock.
6.4 Governmental Approvals; Consents
None of Xxxxxx or the Subsidiaries are subject to any order,
judgement or decree which would prevent the consummation of the transactions
contemplated in any of the Transaction Documents. No claim, legal action, suit,
arbitration, governmental investigation, action or other legal or administrative
proceeding is pending or, to the knowledge of Xxxxxx, threatened against Xxxxxx
or any Subsidiary which would enjoin or delay the transactions contemplated by
any of the Transaction Documents. Except as set forth in Schedule 6.4
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hereto, no consent, approval, order or authorization of, license or permit from,
notice to or registration, declaration or filing with, any governmental
authority or entity, domestic or foreign, or of any third party, is or has been
required on the part of Xxxxxx or the Subsidiaries in connection with the
execution and delivery of the Transaction Documents or the consummation of the
transactions contemplated thereby except for such consents, approvals, orders or
authorizations of, licenses or permits, filings or notices the failure of which
to obtain or make would not have a Material Adverse Effect or which have been
obtained and which will remain in full force and effect after the Closing
assuming the compliance therewith by MergerCo.
6.5 Financial Statements
(a) Schedule 6.5 contains a copy of the unaudited consolidated balance
sheet of the Business as of December 31, 1996 and the related consolidated
statement of income and of cash flows for the fiscal year ended on such date,
including the notes related thereto (the "Annual Financial Statements"). The
Annual Financial Statements have been derived from the books and records of
Xxxxxx and the Subsidiaries and present fairly the consolidated financial
position and the consolidated results of operations and cash flows of the
Business (including the Acquired Assets and the Assumed Liabilities) as of the
dates and for the periods indicated. The Annual Financial Statements have been
prepared in accordance with the internal accounting practices of the Business,
which practices, individually and in the aggregate, are in accordance with GAAP.
Schedule 6.5 also contains the unaudited consolidated balance sheet of the
Business (including the Acquired Assets and the Assumed Liabilities) as of June
30, 1997 (the "Interim Balance Sheet") and the related unaudited consolidated
statement of income and of cash flows for the six-month period ended on such
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date (the "Interim Financial Statements" and together with the Annual Financial
Statements, the "Financial Statements"). The Interim Financial Statements
present fairly the consolidated financial position of the Business (including
the Acquired Assets and the Assumed Liabilities) as of such date and the
consolidated results of operations and consolidated cash flows for the six-month
period then ended subject to normal year-end audit adjustments, none of which is
material, individually or in the aggregate. The Interim Financial Statements
have been prepared in accordance with the internal accounting practices of the
Business, which practices, individually and in the aggregate, are in accordance
with GAAP and consistent with those used in the Annual Financial Statements
except as permitted by GAAP for interim financial reporting or as specified in
Schedule 6.5 or Schedule 6.5(a). The Interim Financial Statements include all
adjustments, consisting solely of normal recurring accruals, necessary for a
fair presentation of the Business' consolidated financial position and results
of operations. The reserves set forth in the Annual Financial Statements under
FAS 106 and 112, respectively, as of December 31, 1996 were adequate and were
recorded in accordance with GAAP. The reserves and accruals for current and
deferred taxes reflected in the Financial Statements were adequate and were
recorded in accordance with GAAP.
(b) From and after the Imperial Termination Date (as defined in Section
13.1(c) of this Agreement), the first three sentences of Section 6.5(a) of this
Agreement shall be deemed to have read in their entirety as of the date hereof
and as of any date hereafter as follows: "Schedule 6.5 contains a copy of the
audited consolidated/combined balance sheets of BDPH and its predecessors with
respect to the Business (the "Predecessors") as of December 31, 1995 and 1996
and the related consolidated/combined statements of income and of cash flows for
the fiscal year ended on such dates, accompanied by the reports thereon of
Deloitte &
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Touche L.L.P. (the "Annual Financial Statements"). The Annual Financial
Statements present fairly the consolidated/combined financial position and
consolidated/combined results of the operations and cash flows of BDPH and its
Predecessors (including the Acquired Assets and the Assumed Liabilities) as of
the dates and for the periods indicated. The Annual Financial Statements,
including the related notes thereto, have been prepared in accordance with GAAP,
consistently applied. Xxxxxx shall deliver the audited financial statements
referred to in this Section 6.5(b) (the "Audited Financial Statements") as
promptly as practicable and in any event within five days prior to the Imperial
Termination Date.
(c) All Financial Statements are qualified by the fact that the
Business was not, prior to January 1, 1996, operated as a separate "stand-alone"
entity within Xxxxxx. As a result, the Business received certain allocated
charges and credits as specified in Note (1) accompanying the Financial
Statements. Such charges and credits, while believed by Xxxxxx to be reasonable,
do not necessarily reflect the amounts which would have resulted from
arms-length transactions. In addition, in order to present stand-alone Financial
Statements for the Business, a number of significant assumptions have been made,
all of which are believed by Xxxxxx to be reasonable and are specified in Note
(1) to the Financial Statements. XXXXXX MAKES NO REPRESENTATION WITH RESPECT TO
ANY FINANCIAL INFORMATION FOR THE BUSINESS DELIVERED TO MERGERCO OTHER THAN AS
CONTAINED IN OR PURSUANT TO THIS AGREEMENT.
6.6 Absence of Changes
Except as specified in Schedule 6.6 hereto or as expressly contemplated
by this Agreement, since December 31, 1996, (i) the Business has been conducted
in the ordinary course consistent with past practice and (ii) there has not been
any material adverse change or
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development that, individually or in the aggregate, could reasonably be expected
to have a material adverse effect on the Business or its financial condition or
results of operations, other than normal seasonal changes, changes relating to
the economy in general or changes relating to the industry in which the Business
operates in general.
6.7 Real and Personal Properties
(a) Xxxxxx and/or one or more of the Subsidiaries have good and
marketable title in fee simple (as to real property) to, or a valid and binding
leasehold interest in, the real or personal property included in the Assets or
otherwise pertaining to the Business, free and clear of all Liens, except (i) as
set forth on Schedule 6.7(a); (ii) as disclosed in the Financial Statements;
(iii) Liens for taxes, assessments and other governmental charges not yet due
and payable or, if due, (A) not delinquent or (B) being contested in good faith
by appropriate proceedings during which collection or enforcement against the
property is stayed, and, for those existing on the dates of the Interim
Financial Statements or the Annual Financial Statements, for which adequate
reserves in accordance with GAAP are reflected on the Interim Financial
Statements or the Annual Financial Statements, as the case may be; (iv)
mechanics', workmen's, repairmen's, warehousemen's, carriers' or other like
liens arising or incurred in the ordinary course of business if the underlying
obligations are not past due, and, for those existing on the dates of the
Interim Financial Statements or the Annual Financial Statements, for which
adequate reserves in accordance with GAAP are reflected on the Interim Financial
Statements or the Annual Financial Statements, as the case may be; (v) original
purchase price conditional sales contracts and equipment leases with third
parties entered into in the ordinary course of business; and (vi) with respect
to real property, (A) easements, licenses, covenants, rights-of-way and other
similar restrictions, including, without
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limitation, any other agreements or restrictions which would be shown by a
current title report or other similar report or listing, (B) any conditions that
may be shown by a current survey, title report or physical inspection and (C)
zoning, building and other similar restrictions, so long as none of (A), (B) or
(C), individually or in the aggregate, renders the title of such real property
unmarketable, materially detracts from its value or prevents the use of such
real property substantially as currently used (such liens, charges and
encumbrances described in clauses (i)-(vi) hereof are referred to herein as
"Permitted Liens").
(b) Schedule 6.7(b) contains a list of all of Xxxxxx and the
Subsidiaries' right, title and interest in real property owned, used or held for
use by Xxxxxx and the Subsidiaries in the Business ("Owned Real Property") and
all leases of real property owned, used or held for use by Xxxxxx and the
Subsidiaries in the Business ("Leased Real Property" and together with Owned
Real Property, the "Real Property"), including all buildings, structures and
other improvements situated thereon (individually, a "Facility" and
collectively, the "Facilities"). Part I of Schedule 6.7(b) lists all of the Real
Property owned by BCL or used or held for use by BCL in the Business. The
covenants, easements or rights-of-way affecting the Real Property do not with
respect to each parcel of Real Property impair the Business' ability to use any
such Real Property in the operation of the Business as presently conducted
except for those covenants, easements and rights of way that, individually or in
the aggregate, could not be reasonably expected to have a Material Adverse
Effect. Each lease listed on Schedule 6.7(b) is in full force and effect, and
Xxxxxx and the Subsidiaries have performed all material obligations required to
be performed by them to date under each of the leases and none of Xxxxxx or the
Subsidiaries, nor to the knowledge of Xxxxxx, any other party thereto, is in
default under any of such leases except for those defaults under leases that,
individually or in
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the aggregate, could not be reasonably expected to have a Material Adverse
Effect. Xxxxxx and the Subsidiaries have delivered to MergerCo a true and
correct copy of each such lease, and all amendments thereto, listed on Schedule
6.7(b). Except as set forth in Schedule 6.7(b), (i) there are no parties in
possession of any portion of the Owned or Leased Real Properties as lessees,
tenants at sufferance or trespassers other than Xxxxxx and the Subsidiaries and
(ii) there is no pending or, to the knowledge of Xxxxxx, threatened special
assessment affecting the Owned Real Properties or any part thereof. Except as
provided in Schedule 6.7(b), none of Xxxxxx or the Subsidiaries have received
any actual notice that the location, construction, occupancy, operation or use
of the buildings located on the Owned or Leased Real Properties violates any
restrictive covenant or deed restriction or any other governmental laws, orders,
rules or regulations. There are no pending or, to the knowledge of Xxxxxx,
threatened condemnation or similar proceedings affecting the Real Property
except those condemnations or similar proceedings that could not, individually
or in the aggregate, be reasonably expected to have a Material Adverse Effect.
The Business has access to public roads, streets or the like or valid easements
over private streets, roads or other private property for such ingress to and
egress from the Real Property.
6.8 Contracts
(a) Except as otherwise disclosed in Schedule 6.8, there are
no outstanding commitments, contracts, indentures and agreements, written or
oral, to which Xxxxxx or any of its Subsidiaries are party to or by which Xxxxxx
or any of the Subsidiaries are bound that relate principally to the Business,
including, without limitation, personal property leases, purchase orders for
inventory, service or maintenance agreements, broker agreements, sales
representative agreements and license agreements (all of the foregoing,
hereinafter
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"Contracts") that (i) involve commitments by Xxxxxx or any of its Subsidiaries
for terms of 12 months or longer, (ii) involve payment of more than US$100,000
in the aggregate, (iii) are entered into with salesmen, commissioned agents, or
other sales representatives, or with distributors, dealers or customers, (iv)
involve agreements or arrangements for the sale or lease of any of the assets of
the Business other than the usual, regular and ordinary course of Business, (v)
involve employment (other than contracts representing the standard terms and
conditions prevailing between Xxxxxx, the Subsidiaries and the Business
Employees), severance or consulting by any Business Employee, (vi) grant to any
person or entity a first-refusal, first-offer or other right to purchase or
acquire any of the capital stock or other securities of the Decorative Products
Companies, (vii) impose noncompetition or exclusive dealing obligations relating
to the Business or (viii) evidence or create any Indebtedness, and in the case
of (i) - (iii), are not terminable by their terms, without penalty, on 30 days
or less notice. Contracts disclosed or required by the terms hereof to be
disclosed in Schedule 6.8 are hereafter referred to as the "Disclosed
Contracts";
(b) Xxxxxx has furnished or made available to MergerCo a true
and correct copy of each Disclosed Contract. Each Contract is valid and in full
force and effect according to its terms and, to Xxxxxx'x knowledge, the parties
thereto are not in default or breach under any such Contract and there are no
claims affecting the same of any kind pending except where such failure to be
valid or in full force or effect or such breach or claim, individually or in the
aggregate, could not be reasonably expected to have a Material Adverse Effect;
and
(c) Except as listed in Schedule 6.8, all Disclosed Contracts
are assignable (to the extent they are being assigned in the Asset Transfer)
without the requirement of
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consent from any other party thereto and, except as could not be reasonably
expected to have a Material Adverse Effect, the consummation of the transactions
contemplated by the Transaction Documents does not otherwise conflict with or
give rise to any right or obligation thereunder.
6.9 Litigation, Agencies
Except as set forth in Schedule 6.9, there are no actions, suits,
proceedings (whether adjudicatory, rulemaking, licensing or otherwise) or
investigations pending or, to the knowledge of Xxxxxx, threatened in law or in
equity, or before any governmental agency, which, if determined or resolved
adversely or in accordance with the plaintiff's demands, individually or in the
aggregate, could be reasonably expected to have a Material Adverse Effect.
Except as set forth on Schedule 6.9, Xxxxxx and its Subsidiaries are not subject
to or in default under any judgment, order, injunction or decree of any court or
government agency relating to the Business except for such defaults, judgments,
orders, injunctions or decrees which, individually or in the aggregate, could
not be reasonably expected to have a Material Adverse Effect.
6.10 Intangible Property Rights
(a) Schedule 6.10(a) lists all material unexpired domestic and
foreign patents and patent applications, as well as all material utility models,
reexamination certificates, reissues, divisionals, continuations and
continuation-in-part applications and any patents issuing thereon, and all
license agreements and other agreements which relate to inventions or
discoveries and any patent applications and patents thereon, as well as
improvements therein owned, used or held for use principally in connection with
the Business (the "Patent Rights"). Part I of Schedule 6.10(a) lists all Patent
Rights owned, used or held
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for use by BCL (whether or not material), Xxxxxx and its Subsidiaries in the
Business. Except as set forth in Schedule 6.10(a) (i) Xxxxxx and its
Subsidiaries own, are licensed or have the full right to use the Patent Rights
and the Technology (as defined below) described or required to be described in
Schedule 6.10(a) free and clear of all Liens and without payment of material
royalties or other fees; (ii) there are no pending, or to the knowledge of
Xxxxxx, threatened claims challenging the validity, enforceability or ownership
of such Patent Rights or Technology or Xxxxxx or its Subsidiaries' right to use
such Patent Rights or Technology except as, individually or in the aggregate,
could not be reasonably expected to have a Material Adverse Effect; (iii) the
Patent Rights described in Schedule 6.10(a) constitute all of the same owned,
used or held for use by Xxxxxx and the Subsidiaries in connection with the
operation of the Business and are sufficient for MergerCo to operate the
Business as presently operated by Xxxxxx and the Subsidiaries; (iv) the issued
patents under such Patent Rights are valid and subsisting and all maintenance
and other fees and taxes for said patents have been paid, and, to the knowledge
of Xxxxxx, none of the claims of said patents is now being infringed by others
except as, individually or in the aggregate, could not be reasonably expected to
have a Material Adverse Effect; (v) there are no licenses or sublicense
agreements now in effect regarding Xxxxxx and its Subsidiaries' use of such
Patent Rights or Technology; and (vi) none of Xxxxxx and the Subsidiaries are,
to the knowledge of Xxxxxx, infringing any U.S. or foreign patent owned by third
parties in the current operation of the Business and no claim is now pending or,
to the knowledge of Xxxxxx, is threatened to such effect, except for such
infringements and claims as, individually or in the aggregate, could not be
reasonably expected to have a Material Adverse Effect. For purposes of this
Agreement, the term "Technology" shall mean the patterns, plans, designs,
research data, trade
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secrets and other proprietary know-how, inventions, discoveries, formulae and
manufacturing processes, computer software or firmware (except as set forth in
Schedule 2.3(a)) operating manuals, drawings, technology, manuals, data,
records, procedures, research and development records, as well as improvements
therein and all licenses or other rights to use any of the same owned or
licensed by others, owned, used or held for use principally in connection with
the Business.
(b) Schedule 6.10(b) lists (i) all material trademarks,
service marks, trademark registrations, service xxxx registrations, trademark
and service xxxx applications (including all documents or files pertaining
thereto), trade names, Internet addresses and names, and similar rights; (ii)
any and all material licenses or other rights to use any of the foregoing owned
by others and (iii) any material trade dress associated therewith, used in
connection with the Business (the "Trademark Rights"). Part I of Schedule
6.10(b) lists the Trademark Rights owned, used or held for use by BCL (whether
or not material). Except as set forth in Schedule 6.10(b), (i) Xxxxxx and/or the
Subsidiaries own, are licensed or have the full right to use the Trademark
Rights described or required to be described in Schedule 6.10(b) free and clear
of all Liens and without payment of material royalties or other fees; (ii) all
such Trademark Rights are valid and subsisting, free and clear of any
encumbrances or rights of third parties which would restrict, impair or dilute
MergerCo's exclusive right to use such Trademark Rights except as, individually
or in the aggregate, could not be reasonably expected to have a Material Adverse
Effect, and (iii) no claim by third parties with regard to the use of any of
such Trademark Rights is pending, has been made or, to the knowledge of Xxxxxx,
threatened and none of such Trademark Rights is being infringed by others,
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individually or in the aggregate, except as could not be reasonably expected to
have a Material Adverse Effect.
(c) Schedule 6.10(c) lists all material copyrights, copyright
registrations, copyright applications (pertaining thereto) and all material
licenses or other rights to use the copyrights of others, in each case used
principally in connection with the Business (the "Copyright Rights"). Part I of
Schedule 6.10(c) lists the Copyright Rights owned, used or held for use by BCL
(whether or not material). Except as disclosed in Schedule 6.10(c), (i) Xxxxxx
and the Subsidiaries own, are licensed or have the full right to use the
Copyright Rights described or required to be described in Schedule 6.10(c) free
and clear of all Liens and without payment of material royalties or other fees
and (ii) there are no pending or, to the best of Xxxxxx'x knowledge, threatened
claims by or against Xxxxxx or any of the Subsidiaries with respect to any
Copyright Rights or the use thereof and no valid basis exists for any such
claim.
6.11 Insurance
Schedule 6.11 sets forth a list of all material insurance policies
providing coverage for the properties or operations or liabilities of the
Business ("Insurance"), the type and amount of coverage and the expiration dates
of the policies. Such policies are valid and enforceable in accordance with
their terms, are in full force and effect and insure against risk and
liabilities to the extent and in the manner reasonably deemed appropriate and
sufficient by Xxxxxx. Xxxxxx and its Subsidiaries will continue in force to the
Closing Date policies of insurance of substantially the same character and
coverage so long as such Insurance continues to be available at commercially
reasonable rates.
6.12 Tax Matters
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(a) Except as set forth in Schedule 6.12(a) hereto, there has
been filed by or on behalf of the Decorative Products Companies or BCL, or a
filing extension from the appropriate federal, state, local or foreign
governments or governmental agencies has been obtained with respect to, all
material returns relating to any United States federal, state, provincial,
local, territorial and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, property, real estate, excise, value added,
estimated, stamp, alternative or add-on minimum, environmental, withholding and
any other taxes, duties or assessments, together with all interest, penalties
and additions imposed with respect to such amounts (collectively, "Taxes")
required to be filed on or prior to the date of this Agreement (the "Tax
Returns"), and all Taxes shown to be due on such Tax Returns have been paid or
adequate provision in current taxes payable (rather than deferred) in accordance
with GAAP for the payment of all Taxes shown to be due on such Tax Returns has
been made.
(b) Except as set forth in Schedule 6.12(b), no audit or other
proceeding by any court, governmental or regulatory authority, or similar person
is pending or, to the knowledge of Xxxxxx, threatened with respect to any Taxes
due from or with respect to any Decorative Products Company or BCL. No
assessment of tax has been proposed in writing against any Decorative Products
Company or BCL.
(c) Except as set forth in Schedule 6.12(c), all Tax Returns
filed with respect to Taxes of the Decorative Products Companies and BCL through
the tax year ended December 31, 1993, have been examined and closed or the
applicable period for assessment of Taxes with respect to such tax years under
applicable law, after giving effect to extensions or waivers, has expired.
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(d) There are no liens for Taxes (other than for Taxes not yet
due and payable) on any Asset except for Permitted Liens.
(e) Except as set forth in Schedule 6.12(e) hereto, none of
the Decorative Products Companies or BCL is a party to or bound by (nor will any
of them become a party to or bound by prior to the Closing Date) any tax
indemnity, tax sharing or tax allocation agreement.
6.13 Employment and Benefits
(a) Labor Controversies. Except as described on Schedule
6.13(a) and except, with respect to clauses (i) and (ii) below, for such
matters, individually or in the aggregate, as could not reasonably be expected
to have a Material Adverse Effect, in respect of the Business, (i) Xxxxxx and
the Subsidiaries are in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, (ii) there is no unfair labor practice complaint against Xxxxxx
or any of the Subsidiaries pending or, to the knowledge of Xxxxxx, threatened,
before the National Labor Relations Board, or any other U.S. or foreign
governmental or regulatory authority or court, (iii) there is no labor strike,
dispute, slowdown or stoppage actually pending or threatened against or
affecting Xxxxxx or any of the Subsidiaries, (iv) Xxxxxx and the Subsidiaries
have not experienced any strike, work stoppage or other labor difficulty, and
(v) none of Xxxxxx or the Subsidiaries are a party to, or subject to, a
collective bargaining agreement, and no collective bargaining agreement relating
to Business Employees is being negotiated. None of the collective bargaining
agreements listed on Schedule 6.13(a) and assumed by MergerCo pursuant to
Section 8.7(c) cover any employees other than Business Employees.
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(b) Employee Benefit Plans. (i) For purposes of this
Agreement, "Benefit Plans" shall mean all "employee benefit plans" (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), including, without limitation, "multiemployer plans"
within the meaning of Sections 3(37) and 4001(a)(3) of ERISA), "multiple
employer plans" within the meaning of Section 413(c) of the Code, retirement
savings, stock purchase, stock option, severance, vacation, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
deferred compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements (whether or not subject to ERISA or
United States laws) (A) under which any employee or former employee of the
Business (collectively, the "Business Employees") has any present or future
right to benefits and (B) under which Xxxxxx or any of its affiliates has any
present or future liability. For purposes of this Agreement, "U.S. Benefit
Plans," "Canada Benefit Plans" and "U.K. Benefit Plans" shall mean all Benefit
Plans under which any Business Employee who is or was primarily employed in the
United States, Canada or the United Kingdom, respectively (collectively, the
"U.S Business Employees,""Canada Business Employees" or "U.K. Business
Employees," respectively), has any present or future right to benefits. Schedule
6.13(b)(i) sets forth a list of each material Benefit Plan.
(ii) Except as described on Schedule
6.13(b)(ii)-1, each Material Benefit Plan has been established and administered
in accordance with its terms and in compliance with the applicable provisions of
ERISA, the Code and other applicable laws (foreign or domestic), except where a
failure to do so, individually or in the aggregate, could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Except for liabilities generically described on Schedule 6.13(b)(ii)-2, neither
Xxxxxx
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nor any Subsidiary nor any other ERISA Affiliate has any liability to provide
medical benefits, life insurance benefits or supplemental pension benefits in
respect of any current of former Business Employee beyond their retirement.
(iii) Except as described on Schedule
6.13(b)(iii), the Internal Revenue Service has issued, with respect to each
Benefit Plan intended to be tax qualified under Sections 401(a) and 501(a) of
the Code, a letter determining that such Benefit Plan is so qualified and its
related trust is exempt from United States federal income tax under Sections
401(a) and 501(a) of the Code (including without limitation the requirements of
the Tax Reform Act of 1986), respectively, and there has been no occurrence
affecting the form or operation of any such Benefit Plan since the date of any
such determination letter which is likely to materially adversely affect such
qualification.
(iv) To Xxxxxx'x or any Subsidiary's knowledge,
there are no actions or claims existing or pending (other than routine claims
for benefits) or threatened with respect to any Benefit Plan, and neither Xxxxxx
nor any Subsidiary nor any other ERISA Affiliate has been notified of any audit
or investigation of a Benefit Plan by any governmental entity that would have a
Material Adverse Effect. "ERISA Affiliate" means any entity, trade or business
that would be treated as under common control with Xxxxxx or as a member of a
controlled group including Xxxxxx within the meaning of Section 414 of the Code
or Section 4001 of ERISA.
(v) Except as described on Schedule 6.13(b)(v),
assuming that all Business Employees remain in the employment of the Business
immediately after the Closing (regardless of whether such employment is
thereafter continued), the Asset Transfer, the Stock Transfer and the Merger in
themselves will not: (A) entitle any such individual to severance
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pay, unemployment compensation or other similar payment; (B) accelerate the time
of payment or vesting of any amount; (C) increase the amount of compensation due
to any such individual; (D) constitute a "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) or (E) entitle any such
individual to an "excess parachute payment" within the meaning of Section 280G
of the Code.
(vi) Schedule 6.13(b)(vi) sets forth the
calculations of the funding status of the ERIP, the Sunworthy Plan and the
Xxxxxx Scheme as calculated by Xxxxxxx X. Xxxxxx Limited and Towers Xxxxxx,
actuaries in Canada and the U.K., respectively, in accordance with the
assumptions set forth in Schedules 8.7(h)-1 through 8.7(h)-3. These calculations
are the last performed before the date of this Agreement. Notwithstanding the
foregoing, Xxxxxx makes no representation about the validity of the calculations
or assumptions in Schedules 6.13, 8.7(h)-1, 8.7(h)-2, 8.7(h)-3 or 8.7(h) or that
any other actuary or individual would arrive at the same calculations or
conclusions.
(c) Employment Contracts. Except as described on Schedule
6.13(c), there are no employment or severance contracts between Xxxxxx or the
Subsidiaries, on the one hand, and any Business Employee, on the other hand,
other than contracts representing the standard terms and conditions prevailing
between Xxxxxx or the Subsidiaries and any Business Employees in existence
pursuant to the standard practices of the countries in which Xxxxxx or the
Subsidiaries conduct their business.
6.14 Compliance with Laws
Except as disclosed on Schedule 6.14 and except for those failures to
have, to be in full force in effect, to file, retain and maintain and to comply
in each case that individually or in the aggregate, could not be reasonably
expected to have a Material Adverse Effect, (i) with
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respect to the Business, Xxxxxx and the Subsidiaries have all licenses, permits
or franchises issued by any United States or foreign, federal, state,
provincial, municipal or local authority or regulatory body and other
governmental certificates, authorizations and approvals (collectively "Permits")
required by every United States or foreign, federal, state, provincial,
municipal or local governmental or regulatory body for the operation of the
Business and the use of its assets and properties as presently operated or used;
(ii) with respect to the Business, all such Permits are in full force and effect
and no action, claim or proceeding is pending, nor to the knowledge of Xxxxxx
threatened, to suspend, revoke, revise, limit, restrict or terminate any of such
Permits or declare any such Permit invalid; (iii) Xxxxxx and its Subsidiaries
have filed all necessary reports and maintained and retained all necessary
records pertaining to such Permits; and (iv) with respect to the Business,
Xxxxxx and the Subsidiaries have otherwise complied with all of the laws,
ordinances, regulations and orders applicable to its existence, financial
condition, operations, assets, properties or Business, and Xxxxxx has not
received any notice to the contrary.
6.15 Finders; Brokers
With the exception of fees and expenses payable to Xxxxxx Xxxxxxx & Co.
Incorporated, which shall be Xxxxxx'x sole responsibility, none of Xxxxxx or any
of the Subsidiaries is a party to any agreement with any finder or broker, or in
any way obligated to any finder or broker for any commissions, fees or expenses
in connection with the origin, negotiation, execution or performance of any
Transaction Document.
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6.16 Environmental Matters
Except as disclosed on Schedule 6.16:
(a) In respect of the Business, Xxxxxx and its Subsidiaries
are in compliance with all Environmental Laws (as defined below)
applicable to the nature, scope and extent of the Business as presently
conducted by Xxxxxx and its Subsidiaries, except for violations of
Environmental Laws that could not, individually or in the aggregate,
have a Material Adverse Effect;
(b) In respect of the Business, Xxxxxx and its Subsidiaries
hold, and are in compliance with, all Licenses and Permits, required
under Environmental Laws applicable to the nature, scope and extent of
the Business as presently conducted by Xxxxxx and its Subsidiaries,
except for the absence of, or noncompliance with, such Licenses and
Permits that could not, individually or in the aggregate, have a
Material Adverse Effect; and
(c) In respect of the Business, Xxxxxx and its Subsidiaries
have not received any written request for information, notice of
violation or noncompliance or notice of the institution or pendency of
any lawsuit, action, proceeding, investigation or claim by any person
alleging any Environmental Liability arising from or relating to the
conduct of the Business, except for all such cases that could not,
individually or in the aggregate, have a Material Adverse Effect.
(d) The business is not subject to any cleanup, remediation,
monitoring or corrective action, liability or requirement under any
Environmental Law applicable to the nature, scope and extent of the
Business as presently conducted by Xxxxxx and its Subsidiaries except
for cleanup, remediation, monitoring or corrective action, liability
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or requirements as would not individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(e) As used herein:
"Environmental Laws" means any domestic, foreign, federal,
state, interstate or local statute, law or regulation in effect prior to the
Closing Date (insofar as they result in a liability or obligation on or after
the Closing Date) or as of the Closing Date or any order, injunction, judgment,
decree, common law or other enforceable requirement of any governmental entity,
and relating to the protection of the environment, including any of the
foregoing related to: (i) Remedial Actions; (ii) the reporting, licensing,
permitting or investigating of the emission, discharge, release or threatened
release of Hazardous Substances into the air, surface water, groundwater or
land; or (iii) the manufacture, release, distribution, use, generation,
treatment, storage, disposal, transport or handling of Hazardous Substances;
"Environmental Liability" means any liability or obligation
arising under Environmental Laws to the extent arising from any condition
existing or any act or omission at or prior to the Closing Date.
"Hazardous Substance" means (i) any substance or material
regulated under applicable Environmental Laws or (ii) gasoline, diesel fuel or
other petroleum hydrocarbons or polychlorinated biphenyls, asbestos or
radioactive matter.
"Remedial Action" means any response action, removal action,
remedial action, corrective action, monitoring program, sampling program,
investigation or other cleanup activity pertaining to any Hazardous Substance.
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6.17 Entire Business
Except for the Excluded Assets and except as set forth in Schedule
6.17, the Assets and the Decorative Products Companies Stock constitute,
together with the rights and services made available in the Services Agreement
and the Xxxxxx Home License Agreement (each as hereinafter defined), all the
assets, properties and rights (i) necessary to conduct the Business in all
material respects as currently conducted, (ii) reflected in the Financial
Statements (except for assets disposed of in the ordinary course of the Business
since the dates thereof) or the Closing Balance Sheet, or (iii) which relate to
the Business.
6.18 Millennium Compliance
(a) Schedule 6.18 describes the measures that have been
implemented to determine the extent to which the computer systems used in the
Business (other than the information systems listed on Schedule 2.3(e)) (the
"Computer Systems") are not in Millennium Compliance, and the material details
of any program undertaken with a view toward causing the Computer Systems to
achieve Millennium Compliance.
(b) As used herein, "Millennium Compliance" means that the
Computer Systems are capable of the following before, during and/or after
January 2000:
(i) handling date information involving all and any dates
before, during and/or after January 1, 2000, including accepting input,
providing output and performing date calculations in whole or in part;
(ii) operating, accurately without interruption on and in
respect of any and all dates before, during and/or after January 1,
2000 and without any change in performance;
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(iii) responding to and processing two digit year input
without creating any ambiguity as to the century; and
(iv) storing and providing date input information without
creating any ambiguity as to the century.
6.19 Affiliate Agreements and Liabilities
Except as set forth on Schedule 6.19 or as expressly contemplated by
this Agreement or the Schedules and Exhibits hereto, there are no written or
oral Contracts, liabilities or obligations pertaining to the Business between
any Decorative Products Company or BCL, on the one hand, and any of Xxxxxx or
its subsidiaries or any affiliate thereof (other than the Decorative Products
Companies), on the other hand, which will continue to exist or under or a result
of which there will be any liability on or after the Closing, including, without
limitation, any such Contracts relating to the provision of any services by the
Business to any of Xxxxxx or its subsidiaries or affiliates, or by any of Xxxxxx
or its subsidiaries or affiliates to the Business.
6.20 Labor Relations
Except as set forth on Schedule 6.20, the Business is not a party to
any collective bargaining agreement covering employees, there are no
controversies or unfair labor practice proceedings pending or, to the best of
Xxxxxx'x knowledge, threatened between the Business and any Business Employee or
any labor or other collective bargaining unit representing any Business Employee
that, individually or in the aggregate, could reasonably be expected to result
in a labor strike, dispute, slow-down or work stoppage or otherwise have a
Material Adverse Effect. Except as set forth on Schedule 6.20, no organizational
effort is presently being made or, to the knowledge of Xxxxxx, threatened by or
on behalf of any labor union.
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6.21 Product Liability
Except as disclosed on Schedule 6.21 and except as could not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect, (i) there is no notice, demand, claim, action, suit, inquiry,
hearing, proceeding, notice of violation or investigation of a civil, criminal
or administrative nature by or before any court or other governmental or
regulatory authority against or involving any product, substance or material
(collectively, a "Material"), or class of claims or lawsuits involving a
Material manufactured, produced, distributed or sold by or on behalf of the
Business which is pending or, to Xxxxxx'x knowledge, threatened, on behalf of
the purchaser of any Material, resulting from an alleged defect in design,
manufacture, materials or workmanship of any Material manufactured, produced,
distributed or sold by or on behalf of the Business, or any alleged failure to
warn, or from any breach of express or implied specifications or warranties or
representations (each such defect, failure or breach, a "Product Claim"), and
(ii) there has not been, nor is there under consideration or investigation by
the Business, any Materials recall, rework, retrofit or post-sale warning
(collectively, recalls, reworks, retrofits and post-sale warnings are referred
to in this Agreement as "Recalls") conducted by or on behalf of the Business
concerning any Materials manufactured, produced, distributed or sold by or on
behalf of the Business or, to the knowledge of Xxxxxx and its Subsidiaries, any
Recall conducted by or on behalf of any entity as a result of any alleged defect
in any Material supplied by the Business. Except as disclosed in Schedule 6.21,
there is no Product Claim pending or, to the knowledge of Xxxxxx, threatened, on
behalf of a customer of the Business or any governmental or regulatory authority
which, individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect. Since December 31, 1996, and except as
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individually or in the aggregate, could not be reasonably expected to have a
Material Adverse Effect, no events, conditions, circumstances, activities,
practices, incidents, actions, omissions or plans have existed or occurred that
could give rise to any liability or otherwise form the basis of any material
claim based on or related to any Product or Material that was or allegedly was
designed, formulated, manufactured, produced, distributed or sold by or on
behalf of the Business.
6.22 No Undisclosed Liabilities
There were no material liabilities of or relating to the Business as of
December 31, 1996 that are of a type required to be disclosed in a balance sheet
prepared in accordance with GAAP, except (a) as set forth in Schedule 6.22 or
(b) as reflected in the Annual Financial Statements. Since December 31, 1996,
the Decorative Products Companies have not incurred any material liabilities,
except (i) as set forth in Schedule 6.22, (ii) those reflected on the Interim
Financial Statements or (iii) liabilities incurred in the ordinary course of
business and not in violation of this Agreement.
6.23 BDPH Preferred Stock
After giving effect to the Merger, the BDPH Preferred Stock will no
longer be outstanding, and BDPH will have no liabilities or obligation in
respect thereof (except the liability to pay the Aggregate Consideration in
accordance with Section 4.1(c) hereof).
6.24 No Other Representations or Warranties
Except for the representations and warranties contained in this Section
6, any Transaction Document, the Schedules or Exhibits thereto or any
certificate delivered in connection with the Closing, neither Xxxxxx, the
Subsidiaries nor any other person makes any other express or implied
representation or warranty on behalf of Xxxxxx and the Subsidiaries
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including, without limitation, as to the probable success or profitability of
the ownership, use or operation of the Business, the Decorative Products
Companies and the Assets by MergerCo after the Closing.
6.25 Expiration of Representations and Warranties
Subject to Sections 11 and 12 hereof, the respective representations
and warranties of Xxxxxx contained herein shall survive the Closing but shall
expire and be terminated and extinguished on April 1, 1999, and thereafter
Xxxxxx shall have no liability whatsoever with respect to any such
representation or warranty, provided, however, that (i) the representations and
warranties in Sections 6.1, 6.2, 6.3, 6.4, 6.7(a), 6.12 and 6.15 (collectively,
the "Five-Year Reps") will survive the Closing until the fifth anniversary
thereof and (ii) nothing herein will affect the parties' relative rights and
obligations in respect of a claim for breach of any representation or warranty
made within the applicable survival period provided herein.
7. REPRESENTATIONS OF MERGERCO
MergerCo represents and warrants to Xxxxxx that:
7.1 Corporate Existence
MergerCo is a corporation duly organized and validly existing and in
good standing under the laws of the jurisdiction of its incorporation. MergerCo
is duly authorized, qualified or licensed to do business as a foreign
corporation and in good standing in every jurisdiction wherein, by reason of the
nature of the Business or the character of the Assets, the failure to be so
qualified or in good standing would reasonably be likely to result in the
material adverse effect on the ability of MergerCo to consummate the
transactions contemplated hereby (a "MergerCo Material Adverse Effect").
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7.2 Corporate Authority; Shareholder Authorization
This Agreement and the consummation of all of the transactions provided
for herein and each of the Transaction Documents have been duly authorized by
the Board of Directors of MergerCo and by all requisite corporate, shareholder
(including approval of the Merger by MergerCo's shareholders), or other action
prior to Closing, and MergerCo has full power and authority to execute and
deliver the Transaction Documents and to perform its obligations thereunder.
This Agreement has been, and the other Transaction Documents will be, duly,
executed and delivered by MergerCo and each Transaction Document constitutes a
valid and legally binding obligation of MergerCo, enforceable in accordance with
its terms (i) except as enforceability may be limited by bankruptcy, insolvency
or other similar laws affecting the enforcement of creditor's rights or (ii)
subject to general principles of equity. The execution and delivery of the
Transaction Documents by MergerCo or the consummation by MergerCo of the
transactions contemplated thereby and the fulfillment of the terms and
compliance with the provisions hereof, will not (a) conflict with or result in a
breach of or a default (or in an occurrence which with the lapse of time or
action by a third party, or both, could result in a default) with respect to any
of the terms, conditions or provisions of, (b) result in the termination of,
accelerate the performance required by, (c) impair MergerCo's ability to
consummate the transactions contemplated hereby, (d) give rise to any right of
termination or renegotiation, or purchase or offer right, under: (x) any
statute, rule, regulation, code, order, writ or decree of any governmental
authority applicable to MergerCo, (y) the certificate of incorporation or
by-laws or other constituent documents of MergerCo, or (z) any contract, lease,
permit or other instrument to which MergerCo is a party or subject or by which
any of MergerCo's properties or assets are bound, except in the cases of clauses
(x) and (z) for those
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conflicts, breaches, defaults, terminations, or accelerations which,
individually or in the aggregate, could not reasonably be expected to have a
MergerCo Material Adverse Effect and except that no representation is made
herein as to the effect of this Agreement and the transactions contemplated
hereby under antitrust laws.
7.3 Governmental Approvals; Consents
MergerCo is not subject to any order, judgement or decree which would
prevent the consummation of the transactions contemplated hereby. No claim,
legal action, suit, arbitration, governmental investigation, action or other
legal or administrative proceeding is pending or, to the knowledge of MergerCo,
threatened against MergerCo which would enjoin or delay the transactions
contemplated hereby. Except as set forth in Schedule 7.3 hereto, no consent,
approval, order or authorization of, license or permit from, notice to or
registration, declaration or filing with, any governmental authority or entity,
domestic or foreign, or of any third party, is or has been required on the part
of MergerCo in connection with the execution and delivery of this Agreement, or
the consummation of the transactions contemplated hereby except for such
consents, approvals, orders or authorizations of, licenses or permits, filings
or notices the failure of which to obtain or make would not have a MergerCo
Material Adverse Effect or which have been obtained and which will remain in
full force and effect after the Closing.
7.4 Finders; Brokers
MergerCo is not a party to any agreement with any finder or broker, or
in any way obligated to any finder or broker for any commissions, fees or
expenses, in connection with the origin, negotiation, execution or performance
of this Agreement for which Xxxxxx or any
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of its Affiliates (other than, if the Closing occurs, the Decorative Product
Companies), have any liability.
7.5 Purchase for Investment
MergerCo is aware that no shares of capital stock or other securities
being acquired pursuant to the transactions contemplated hereby are registered
under the Securities Act of 1933, as amended (the "Securities Act"), or under
any state or foreign securities laws. MergerCo is not an underwriter, as such
term is defined under the Securities Act.
7.6 Financial Capacity
MergerCo has in hand a binding commitment letter (the "Commitment
Letter"), which is currently in effect and true and a correct copy of which is
attached hereto as Schedule 7.6, from the financial institutions indicated
therein, as well as the equity Commitment Letter (the "Blackstone Commitment
Letter") of Blackstone, to provide secured debt and equity financing
contemplated by MergerCo and BDPH for the transactions described in this
Agreement and has obtained a highly confident letter with respect to the
subordinated debt financing so contemplated (collectively, the "Financing").
Blackstone has undertaken to provide the equity capital contemplated by the
Commitment Letter.
7.7 [Intentionally omitted]
7.8 No Other Representations or Warranties
Except for the representations and warranties contained in this Section
7, neither MergerCo nor any other person makes any other express or implied
representation or warranty on behalf of MergerCo.
7.9 Expiration of Representations and Warranties
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Subject to Sections 11 and 12 hereof, the respective representations
and warranties of MergerCo contained herein shall survive the Closing but shall
expire and be terminated and extinguished on April 1, 1999 and thereafter
MergerCo shall have no liability whatsoever with respect to any such
representation or warranty, provided, however, that (i) the representations and
warranties in Sections 7.1, 7.2, 7.3 and 7.4 (collectively, "Long-Term Reps")
will survive the Closing until the fifth anniversary thereof and (ii) nothing
herein will affect the parties' relative rights and obligations in respect of a
claim for breach of any representation or warranty made within the applicable
survival period provided herein.
8. AGREEMENTS OF MERGERCO AND XXXXXX
8.1 Operation of the Business
Except as otherwise contemplated by this Agreement or as disclosed in
Schedule 8.1, Xxxxxx covenants that until the Closing it will, and it will cause
the Subsidiaries (including BDPH) to, use all reasonable efforts to continue, in
a manner consistent with the past practices of the Business, to maintain and
preserve intact the Business and to maintain the ordinary and customary
relationships of the Business with its employees, suppliers, customers and
others having business relationships with it with a view toward preserving for
BDPH to and after the Closing Date the Business, the Assets and the goodwill
associated therewith. Until the Closing Date, Xxxxxx shall, and Xxxxxx shall
cause the Subsidiaries (including BDPH) to, continue to operate and conduct the
Business in the ordinary course consistent with past practice (including,
without limitation, in respect of the creation and distribution of sample books
and other marketing efforts, and customer returns and allowances policies) and
maintain its books and records in accordance with GAAP and will not, and shall
cause the
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Subsidiaries (including BDPH) not to, without the prior written approval of
MergerCo or as otherwise contemplated by this Agreement or Schedule 8.1, take
any of the following actions:
(a) with respect to any Decorative Products Company, amend its
charter or by-laws (or analogous organizational documents), issue, deliver,
sell, pledge or otherwise encumber any shares of capital stock of any class or
series, or any securities convertible into or exchangeable for shares of capital
stock, or issue any options, warrants or other rights to acquire any shares of
capital stock;
(b) sell, transfer or otherwise dispose of or encumber any of
their properties or assets pertaining to the Business, other than (A) in the
ordinary course of business and (B) transfers by a Decorative Product Company to
another Decorative Products Company or by Xxxxxx or another Subsidiary to a
Decorative Product Company;
(c) cancel any debts or waive any claims or rights pertaining
to the Business, except in the ordinary course of business;
(d) grant any increase in the compensation of directors,
officers or employees who are Business Employees except for increases to
employees (but not officers or directors) (i) in the ordinary course of business
and consistent with past practice or (ii) as required by any Benefit Plan (as
defined in Section 6.13(b));
(e) fail to make capital expenditures as contemplated by
Schedule 8.1(e);
(f) except with respect to endorsement of negotiable
instruments in the ordinary course of its Business, incur, assume, guarantee or
otherwise become liable in respect of any Indebtedness. For purposes of this
Agreement, "Indebtedness" means any liability or obligation (whether primary or
secondary as a guarantor or other surety other than arising out of the
endorsement of checks for collection in the ordinary course of business), for
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borrowed money (other than purchase money borrowing and other borrowings which
are repaid in full prior to the Closing), for the deferred purchase price of any
asset (other than inventory in the ordinary course of business), under a
capitalized lease or any other liability or obligation which should be shown as
indebtedness on a balance sheet for the Business prepared in accordance with
GAAP, whether or not evidenced by a note, bond or similar instrument;
(g) fail to observe, in all material respects, their duties
and obligations under the Disclosed Contracts or any other material Contract;
(h) amend, modify or cancel any Disclosed Contract or any
other material Contract, except in the ordinary course of business consistent
with past practice or adopt or amend any Benefit Plan;
(i) fail to continue existing practices relating to
maintenance of Assets owned, leased or otherwise held in connection with the
Business or by any Decorative Products Company;
(j) dispose of, permit to lapse, or otherwise fail to preserve
any of the Patent Rights, Trademark Rights, Copyright Rights and Technology or
other similar rights, or amend any Contract relating thereto, dispose of or
permit to lapse any material Permit, or dispose of or disclose to any person or
entity other than an authorized representative of MergerCo, any trade secret
(except for such of the foregoing as may occur by operation of law or the terms
of any of the foregoing);
(k) with respect to any Decorative Products Company, make any
investments in, or acquisitions of, or enter into any joint venture, partnership
or similar arrangement with, any person or entity;
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(l) settle or compromise or agree to settle any claim related
to the Business that is in excess of $50,000 against any person or entity;
(m) take or omit to take any action that would cause any
representation of Xxxxxx or BDPH (i) that is qualified as to materiality to
become untrue or (ii) that is not qualified as to materiality to become untrue
in all material respects;
(n) make any change in the accounting methods, principles or
practices of the Business, except as required by GAAP;
(o) (i) split, combine or reclassify any Decorative Products
Company Stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of Decorative Products
Company Stock or (ii) purchase, redeem or otherwise acquire any shares of
Decorative Products Company Stock or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities; or
(p) agree, whether in writing or otherwise, to do any of the
foregoing.
8.2 Investigation of Business
MergerCo may, prior to the Closing Date, make or cause to be made such
investigation of the business, assets and properties of the Business and of its
financial and legal condition as MergerCo deems necessary or advisable. Xxxxxx
will, or it will cause the Subsidiaries to, permit MergerCo and its authorized
agents or representatives, including its independent accountants, to have full
access to the assets, properties, employees, officers, books and records of the
Business at reasonable hours to review information and documentation relative to
the properties, books, contracts, commitments and other records of the Business,
provided, however, that MergerCo shall not have access to customer lists to the
extent disclosure thereof to MergerCo is prohibited by applicable law prior to
Closing.
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MergerCo and its representatives will hold in confidence all confidential
information obtained from Xxxxxx and the Subsidiaries and their officers,
agents, representatives or employees in accordance with the provisions of the
letter dated April 25, 1997 between MergerCo and Xxxxxx ("Confidentiality
Letter").
8.3 Mutual Cooperation; No Inconsistent Action
(a) Subject to the terms and conditions hereof, Xxxxxx and
MergerCo agree to use their reasonable best efforts to take, or cause to be
taken, all commercially reasonable actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including all of the following (i)
obtain prior to Closing all licenses, certificates, permits, approvals,
authorizations, qualifications and orders of governmental authorities as are
necessary for the consummation of the transactions contemplated hereby,
including without limitation such consents and approvals as may be required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"Xxxx-Xxxxx Act"), and any similar foreign legislation; (ii) effect all
necessary registrations and filings and (iii) satisfy the conditions to Closing.
Xxxxxx and MergerCo shall cooperate fully with each other to the extent
reasonable in connection with the foregoing.
(b) MergerCo and Xxxxxx shall timely and promptly make all
filings which may be required by each of them in connection with the
consummation of the transactions contemplated hereby under the Xxxx-Xxxxx Act
and any similar foreign legislation. Each party shall furnish to each other such
necessary information and assistance as the other party may reasonably request
in connection with the preparation of any necessary filings or submissions by it
to any U.S. or foreign governmental agency, including, without limitation, any
filings
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necessary under the provisions of the Xxxx-Xxxxx Act. Each party shall provide
the other party the opportunity to make copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between such
party or its representatives, on the one hand, and the Federal Trade Commission
(the "FTC"), the Antitrust Division of the United States Department of Justice
(the "Antitrust Division") or any similar foreign governmental agency or members
of their respective staffs, on the other hand, with respect to this Agreement or
the transactions contemplated hereby.
(c) Other than to the extent applicable law expressly requires
Xxxxxx and its Subsidiaries to do so, BDPH shall be responsible for making all
filings and giving all notices relating to, and otherwise pursuing all licenses,
permits, consents, approvals, authorizations and orders of foreign governmental
authorities and making all registrations and filings with foreign governmental
authorities (collectively, the "Foreign Governmental Consents"), to be made or
given subsequent to the Closing Date, which, to the best knowledge of BDPH or
MergerCo, are required in connection with the transactions contemplated hereby
and shall provide a copy of any such filings or notices to Xxxxxx. In connection
with and as a condition to BDPH's obligations under the preceding sentence,
Xxxxxx shall fully cooperate with and assist BDPH in identifying and obtaining
all such licenses, permits, consents, approvals, authorizations or orders and in
making all such registrations and filings.
(d) Each of Xxxxxx and MergerCo shall notify and keep the
other advised in reasonable detail as to (i) any litigation or administrative
proceeding pending and known to such party, or to its knowledge threatened,
which challenges the transactions contemplated hereby or the acquisition (the
"C&A Transaction") of Xxxxxxx & Xxxxxx Products Co.'s
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Imperial Wallcoverings business ("Imperial") and (ii) any event or circumstance
which would constitute a breach of their respective representations and
warranties in this Agreement, provided that the failure of Xxxxxx or MergerCo to
comply with clause (ii) shall not subject Xxxxxx or MergerCo to any liability
hereunder except as and to the extent Xxxxxx or MergerCo would be responsible
for a breach of such representations and warranties pursuant to Section 11
(including, without limitation, the limitations on recovery and the time periods
for bringing claims thereunder). Subject to the provisions of Section 13 hereof,
Xxxxxx and MergerCo shall not and shall cause their respective affiliates not to
take any action inconsistent with their obligations under this Agreement or
which would materially hinder or delay the consummation of the transactions
contemplated by this Agreement.
8.4 Public Disclosures
Prior to the Imperial Termination Date, neither MergerCo nor Xxxxxx
will issue any press release or make any other public disclosures concerning the
existence or contents of this Agreement or the transactions contemplated hereby.
On or after the Imperial Termination Date, neither MergerCo nor Xxxxxx will
issue any press release or make any other public disclosures concerning this
transaction or the existence or contents of this Agreement or the transactions
contemplated hereby without the prior written consent of the other party, which
shall not be unreasonably withheld or delayed. Until the first anniversary of
the Closing Date the parties agree that prior to filing any report or document
with the Securities and Exchange Commission containing language describing the
Agreement and the transactions contemplated by or directly related to the
Transaction Documents, each shall allow the other party reasonable time to
comment on such language. Notwithstanding the above, nothing in this Section
will preclude any party from making any disclosures it determines in good faith
to be
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required by law or regulation or necessary and proper in conjunction with the
filing of any tax return or other document required to be filed with any
federal, state or local governmental body, authority or agency; provided, that
the party required to make the release or statement shall, if practicable in the
circumstances, allow the other party reasonable time to comment on such release
or statement in advance of such issuance.
8.5 Access to Records and Personnel
(a) The parties shall retain the books, records, documents,
instruments, accounts, correspondence, writings, evidences of title and other
papers, including independent accountants' workpapers, relating to the Business
or the Assets in their possession (the "Books and Records") for the longer of
(i) the period of time set forth in their respective records retention policies
on the Closing Date or (ii) for such longer period as may be required by law or
any applicable court order.
(b) The parties will allow each other reasonable access to
such Books and Records, and to personnel having knowledge of the whereabouts
and/or contents of such Books and Records (and will instruct such personnel to
fully cooperate with the other party) for legitimate business reasons, such as
the preparation of tax returns, the defense of litigation, the preparation of
audited financial statements and in connection with the financing of the
transactions contemplated hereby, provided, however, such access shall not
interfere with the normal operation of the providing party's business. Xxxxxx
will use its reasonable best efforts to cause the independent accountants that
issued the reports relating to the 1995, 1996 and 1997 audited Financial
Statements of the Business to consent to BDPH's use of such audited Financial
Statements as may be required by applicable law in the disclosure documents
relating to the financing contemplated by this Agreement or any subsequent
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financing involving a public offering. Each party shall be entitled to recover
its out-of-pocket costs (including, without limitation, copying costs and
accountants' fees and expenses) incurred in providing such records and/or
personnel to the other party. The requesting party will hold in confidence all
confidential information identified as such by, and obtained from, the
disclosing party, any of its officers, agents, representatives or employees,
provided, however, that information which was (i) in the public domain; (ii) was
in fact known to the requesting party prior to disclosure by the disclosing
party, its officers, agents, representatives or employees; or (iii) becomes
known to the requesting party from or through a third party not under an
obligation of non-disclosure to the disclosing party, shall not be deemed to be
confidential information.
8.6 Use of Materials Bearing the "Xxxxxx" Trademark
(a) Except as otherwise provided in the Xxxxxx Home License
Agreement (defined below), for a period of 6 months after the Closing Date,
Xxxxxx hereby grants to BDPH a non-exclusive non-assignable, royalty-free
license to use the Xxxxxx(R) trademark (hereinafter in this Section 8.6 the
"Trademark") on any and all packaging materials for Products on which the
Trademark appears as of the Closing Date ("Packaging Materials"); provided that
any such products manufactured by BDPH are manufactured, in all material
respects, at the quality standards of Xxxxxx and consistent, in all material
respects, with the quality standard used prior to Closing. Any such Packaging
Materials bearing the Trademark not used within 6 months after the Closing Date
may not be thereafter used by BDPH and shall be destroyed at MergerCo's sole
expense unless otherwise agreed to by Xxxxxx in writing. Within the later of (i)
one month after any extension granted by Xxxxxx pursuant to the previous
sentence and (ii) 7 months following the Closing Date, BDPH shall provide to
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Xxxxxx evidence reasonably satisfactory to Xxxxxx that all such Packaging
Materials have been used or destroyed. BDPH shall defend, indemnify and hold
Xxxxxx harmless from any product liability or similar claims arising from
Products manufactured and sold by BDPH using such Packaging Materials. On and
after the Closing, BDPH shall not be authorized to execute any purchase order
bearing the Trademark and BDPH agrees immediately after Closing to destroy any
and all such purchase order forms.
(b) On or prior to the Closing, Xxxxxx shall have delivered to
MergerCo evidence that the inter-company trademark licensing agreements between
Xxxxxx and its affiliates (other than Decorative Products Companies), on the one
hand, and the Decorative Product Companies, on the other hand, listed on
Schedule 8.6(b) hereto shall have been terminated.
(c) On the Closing Date, BDPH and Xxxxxx shall execute and
deliver a transition license agreement, substantially in the form of Exhibit A
hereto (the "Xxxxxx Home License Agreement"), pursuant to which Xxxxxx shall
xxxxx to BDPH a non-assignable license to use, for a period of one year
following the Closing Date, certain Xxxxxx Home-related trademarks.
8.7 Employee Relations and Benefits
(a) Conduct Prior to Closing Date. Xxxxxx and its Subsidiaries
shall be under no obligation to terminate any Business Employee; provided,
however, that the Decorative Products Companies shall be under no obligation to
maintain employment of any Business Employee following the Closing Date by
virtue of any provision of this Agreement.
(b) Continuity of Employment. The parties agree that all
Business Employees employed immediately prior to the Closing will be employed in
the Business
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immediately after the Closing; provided, however, that the Decorative Products
Companies shall be under no obligation to employ any Business Employee following
the Closing Date.
(c) Collective Bargaining Agreements. The BDPH Canadian
Subsidiary shall assume and be bound by the terms of the collective bargaining
agreements listed on Schedule 8.7(c) which pertain to the Acquired Assets and
Assumed Liabilities to be acquired or assumed by the BDPH Canadian Subsidiary
(the "Collective Bargaining Agreements") as of the Closing Date.
(d) Comparable Benefits. Subject to Section 8.7(m), for one
year following the Closing Date, BDPH shall offer such compensation and benefits
(including, but not limited to, health, welfare, pension, vacation, savings and
severance benefits), effective as of the Closing Date, to the Business Employees
who are not in a unit represented by a collective bargaining agent that are
comparable in the aggregate to the compensation and benefits that are in effect
for Imperial employees immediately prior to Closing.
(e) Benefit Plan Participation. Except as expressly provided
in this Section 8.7 or except as otherwise required by applicable law, all
Business Employees shall cease active participation in (and accrual of
additional benefits under) all Benefit Plans as of the Closing Date.
(f) Employment Liabilities. Except as otherwise specifically
provided in this Section 8.7, BDPH shall be responsible and liable for (i) all
liabilities and obligations relating to the participation of the Business
Employees under the Benefit Plans before, on or after the Closing Date
(including, but not limited to, medical, dental and life insurance benefits for
the benefit of Business Employees who are receiving disability income payments
under any Benefit Plan, but excluding all liabilities and obligations relating
to the Xxxxxx,
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Inc. Employees Retirement Income Plan (the "Xxxxxx U.S. Pension Plan"), any
withdrawal liability incurred by or asserted with respect to any Benefit Plan
that is a multiple employer plan or multiemployer plan, and long-term disability
income benefits payable to U.S. Business Employees and Canada Business Employees
for long-term disability claims reported to Xxxxxx by the making of application
for disability benefits prior to Closing, which excluded liabilities shall be
assumed and/or retained by Xxxxxx) and (ii) all liabilities and obligations in
connection with the employment (or termination of employment) of the Business
Employees before, on or after Closing including the assumption of the employment
agreements with respect to the Business Employees.
(g) U.S. Defined Contribution Plans. (i) As of Closing, Xxxxxx
shall cause the active participation by the U.S. Business Employees in the
Xxxxxx, Inc. Retirement Savings Plan, the Xxxxxx, Inc. Union Savings Plan and
the Xxxxxx, Inc. Associate Savings Plan (collectively, the "U.S. Savings Plans")
to cease. Xxxxxx shall (A) as of Closing cause the trustees of the Savings Plans
to identify, in accordance with the applicable spinoff provisions set forth
under Section 414(l) of the Code, the assets of the U.S. Savings Plans
representing the full account balances of the U.S. Business Employees for all
periods of participation through Closing (including, as applicable, all employee
contributions, employer contributions and all earnings attributable thereto);
and (B) as soon as practicable (but in no event later than nine months) after
Closing, make all required filings and submissions to appropriate governmental
authorities and all required amendments to the U.S. Savings Plans and related
trust agreements necessary to provide for the transfer of assets described in
this Section 8.7(g). The U.S. Savings Plans shall be amended to provide that (A)
there shall be
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no contributions thereto with respect to the U.S. Business Employees for periods
after Closing and (B) all transferred employer contributions shall be fully
vested.
(ii) BDPH shall (A) give Xxxxxx written notice of the name
of the trustee of the defined contribution plan designated by BDPH to which the
assets and liabilities for benefits of the U.S. Savings Plans are to be
transferred (the "BDPH U.S. Savings Plan"), accompanied by a copy of the most
recent favorable IRS determination letter for such plan received by BDPH, as
promptly as possible after Closing, but in any event prior to the date on which
such transfer is to occur; and (B) as soon as practicable (but in no event later
than nine months) after Closing, make all required filings and submissions to
appropriate governmental authorities. As soon as practicable after Closing, and
pursuant to the procedures set forth below, Xxxxxx shall cause the trustees of
the U.S. Savings Plans to transfer to the trustee of the BDPH Savings Plan the
following amount (the "U.S. Savings Total Transfer Amount"): (A) the full
account balances (in kind or in cash as determined by Xxxxxx, and notes for any
loans to the U.S. Business Employees) of all U.S. Business Employees, whose
account balances shall have been credited with appropriate earnings and
contributions, if any, attributable to the period ending at the close of
business on the Closing Date, plus (B) earnings on such account balances
attributable to the period from the Closing Date to U.S. Savings Transfer Date,
as defined below, reduced by (C) any benefit or withdrawal payments in respect
of the U.S. Business Employees prior to the U.S. Savings Transfer Date. The
"U.S. Savings Transfer Date" shall be the first day of the month following a
15th day of a month by which BDPH has requested the transfer and Xxxxxx has
received copies of the applicable favorable IRS determination letter; provided,
however, that in no instance shall such date occur more than nine months after
Closing. On the U.S.
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Savings Transfer Date, Xxxxxx shall transfer 90% of its good faith estimate of
the U.S. Savings Total Transfer Amount. Upon the completion of a calculation of
the U.S. Savings Total Transfer Amount by the record keeper for the U.S. Saving
Plans (such calculation to occur no later than 120 days after the U.S. Savings
Transfer Date and such calculation to be binding on BDPH), the U.S. Savings
Plans shall transfer to the BDPH U.S. Savings Plan an amount equal to the
difference between the U.S. Savings Total Transfer Amount and any amounts
previously transferred to the BDPH U.S. Savings Plan or, if applicable, the BDPH
U.S. Savings Plan shall transfer to the U.S. Savings Plans an amount equal to
the difference between any amounts previously transferred to the BDPH U.S.
Savings Plan and the U.S. Savings Total Transfer Amount. In consideration of the
transfer of assets hereunder, BDPH shall, as of the U.S. Savings Transfer Date,
cause the BDPH U.S. Savings Plan to assume the liabilities for benefits payable
to plan participants and beneficiaries in respect of participants for whom
assets (including notes) are transferred.
(iii) BDPH shall (A) permit repayment to the BDPH U.S.
Savings Plan of the outstanding loans of the U.S. Business Employees (under the
U.S. Savings Plans) by way of regular paycheck deductions and (B) take all steps
required to effectuate such repayment (including, but not limited to, the
amendment of its plans).
(iv) Any transfer of plan assets shall consist of cash,
participants notes and fixed investment contracts (valued at their book value as
of the date or dates of transfer) as determined by Xxxxxx.
(h) International Benefit Plans. Schedule 8.7 (h) describes
additional obligations of BDPH and Xxxxxx with respect to Benefit Plans that are
not U.S. Benefit Plans (collectively, the "International Benefit Plans"). To the
extent that an International Benefit
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Plan is not specifically addressed in Schedule 8.7(h), such International
Benefit Plan shall be governed by the general provisions of this Section 8.7 and
by applicable local laws.
(i) Pre-Closing Claims. In respect of pre-Closing benefits
claims (including, without limitation, workers compensation claims, claims under
Xxxxxx'x self-insured retention programs and welfare benefit claims) assumed or
retained by BDPH pursuant to Section 8.7, following the Closing until such time
as BDPH provides Xxxxxx with reasonably satisfactory evidence that it has made
arrangements to promptly process such claims, Xxxxxx shall have the option, but
not the obligation, to process and pay such claims and BDPH hereby agrees to
promptly reimburse Xxxxxx the amount paid in respect of such claims, as well as
Xxxxxx'x incremental costs of processing such claims.
(j) Post-Retirement Benefits. As of Closing, no Business
Employee shall be eligible to receive "Post-Retirement Benefits" from Xxxxxx
(including, but not limited to, retiree medical and retiree life benefits). To
the extent that Business Employees receive (or are eligible to receive) any of
the Post-Retirement Benefits generically described on Schedule 8.7(j) from
Xxxxxx immediately prior to Closing, such Business Employees shall receive the
same Post-Retirement Benefits from BDPH following Closing.
(k) Welfare Plans. Except with respect to the disability
benefits retained by Xxxxxx pursuant to Section 8.7(f)(i) above, with respect to
any BDPH Benefit Plan that is a "welfare benefit plan" (as defined in Section
3(1) of ERISA, or would be a "welfare benefit plan" if such plan was subject to
ERISA) for the benefit of Business Employees on and after Closing, BDPH shall
(a) cause there to be waived any pre-existing condition limitations and (b) give
effect, in determining any deductible and maximum out-of-pocket limitations, to
claims incurred and amounts paid by, and amounts reimbursed to, such employees
with
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respect to similar plans maintained by Xxxxxx immediately prior to Closing.
Notwithstanding any other Section in this Agreement, BDPH shall assume all
liabilities (whether incurred before, during or after the Closing) with respect
to the FAS 106 and FAS 112 liabilities (including, but not limited to,
Post-Retirement and Post-Employment Benefits) of the Business Employees.
(l) Accrued Vacation. With respect to any accrued but unused
vacation time to which any Business Employee is entitled pursuant to the
vacation policies, which, in the case of non-union vacation policies, are
described on Schedule 8.7(l)-1, applicable to such employee (the "Vacation
Policy") as of the Closing Date, BDPH shall allow such Business Employee to use
such accrued vacation; provided, however, that if BDPH deems it necessary to
disallow such employee from taking such accrued vacation, BDPH shall be liable
for and pay in cash an amount that is consistent with vacation time accrued
under the Vacation Policy to such employee.
(m) Severance. With respect to Business Employees covered by
the Collective Bargaining Agreements, such Business Employees shall be covered
by such severance benefits, if any, as provided by such Collective Bargaining
Agreements. With respect to U.K. Business Employees, MergerCo shall provide such
Business Employees terminated within 12 months of Closing, who otherwise qualify
therefor, with severance benefits in accordance with the severance practices set
forth in Schedule 8.7(m)-1. With respect to all other Business Employees,
MergerCo shall provide severance benefits in accordance with the severance
practices of Imperial set forth in Schedule 8.7(m)-2 to such Business Employees
(who are either salaried or non-union hourly employees) terminated within 12
months of Closing who otherwise qualify therefor.
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(n) Service Credit. With respect to the Business Employees,
BDPH shall recognize all service with Xxxxxx and its Subsidiaries for purposes
of eligibility and vesting under the BDPH Benefit Plans.
(o) WARN Act. BDPH agrees to provide any required notice under
the Worker Adjustment and Retraining Notification Act ("WARN") and any other
similar applicable law and to otherwise comply with any such statute with
respect to any "plant closing" or "mass layoff" (as defined in WARN) or similar
event affecting U.S. Business Employees and occurring on or after Closing or
arising as a result of the transactions contemplated hereby.
(p) COBRA. BDPH agrees to provide any required notice under
the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, and any
other applicable law on or after Closing.
(q) No Rights Conferred on Employees. Nothing herein,
expressed or implied, shall confer upon any employee or former employee of
Xxxxxx, BDPH or any Decorative Products Company or any of their affiliates
(including, without limitation, the Business Employees) any rights or remedies
including, without limitation, any right to employment or continued employment
for any specified period) of any nature or kind whatsoever, under or by reason
of this Agreement.
(r) Retention of Certain Severance Liabilities. Xxxxxx agrees
to retain all liabilities and obligations for any severance liabilities arising
solely from the Asset Transfer, the Stock Transfer and the Merger, provided that
any severance liabilities or obligations arising from the acts or omissions of
MergerCo, or, following the Closing, BDPH and its Subsidiaries, shall be the
responsibility of BDPH.
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8.8 Intentionally Omitted
8.9 "As Is" Condition
Except as otherwise specifically provided by Xxxxxx in the
representations and warranties of Xxxxxx set forth herein, and subject to the
limitations with respect to such representations and warranties contained in
this agreement, MergerCo agrees that it shall accept all Assets in an "As Is"
"Where Is" condition at the Closing Date. EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED BY XXXXXX IN THE REPRESENTATIONS AND WARRANTIES OF XXXXXX SET FORTH IN
THE TRANSACTION DOCUMENTS, AND SUBJECT TO THE LIMITATIONS WITH RESPECT TO SUCH
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, XXXXXX MAKES NO
WARRANTY WITH RESPECT TO THE VALUE, CONDITION OR USE OF THE ASSETS, WHETHER
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
8.10 Intercompany Transactions
Effective as of the Closing Date, all intercompany receivables or
payables and loans (including intercompany obligations with respect to foreign
currency contracts or other derivative financial contracts) then existing
between Xxxxxx and any affiliates of Xxxxxx which are not Decorative Products
Companies (collectively the "Xxxxxx Affiliates") on the one hand, and any of the
Decorative Products Companies, on the other hand, shall be netted and the
remaining balance will be deemed to be treated as an intercompany dividend or
capital contribution, as the case may be, and all Contracts between such parties
will terminate except as specified in Schedule 8.10.
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8.11 Non-Solicitation
Until the Closing shall actually have occurred, MergerCo acknowledges
that it remains subject to paragraph 12 of the Confidentiality Letter.
8.12 Guarantees
BDPH shall use its commercially reasonable efforts (which shall not
include agreeing to any modifications of the terms of the underlying obligations
or the payment of any amounts) to cause itself or one or more of its affiliates
to be substituted in all respects for the Xxxxxx Affiliates, effective as of the
Closing, in respect of all obligations of the Xxxxxx Affiliates under each of
the guarantees, indemnities, surety bonds, letters of credit and letters of
comfort obtained by the Xxxxxx Affiliates for the benefit of the Business listed
on Schedule 8.12 (the "Guarantees").
8.13 Financing
(a) If MergerCo is unable to arrange and/or cause BDPH to
obtain any portion of the financing described in the Commitment Letters due to
facts or circumstances relating to Imperial or the C&A Transaction, then
MergerCo shall use its reasonable best efforts to arrange and/or cause BDPH to
obtain alternative financing for the consummation of the transactions (excluding
the C&A Transaction) contemplated hereby from other sources or in any other
commercially reasonable manner, provided, however, that reasonable best efforts
shall not be deemed to include acceptance of financial or other terms that
MergerCo determines are not, taken as a whole, at least as favorable in all
material respects to MergerCo as the terms contained in the Commitment Letters.
MergerCo will inform Xxxxxx within 24 hours of any determination that it is
unable to arrange any financing.
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(b) At Closing, MergerCo will be capitalized as contemplated
by the Blackstone Commitment Letter. In the event that Blackstone contributes
additional equity capital (the amount of such additional contribution, together
with any shares of BDPH Common Stock received by C&A from Blackstone following
the Closing Date in the C&A Transaction (provided such common stock is expressed
in the definitive documentation of the C&A Transaction on or prior to the
Imperial Termination Date as a fixed number of shares and is not amended with
respect to such number of shares without the prior written consent of Xxxxxx),
valued on the same basis as the shares of BDPH Common Stock held by Blackstone
on the Closing Date immediately following the Merger, the "C&A Capital Amount")
to BDPH in connection with a closing of the C&A Transaction which is subsequent
to the Closing Date and subject to the condition that no additional shares of
BDPH Common Stock or common stock of any subsidiary of BDPH and no options,
warrants, appreciation rights or other rights of any kind relating to the BDPH
Common Stock or the common stock of any subsidiary of BDPH are issued in
connection with the C&A Transaction, then the Cash Refund Amount (as defined
below), if any, shall be paid by Xxxxxx to BDPH by wire transfer within 2
business days of notice thereof in writing to Xxxxxx following the closing of
the C&A Transaction. The term "Cash Refund Amount" shall mean the excess, if
any, of (i) the Cash Amount as actually calculated at the Closing over (ii) the
Cash Amount as it would have been calculated at the Closing had the C&A Capital
Amount been provided to MergerCo prior to the Closing; provided, that in no
event shall the Cash Amount calculated pursuant to either clause (i) or clause
(ii) of this definition ever be less than $309,550,000.
(c) From and after the opening of business on the Closing
Date, BDPH shall be responsible for funding all disbursements of the Business;
Xxxxxx will be responsible
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therefor prior thereto. Any cash, cash equivalents, similar investments,
certificates of deposit, Treasury bills and other marketable securities at the
Closing shall be treated by the parties consistent with Section 2.3(c).
8.14 Buy-Out of BLC Assets
The "BLC Master Lease" shall mean the master lease dated June 1, 1990
between Citicorp Bankers Leasing Corporation ("Citicorp") and Xxxxxx pursuant to
which the machinery and equipment described in Schedule 8.14 (the "BLC Assets")
are leased to Xxxxxx by Citicorp. Prior to the Closing Date, Xxxxxx and MergerCo
shall each use commercially reasonable efforts to assign the BLC Master Lease,
relating to the BLC Assets, to BDPH, provided, however, that nothing herein will
require BDPH, MergerCo or any affiliate of MergerCo (or any subsidiary of BDPH
or any post-merger affiliate of BDPH) to expend money or incur any liability or
obligation to obtain such assignment. If, prior to the Closing Date, Citicorp
has not agreed to such assignment effective prior to the Closing, then Xxxxxx
shall pay to Citicorp immediately prior to the Closing, by wire transfer of
immediately available funds, the BLC Buy-Out Amount (as defined below). If such
assignment is procured prior to the Closing Date on or prior to the Closing
Date, MergerCo shall arrange to have all BLC Assets which by law are required to
carry liability or other insurance insured in accordance with applicable law.
The "BLC Buy-Out Amount" shall mean approximately $639,240 (the equity balance
payable by Xxxxxx as of September 30, 1997 under the BLC Master Lease to acquire
title to the BLC Assets) less any lease payments on such BLC Assets made by
Xxxxxx from the date on which the foregoing equity balance was calculated
through the Closing Date.
8.15 Services Agreement
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On the Closing Date, BDPH and Xxxxxx shall execute and deliver
agreements, substantially in the form attached hereto as Exhibit B (the
"Services Agreements"), pursuant to which Xxxxxx shall agree to provide certain
services on the terms and subject to the conditions set forth therein.
8.16 Nondisclosure; Noncompetition
(a) From and after the Closing Date, Xxxxxx shall not, and
shall cause its subsidiaries not to use, divulge, furnish or make accessible to
anyone (except to the extent otherwise required in the opinion of Xxxxxx'x
counsel, by applicable law, regulation or legal process) any proprietary,
material non-public, confidential or secret information to the extent relating
to the Business (including, without limitation, customer lists, supplier lists
and pricing and marketing arrangements with customers or suppliers), and Xxxxxx
and its subsidiaries shall cooperate reasonably with MergerCo in preserving such
proprietary, confidential or secret aspects of the Business. After the Closing
Date and to the extent provided in the applicable confidentiality letter, Xxxxxx
shall use its reasonable best efforts to retrieve (or obtain an agreement to
destroy) any written evaluation and due diligence materials distributed to
parties (other than MergerCo and affiliates of MergerCo and other than parties
who are involved in the sales process for Xxxxxx'x Columbus Coated Fabrics
division and/or Orchard division), and any materials incorporating or based on
such materials, in connection with the sales process undertaken by Xxxxxx in
connection with the proposed sale of the Business and take such other actions as
BDPH may request to enforce Xxxxxx'x rights under any agreements similar to the
confidentiality letter for the benefit of BDPH; provided that BDPH shall
reimburse Xxxxxx for its out-of-pocket costs in connection with its obligations
in this sentence.
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(b) For a period of two years after the Closing Date, other
than as a result of the BDPH Common Stock owned pursuant to this Agreement,
Xxxxxx shall not, and shall cause its subsidiaries not to, directly or
indirectly, manufacture or sell any Products manufactured or sold by the
Residential Wallcoverings and Xxxxxx Plastics businesses as of the Closing, or
own stock or otherwise have an equity interest in any person or entity engaged
in such business (other than holding less than 5% of the stock of a publicly
held corporation engaged in such business). Notwithstanding the foregoing,
Xxxxxx may engage in a transaction whereby, directly or indirectly, it acquires
(whether by merger, stock purchase, purchase of assets or otherwise), any person
or business, or any interest in any person or business, engaged at the time of
such acquisition in the manufacture or sale of any products manufactured or sold
by the Business as of the Closing provided that, at the time of such
transaction, no more than 25% of such person's or business's revenues result
from products of a type manufactured by the Business as of the Closing. None of
Xxxxxx and its subsidiaries will, for a period of two years from the Closing
Date, solicit for hire any employees of the Business without the prior written
consent of MergerCo; provided, however, that the foregoing provision will not
prevent Xxxxxx from hiring any such person (i) who contacts Xxxxxx on his or her
own initiative without any direct or indirect solicitation by or encouragement
from Xxxxxx, (ii) who responds to a public advertisement placed by Xxxxxx, (iii)
who has not been employed by BDPH during the preceding six months or (iv) who
has been terminated by BDPH. Xxxxxx and its subsidiaries agree that a violation
of this Section 8.16 will case irreparable injury to MergerCo, and MergerCo will
be entitled, in addition to any other rights and remedies it may have at law or
in equity, to an injunction enjoining and
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restraining Xxxxxx and its subsidiaries from doing or continuing to do any such
violation and any other violations or threatened violations of Section 8.16.
(c) Xxxxxx and its subsidiaries acknowledge and agree that the
covenants set forth in this Section 8.16 are reasonable and valid in scope and
in all other respects. If any of such covenants is found to be invalid or
unenforceable by a final determination of a court of competent jurisdiction (i)
the remaining terms and provisions hereof shall be unimpaired and (ii) the
invalid or unenforceable term or provision shall be deemed replaced by 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. In the event that,
notwithstanding the first sentence of this Section 8.16(c), any of the
provisions of this Section 8.16 relating to scope of the covenants contained
therein or the nature of the business restricted thereby shall be declared by a
court of competent jurisdiction to exceed the maximum restrictiveness such court
deems enforceable, such provision shall be deemed to be replaced by the maximum
restriction deemed enforceable by such court.
8.17 PVC Contract. Following the Closing, in connection with any sale
by BDPH of the Xxxxxx plastics division of the Business in a single transaction,
Xxxxxx will cause its Subsidiary which acts as general partner of BCP (as
defined in Section 9.3(o)) to cooperate, subject to such Subsidiary's duties as
general partner, if any, in any required assignment of the contract referred to
in Section 9.3(o).
8.18 Stockholders Agreement
On the Closing Date, Blackstone, BDPH and Xxxxxx shall execute and
deliver an agreement ("Stockholders Agreement"), incorporating the terms of the
term sheet attached hereto as Annex B, pursuant to which Xxxxxx, BDPH and
Blackstone will agree to certain
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rights and obligations with respect to the BDPH Common Stock owned by such
parties. Xxxxxx and MergerCo will endeavor to agree upon the definitive form of
the Stockholders' Agreement prior to the Imperial Termination Date.
8.19 Insurance Covenant
With respect to any loss, liability or damage suffered after the
Closing Date resulting from or arising out of the conduct of the Business on or
prior to the Closing Date or for which the Asset Seller or any of its affiliates
(other than BDPH) (a "Xxxxxx Insured Party") would be entitled to assert, or
cause any other person to assert, a claim for recovery under any policy of
Insurance underwritten by third parties not affiliated with Xxxxxx, at the
reasonable request of BDPH and to the extent permitted under such applicable
policies of Insurance without the payment of additional premiums in connection
therewith, such Xxxxxx Insured Party will assert one or more claims under the
policies of Insurance covering such loss, liability or damage if BDPH is not
itself entitled to assert such claim, but such Xxxxxx Insured Party is so
entitled; provided, however, that all of the Xxxxxx Insured Parties' reasonable
out-of-pocket costs and expenses incurred in connection with the foregoing,
including without limitation any liability, obligation or expense referred to in
the last sentence hereof, are, at the option and in the sole discretion of the
entity incurring such costs and expenses, paid in advance of the entity
incurring such costs and expenses, or promptly reimbursed by MergerCo and/or
BDPH. To the extent required under the terms of the policies of Insurance to
give effect to the foregoing, Xxxxxx will be deemed, solely for the purpose of
asserting claims for recovery under such Insurance to have assumed or retained
liability for such loss, liability or damage but only to the extent of the
policy limits of the applicable policy of Xxxxxx Insurance; provided, however,
that (i) BDPH and/or Holding's
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obligations under Section 11.2 will not be affected by the provisions hereof and
(ii) with respect to any claim made by any Xxxxxx Insured Party under any
Insurance pursuant to this section, BDPH and/or MergerCo will indemnify, defend
and hold harmless Xxxxxx and each of its affiliates (other than BDPH) and their
respective directors, officers, partners, employees, agents and representatives
(including without limitation any predecessor or successor of any of the
foregoing) from and against any Xxxxxx Losses relating to, resulting from or
arising out of any deductible, policy limit, obligation, indemnity, reinsurance
due to the liquidation or insolvency of the reinsurer, self-insurance retention
or retroactive or retrospective premium resulting from claims made hereunder or
other like arrangement by which any such entity, including without limitation
any captive insurance company, retains any liability or obligation under any
such policy of Insurance or otherwise.
8.20 Certain Purchasers. Promptly after the Imperial Termination Date,
Xxxxxx shall offer to purchase, subject to the occurrence of the Closing, any
and all shares of BDPH Common Stock to be owned beneficially or of record
following the Merger by persons other than Xxxxxx or any subsidiary of Xxxxxx
who were holders of shares of BDPH Common Stock prior to the Merger for cash at
a price per share equal to the Per Share Consideration and, following the
occurrence of the Closing, shall purchase promptly all such shares from holders
accepting such offer. If any such shares are not so purchased, the parties will
endeavor to cause all shareholders to become parties to the Stockholders'
Agreement.
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9. CONDITIONS
9.1 Conditions Precedent to Obligations of MergerCo and Xxxxxx
The respective obligations of MergerCo and Xxxxxx to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing Date of each of the following conditions:
(a) No Injunction, etc. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any court or
governmental agency or body of competent jurisdiction that is in effect that
restrains or prohibits this Agreement or any material transaction contemplated
hereby, including without limitation, the consummation of the Asset Transfer,
the Stock Transfer or the Merger, and no governmental authority (an "Enforcement
Authority") shall have initiated any action to restrain, enjoin or otherwise
prohibit the consummation of the transactions contemplated by this Agreement
which action remains outstanding at the time in question.
(b) Regulatory Authorizations. All (i) consents, approvals,
authorizations and orders of federal, state and foreign governmental and
regulatory authorities as are necessary in connection with the Asset Transfer,
the Stock Transfer or the Merger or which if not obtained could be reasonably
likely to subject BDPH, MergerCo, Xxxxxx or any Subsidiary, or any officer,
director or agent of any such person to civil or criminal liability or could
render such transfer void or voidable (the "Required Consents") shall have been
obtained, except for Required Consents the failure to obtain which, individually
or in the aggregate, are not material to the operations of the Business taken as
a whole and the failure of which to obtain would not subject MergerCo, BDPH or
Xxxxxx or Xxxxxx'x affiliates, or any officers, directors or agent of any such
person to civil or criminal liability; provided that
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for purposes of this clause (b) applicable waiting periods specified under the
Xxxx-Xxxxx Act with respect to the transactions contemplated by this Agreement
shall have lapsed or been terminated.
9.2 Conditions Precedent to Obligation of Xxxxxx
The obligation of the Xxxxxx to consummate the transactions provided
for in this Agreement is subject to fulfillment of each of the following
conditions:
(a) Accuracy of MergerCo's Representations and Warranties;
Covenants of MergerCo. The representations and warranties of MergerCo contained
in this Agreement that are qualified as to materiality shall be true and correct
and the representations and warranties of MergerCo set forth in this Agreement
and that are not so qualified shall be true and correct in all material
respects, in each case on the date of this Agreement (except to the extent cured
prior to the Closing Date) and on the Closing Date as though made on the Closing
Date, except to the extent such representations and warranties speak as of an
earlier date; provided that for purposes only of the condition set forth in this
Section 9.2(a) any breach of a representation or warranty will be considered
both individually and together with any other such breaches; MergerCo shall have
complied in all material respects with all covenants contained in this Agreement
to be performed by it prior to Closing; and Xxxxxx shall have received a
certificate signed by an officer of MergerCo to such effect.
(b) Stockholders Agreement. Blackstone and BDPH shall have
executed and delivered to Xxxxxx the Stockholders Agreement.
(c) Xxxxxx Home License Agreement. MergerCo shall have
executed and delivered to Xxxxxx the Xxxxxx Home License Agreement.
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(d) Services Agreement. MergerCo shall have executed and
delivered to Xxxxxx the Services Agreement.
(e) Exemption Certificates. MergerCo shall have executed and
delivered to Xxxxxx all certificates required by all relevant taxing authorities
that are necessary to support any applicable exemption from the imposition of
any sales or similar tax on the transfer of the Acquired Assets or the
Decorative Products Company Stock.
(f) Stock Certificates. Subject to compliance with the
provisions of Section 4.2(f), Xxxxxx shall have received stock certificates
representing the Retained Shares.
(g) Corporate Documents. Xxxxxx shall have received from
MergerCo certified copies of the resolutions duly adopted by the Board of
Directors of MergerCo approving the execution and delivery of the Transaction
Documents by MergerCo and the consummation of the transactions contemplated
thereby, and such resolutions shall be in full force and effect as of the
Closing Date.
(h) Opinion of Counsel. Xxxxxx shall have received an opinion
of Xxxxx, Day, Xxxxxx & Xxxxx, counsel to MergerCo, substantially to the effect
set forth in Exhibit C.
9.3 Conditions Precedent to Obligation of MergerCo
The obligation of MergerCo to consummate the transactions provided for
in this Agreement is subject to fulfillment of each of the following conditions:
(a) Accuracy of Representations and Warranties of Xxxxxx;
Covenants of Xxxxxx. The representations and warranties of Xxxxxx and BDPH
contained in this Agreement that are qualified as to materiality shall be true
and correct and the representations and warranties of Xxxxxx set forth in this
Agreement and that are not so qualified shall be true and correct in all
material respects, in each case on the date of this Agreement (except to
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the extent cured prior to the Closing Date) and on the Closing Date as though
made on the Closing Date, except to the extent such representations and
warranties speak as of an earlier date; provided that for purposes only of the
condition set forth in this Section 9.3(a) any breach of a representation or
warranty will be considered both individually and together with any other such
breaches; Xxxxxx shall have complied in all material respects with all covenants
contained in this Agreement to be performed by it prior to Closing; and MergerCo
shall have received a certificate signed by an officer of Xxxxxx to such effect;
(b) Financing. All conditions precedent to BDPH's being
entitled to receive the proceeds of the Financing shall have been satisfied or
waived.
(c) Stockholders Agreement. Xxxxxx shall have executed and
delivered to MergerCo the Stockholders Agreement.
(d) Xxxxxx Home License Agreement. Xxxxxx shall have executed
and delivered to MergerCo the Xxxxxx Home License Agreement;
(e) Services Agreement. Xxxxxx shall have executed and
delivered to MergerCo the Services Agreements;
(f) Termination Agreement. Xxxxxx and its affiliates shall
have executed and delivered to MergerCo a termination agreement ("Termination
Agreement"), terminating the inter-company trademark licensing agreements listed
on Schedule 8.6(b);
(g) Certain Payments. If applicable, Xxxxxx shall have made
the payments contemplated by Section 8.14;
(h) Corporate Documents. MergerCo shall have received from
Xxxxxx and the Subsidiaries certified copies of the resolutions duly adopted by
the Boards of Directors of Xxxxxx and the Subsidiaries, and certified copies of
the resolutions duly adopted by the
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shareholders of Xxxxxx and the Subsidiaries where required, approving the
execution and delivery of the Transaction Documents by Xxxxxx and the
consummation of the transactions contemplated thereby, and such resolutions
shall be in force and effect as of the Closing Date;
(i) Consents. Consent, if and to the extent required, to the
assignment to the BDPH Canadian Subsidiary of the lease of the property at 000
Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx shall have been obtained or, in Xxxxxx'x sole
discretion, in lieu of any such consent, a new lease putting the Business in
substantially the same position as such consent shall have been entered into.
(j) Material Adverse Effect. Since the date of the Interim
Balance Sheet, there shall not have occurred (i) a Material Adverse Effect or
(ii) any event which could reasonably be expected to have a Material Adverse
Effect;
(k) Opinion of Counsel. MergerCo shall have received an
opinion of the General Counsel of Xxxxxx substantially to the effect set forth
in Exhibit D;
(l) No Outstanding BDPH Warrants or Options. After giving
effect to the transactions contemplated to occur at the Closing, there will not
be outstanding any options, warrants, convertible securities or other rights of
any kind exercisable, convertible or exchangeable into or evidencing the right
to purchase any capital stock of BDPH ("BDPH Options").
(m) No C&A Injunctions, Etc. (i) At the Closing Date, there
shall be no injunction, restraining order or decree of any nature of any court
or governmental agency or body of competent jurisdiction that is in effect that
restrains or prohibits the C&A Transaction (or the operative acquisition
agreements in connection therewith) and no Enforcement Authority shall have
initiated any action to restrain, enjoin or otherwise prohibit the
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consummation of the C&A Transaction (or the operative acquisition agreements in
connection therewith) on antitrust or competition grounds.
(ii) The applicable waiting periods specified under
the Xxxx-Xxxxx Act with respect to the transactions contemplated by the C&A
Transaction shall have lapsed or been terminated and all consents, approvals,
authorizations and orders of federal, state and foreign governmental and
regulatory authorities which if not obtained could be reasonably expected to
subject MergerCo or any officer, director or agent of MergerCo to criminal
liability shall have been obtained.
(n) Release of Liens. Xxxxxx shall have delivered to MergerCo
evidence reasonably satisfactory to MergerCo of the release and termination of
all Liens (other than Permitted Liens) in respect of Balance Sheet Indebtedness.
(o) New PVC Contract. BDPH and Xxxxxx Chemical and Plastics
Operating Limited Partnership, a Delaware Partnership ("BCP"), shall have
entered into a new contract (the "New PVC Contract") for the purchase by BDPH
or, if in existence, a wholly owned subsidiary of BDPH designated by MergerCo,
and BCP's sale of polyvinyl chloride on terms at least as favorable as those
terms contained in the PVC Purchase Agreement made as of November 30, 1987,
between Xxxxxx and BCP, having a term expiring on November 30, 2002.
(p) Asset Transfer. The Asset Transfer and the Stock Transfer
shall have been consummated, BCL and the BDPH Canadian Subsidiary shall have
executed and delivered a Xxxx of Sale and an Assumption Agreement substantially
in the form of Exhibits E and F, respectively, a copy of which Xxxx of Sale and
Assumption Agreement shall have been
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provided to MergerCo and Xxxxxx shall have delivered to MergerCo evidence
satisfactory to MergerCo that the Stock Transfer has been consummated.
10. CLOSING
10.1 Generally
(a) Unless this Agreement shall have been terminated and the
transactions herein shall have been abandoned pursuant to Section 13 hereof, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place at a location in New York City to be agreed upon by the parties, at
10:00 a.m., New York City time, on December 31, 1997 (or as soon as practicable
thereafter as all of the conditions to the Closing set forth in Section 9 hereof
are satisfied or waived), or such other date, time and place as shall be agreed
upon by Xxxxxx and MergerCo (the actual date and time being herein called the
"Closing Date").
(b) Subject to the terms and conditions of this Agreement, the
respective deliveries to be performed by MergerCo and Xxxxxx and the
Subsidiaries will take place in the sequence specified in Section 5.1(a).
(c) Notwithstanding the foregoing, the parties hereto agree
that, unless otherwise agreed to in writing, the Closing shall not be deemed to
have occurred until such time as all of the transfers, transactions and
deliveries contemplated by Section 5.1(a) hereof been completed in accordance
with the requirements of such Section and no transfer, transaction or delivery
contemplated by Section 5.1(a) shall be deemed to be valid or in full force and
effect until such time as all of the transfers, transactions and deliveries
contemplated by Section 5.1(a) have been consummated.
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10.2 MergerCo Deliveries
At the Closing, MergerCo shall deliver or cause BDPH to deliver, (i)
the Aggregate Consideration in accordance with the sequence set forth in Section
5.1(a) hereof, (ii) the documents described in Section 9.2 hereof and (iii) such
other documents and instruments as counsel for MergerCo and Xxxxxx mutually
agree to be reasonably necessary to consummate the transactions described
herein.
10.3 Xxxxxx Deliveries
At the Closing, Xxxxxx shall deliver, or cause one or more of the
Subsidiaries or affiliates to deliver, to BDPH, the following executed
instruments in such form and substance as indicated in any applicable Schedule
hereto, or as is reasonably acceptable to MergerCo:
(a) a copy of the certificate of incorporation of each of the
Decorative Products Companies, as amended, certified as of a date not earlier
than 10 days prior to the Closing Date, by the corporate Secretary for each of
said corporations;
(b) the documents described in Section 9.3 hereof;
(c) stock certificates representing shares of BDPH duly
endorsed or accompanied by stock powers duly executed;
(d) warranty deeds to any Owned Real Properties of BCL; and
(e) such other documents and instruments as counsel for
MergerCo and Xxxxxx mutually agree to be reasonably necessary to consummate the
transactions described herein.
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11. INDEMNIFICATION
11.1 Indemnification by Xxxxxx
(a) Xxxxxx shall defend, indemnify and hold BDPH, MergerCo and their
respective affiliates harmless from and against and in respect of any and all
losses, claims, demands, actions, suits or proceedings (by any person or entity,
including without limitation any governmental authority in connection therewith
or in enforcing BDPH's, MergerCo's and their respective affiliates' rights
hereunder), liabilities, damages, judgements, settlements and expenses,
including reasonable attorneys' fees in connection therewith or in enforcing
BDPH's, MergerCo's and their respective affiliates' rights hereunder incurred
directly by any such person or entity (hereinafter "MergerCo Losses") which
arise out of (i) any breach of any of the representations or warranties
contained in Section 6 hereof, in any other Transaction Document or in any
certificate delivered in connection with the Closing, (ii) any breach of any of
the covenants of Xxxxxx (other than the covenant set forth in clause (ii) of the
first sentence of Section 8.3(d)) in this Agreement), (iii) the ownership,
operation or use of any of the Excluded Assets, (iv) any direct or derivative
claim or action by a holder of BDPH Common Stock or any rights to purchase BDPH
Capital Stock, including, without limitation, any action by such a holder who
has demanded payment for and an appraisal of such shares in accordance with
Section 262 of the DGCL, (v) liabilities and obligations of the Decorative
Products Companies that do not arise principally out of or pertain principally
to the Business or the Assets and (vi) any of the Excluded Liabilities and any
liabilities retained by Xxxxxx pursuant to Section 8.7. MergerCo or BDPH shall
give Xxxxxx prompt written notice of any third party claim which may give rise
to any indemnity obligation under this Section, together if reasonably possible
with the estimated amount of such claim, and Xxxxxx
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shall have the right to assume the defense of any such claim through counsel of
its own choosing, by so notifying MergerCo within 30 days of receipt of
MergerCo's or BDPH's written notice; provided, however, that Xxxxxx'x counsel
shall be reasonably satisfactory to MergerCo. Failure to give prompt notice
shall not affect the indemnification obligations hereunder in the absence of
actual prejudice and then only to the extent proximately resulting therefrom. If
MergerCo or BDPH desires to participate in any such defense assumed by Xxxxxx,
it may do so at its sole cost and expense (except that Xxxxxx shall be
responsible for the fees and expenses of counsel to MergerCo or BDPH to the
extent MergerCo or BDPH is advised, in writing by its counsel, that either (x)
Xxxxxx'x counsel has a conflict of interest, or (y) there are legal defenses
available to MergerCo that are different from or additional to those available
to Xxxxxx (but only to the extent of such additional defenses)). If Xxxxxx
declines to assume any such defense, it shall be liable for all reasonable costs
and expenses of defending such claim incurred by MergerCo or BDPH, including
reasonable fees and disbursements of counsel. Neither party shall, without the
prior written consent of the other party, which shall not be unreasonably
withheld or delayed, settle, compromise or offer to settle or compromise any
such claim or demand on a basis which would result in the imposition of a
consent order, injunction or decree which would restrict the future activity or
conduct of the other party or any subsidiary or affiliate thereof or if such
settlement or compromise does not include an unconditional release of the other
party for any liability arising out of such claim or demand or any related claim
or demand.
(b) The foregoing obligation to indemnify MergerCo, BDPH and
their respective affiliates set forth in Section 11.1(a) shall be subject to
each of the following limitations:
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(i) Xxxxxx'x indemnification obligation for any breach of the
representations and warranties described in Section 6 of this Agreement
shall survive until April 1, 1999 (other than the Five-Year Reps which
shall survive until the fifth anniversary of the Closing), and
thereafter all such representations and warranties of Xxxxxx under this
Agreement shall be extinguished. No claim for the recovery of such
MergerCo Losses may be asserted by MergerCo after April 1, 1999 (other
than claims asserted for breaches of the Five-Year Reps which shall
survive and may be asserted until the fifth anniversary of the
Closing); provided, however, that claims first asserted in writing with
reasonable specificity within the applicable period shall not
thereafter be barred;
(ii) No reimbursement for MergerCo Losses asserted against
Xxxxxx under Section 11.1(a)(i), above shall be required unless and
until the cumulative aggregate amount of such MergerCo Losses equals or
exceeds US $2,500,000 (the "Threshold") and then only to the extent
that the cumulative aggregate amount of MergerCo Losses exceeds the
Threshold; provided that in calculating such Threshold any MergerCo
Losses which individually and when considered together with any related
MergerCo Losses total less than US $25,000 each ("De Minimis MergerCo
Losses") shall be excluded in their entirety and Xxxxxx in any event
shall have no liability hereunder to BDPH, MergerCo and their
respective affiliates under Section 11.1(a)(i) for any such De Minimis
MergerCo Losses.
(iii) Xxxxxx'x liability to MergerCo and its affiliates under
Section 11.1(a)(i) for MergerCo Losses in excess of the Threshold shall
not exceed $80,000,000.
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(c) The indemnities provided in this Section 11.1 shall survive the
Closing. The indemnity provided in this Section 11.1 shall be the sole and
exclusive remedy of the indemnified party against the indemnifying party at law
or equity for any matter covered by paragraphs (a) and (b).
(d) In no event shall Xxxxxx be liable to MergerCo or its affiliates
for special, indirect, incidental, consequential or punitive damages, except for
such instances, if any, where the MergerCo Losses result from a third-party
claim to which Xxxxxx is required to indemnify MergerCo or its affiliates
pursuant to Subsection 11.1 (a)(iii)-(v) of this Agreement.
(e) The indemnities provided in this Section 11.1 shall survive any
investigation prior to Closing by or on behalf of MergerCo or any knowledge or
information MergerCo may have, subject to the limitations on indemnification set
forth in Section 11.1(b)(i) of this Agreement.
11.2 Indemnification by BDPH
(a) BDPH shall defend, indemnify and hold Xxxxxx and its affiliates
harmless from and against and in respect of any and all actual losses, claims,
demands, actions, suits or proceedings (by any person or entity, including
without limitation any governmental authority in connection therewith or in
enforcing Xxxxxx'x and its Affiliates' rights hereunder), liabilities, damages,
judgements, settlements and expenses, including reasonable attorney fees, in
connection therewith or in enforcing Xxxxxx'x and its Affiliates' rights
hereunder incurred directly by Xxxxxx and its affiliates (hereinafter the
"Xxxxxx Losses"; together with MergerCo Losses, "Losses") arising out of (i) any
breach of any of the representations or warranties contained in Section 7
hereof, (ii) any breach of any of the covenants of MergerCo (other
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than the covenant set forth in clause (ii) of the first sentence of Section
8.3(d)) in this Agreement, (iii) the ownership, operation or use of the Assets
after the Closing and (iv) any Assumed Liabilities and any liabilities retained
by BDPH pursuant to Section 8.7. Xxxxxx shall give BDPH prompt written notice of
any third party claim which may give rise to any indemnity obligation under this
Section, together if reasonably possible with the estimated amount of such
claim, and BDPH shall have the right to assume the defense of any such claim
through counsel of its own choosing, by so notifying Xxxxxx within 30 days of
receipt of Xxxxxx'x written notice; provided, however, that BDPH's counsel shall
be reasonably satisfactory to Xxxxxx. Failure to give prompt notice shall not
affect the indemnification obligations hereunder in the absence of actual
prejudice. If Xxxxxx desires to participate in any such defense assumed by BDPH
it may do so at its sole cost and expense (except that BDPH shall be responsible
for the fees and expenses of counsel to Xxxxxx to the extent the Xxxxxx is
advised, in writing by its counsel, that either (x) BDPH's counsel has a
conflict of interest, or (y) there are legal defenses available to Xxxxxx that
are different from or additional to those available to BDPH (but only to the
extent of such additional defenses)). If BDPH declines to assume any such
defense, it shall be liable for all costs and expenses of defending such claim
incurred by Xxxxxx and its affiliates, including reasonable fees and
disbursements of counsel. Neither party shall, without the prior written consent
of the other party, which shall not be unreasonably withheld or delayed, settle,
compromise or offer to settle or compromise any such claim or demand on a basis
which would result in the imposition of a consent order, injunction or decree
which would restrict the future activity or conduct of the other party or any
subsidiary or affiliate thereof or if such settlement or
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compromise does not include an unconditional release of the other party for any
liability arising out of such claim or demand.
(b) The foregoing obligation to indemnify Xxxxxx and its affiliates set
forth in Section 11.2(a) shall be subject to each of the following limitations:
(i) BDPH's indemnification obligation for any breach of the
representations and warranties described in Section 7 of this Agreement
shall survive until April 1, 1999 other than the Long-Term Reps which
shall survive until the fifth anniversary of the Closing, and
thereafter all such representations and warranties of MergerCo under
this Agreement shall be extinguished. No claim for the recovery of such
Xxxxxx Losses may be asserted by Xxxxxx after April 1, 1999 (other than
claims asserted for breaches of the Long-Term Reps which shall survive
and may be made until the fifth anniversary of the Closing); provided,
however, that claims first asserted in writing with specificity within
such period shall not thereafter be barred;
(ii) No reimbursement for the Xxxxxx Losses asserted against
MergerCo under Section 11.2(a)(i), above shall be required unless and
until the cumulative aggregate amount of such Xxxxxx Losses equals or
exceeds US $2,500,000.00 (the "MergerCo Threshold") and then only to
the extent that the cumulative aggregate amount of the Xxxxxx Losses,
as finally determined, exceeds the MergerCo Threshold; provided that in
calculating such Threshold any Losses which individually and when
considered together with any related Xxxxxx Losses total less than
US$25,000 each ("De Minimis Losses") shall be excluded in their
entirety and in any event shall have no liability hereunder to Xxxxxx
and its affiliates for any such De Minimis Losses.
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(iii) BDPH's liability to Xxxxxx and its affiliates under
Section 11.2(a)(i) for the Xxxxxx Losses in excess of the MergerCo
Threshold shall not exceed $80,000,000.
(c) The indemnities provided in this Section 11.2 shall survive the
Closing. The indemnity provided in this Section 11.2 shall be the sole and
exclusive remedy of the indemnified party against the indemnifying party at law
or equity for any matter covered by paragraphs (a) and (b).
(d) In no event shall MergerCo or BDPH be liable to Xxxxxx or its
affiliates for special, indirect, incidental, consequential or punitive damages
except for such instances, if any, where the Xxxxxx Losses result from a third
party claim to which BDPH is required to indemnify Xxxxxx of its affiliates
pursuant to Subsections 11.2(a)(iii)-(iv) of this Agreement.
(e) The indemnities provided in this Section 11.2 shall survive any
investigation prior to Closing by or on behalf of Xxxxxx or any knowledge or
information that Xxxxxx may have, subject to the limitations or indemnification
set forth in Section 11.2(b)(i) of this Agreement.
11.3 Indemnification Calculations
(a) The amount of any Xxxxxx Losses or MergerCo Losses for which
indemnification is provided under this Section 11 shall be computed net of any
net insurance proceeds received by the indemnified party in connection with such
Losses, reduced by all costs and expenses related thereto and any retrospective
or other premium increase or expense resulting therefrom. If the amount with
respect to which any claim is made under this Section 11 (an "Indemnity Claim")
gives rise to a currently realizable Tax Benefit (as defined below) to the party
making the claim, the indemnity payment shall be reduced by the amount of the
Tax Benefit available to the party making the claim if and to the extent
actually
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realized by such party. To the extent such Indemnity Claim does not give rise to
a currently realizable Tax Benefit, if the amount with respect to which any
Indemnity Claim is made gives rise to a subsequently realized Tax Benefit to the
party that made the claim, such party shall refund to the indemnifying party the
amount of such Tax Benefit when, as and if realized. For the purposes of this
Agreement, any subsequently realized Tax Benefit shall be treated as though it
were a reduction in the amount of the initial Indemnity Claim, and the
liabilities of the parties shall be redetermined as though both occurred at or
prior to the time of the indemnity payment. For purposes of this Section 11.3, a
"Tax Benefit" means an amount by which the tax liability of the party (or group
of corporations including the party) is actually reduced (including, without
limitation, by deduction, reduction of income by virtue of increased tax basis
or otherwise, entitlement to refund, credit or otherwise), after first taking
into account all other losses, deductions, credits and other tax items available
to the parties, plus any related interest received from the relevant taxing
authority. Where a party has other losses, deductions, credits or items
available to it, the Tax Benefit from any losses, deductions, credits or items
relating to the Indemnity Claim shall be deemed to be realized only after any
other losses, deductions, credits or items. For the purposes of this Section 11,
a Tax Benefit is "currently realizable" to the extent such Tax Benefit is
realized in the current taxable period or year or in any tax return with respect
thereto (including through a carryback to a prior taxable period) or in any
taxable period or year prior to the date of the Indemnity Claim. In the event
that there should be a determination disallowing the Tax Benefit, the
indemnifying party shall be liable to refund to the indemnified party the amount
of any related reduction previously allowed or payments previously made to the
indemnifying party pursuant to this Section 11.3. The amount of the refunded
reduction or payment shall be
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deemed a payment under this Section 11.3 and thus shall be paid subject to any
applicable reductions under this Section 11.3.
(b) If the amount of any Xxxxxx Losses or MergerCo Losses, at any time
subsequent to the making of an indemnity payment, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or pursuant
to any claim, recovery, settlement, rebate or other payment by or against any
other person, the amount of such reduction, together with interest thereon from
the date of payment thereof at the rate of interest described in Section 5.2(d),
will promptly be repaid by the indemnitee to the indemnifying party. Upon making
any indemnity payment the indemnifying party will, to the extent of such
indemnity payment, be subrogated to all rights of the indemnitee or an insurer
of the indemnitee in respect of the Loss to which the indemnity payment relates;
provided, however, that (i) the indemnifying party shall then be in compliance
with its obligations under this Agreement in respect of such loss and (ii) until
the indemnitee recovers full payment of its loss, any and all claims of the
indemnifying party against any such third person on account of said indemnity
payment will be subrogated and subordinated in right of payment to the
indemnitee's rights against such third person. Without limiting the generality
or effect of any other provision hereof, each such indemnitee and indemnifying
party will duly execute upon request all instruments reasonably necessary to
evidence and perfect the above-described subrogation and subordination rights.
(c) The parties agree that any indemnification payments made pursuant
to this Agreement shall be treated for tax purposes as an adjustment to the
Aggregate Consideration, unless otherwise required by applicable law.
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12. TAX MATTERS
12.1 Tax Indemnification
(a) Following the Closing, Xxxxxx shall indemnify MergerCo and
its affiliates (including the Decorative Products Companies) and each of their
respective officers, directors, employees, agents and other representatives and
hold them harmless from (i) all liability for income Taxes (other than any
liability for UK national income taxes for 1997 and any portion of 1998 prior to
the Closing) of the Decorative Products Companies, for a Pre-Closing Tax Period
(as defined below), (ii) all liability as a result of Treasury Regulation
Section 1.1502-6(a) for U.S. federal income Taxes of Xxxxxx or any of its
affiliates or any other entity which is or has been affiliated with the
Decorative Products Companies and BCL relating to a Pre-Closing Tax Period,
(iii) all liability for Taxes attributable to actions taken after the Closing by
Xxxxxx or any of its affiliates (other than the Decorative Products Companies)
or attributable to a breach by Xxxxxx of any covenant contained in Section 12.2
and (iv) all liability for U.K. national income taxes of the Decorative Products
Companies for 1997 and any portion of 1998 prior to the Closing in excess of
$7,957,000. Notwithstanding the foregoing, Xxxxxx shall not indemnify and hold
harmless any of MergerCo, its affiliates or their respective officers,
directors, employees and agents from any liability for Taxes attributable to (i)
Taxes of the Decorative Products Companies for the Pre-Closing Tax Period to the
extent of the accrual, if any, established therefor and reflected as Balance
Sheet Indebtedness or as a current liability in the calculation of Closing
Working Capital or (ii) any action taken after the Closing by MergerCo, any of
its affiliates (including the Decorative Products Companies), or any transferee
of MergerCo or any of its affiliates (other than any such action expressly
required by applicable law or by this Agreement) (a "MergerCo Tax
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Act") or attributable to a breach by MergerCo of any covenant contained in
Section 12.2 of this Agreement. "Pre-Closing Tax Period" shall mean all or any
portion of a taxable period ending on or before the Closing Date.
(b) Following the Closing, MergerCo shall, and shall cause the
Decorative Products Companies to, indemnify Xxxxxx and its affiliates and each
of their respective officers, directors, employees, and agents and hold them
harmless from (i) all liability for Taxes of the Decorative Products Companies
for any Post-Closing Tax Period, (ii) all liability for Taxes attributable to a
MergerCo Tax Act or to a breach by MergerCo of any covenant contained in Section
12.2 of this Agreement, (iii) all liability for up to $7,957,000 of U.K.
national income taxes of the Decorative Products Companies for 1997 and any
portion of 1998 prior to the Closing and (iv) all liability for Taxes of the
Decorative Products Companies for the Pre-Closing Tax Period to the extent of
the accrual, if any, established therefor as Balance Sheet Indebtedness or as a
current liability in the calculation of Closing Working Capital.
"Post-Closing Tax Period" shall mean all or any portion of a
taxable period beginning after the Closing Date.
(c) Procedures Relating to Indemnification of Tax Claims. If a
claim shall be made by any taxing authority, which, if successful, might result
in an indemnity payment to a party (the "First Party"), one of its affiliates or
any of their respective officers, directors, employees, agents or
representatives pursuant to this Section 12.1, the First Party shall promptly
and in any event no more than 30 days following the First Party's receipt of
written notice of such claim, give notice to the other party (the "Second
Party") in writing of such claim (a "Tax Claim"); provided, however, the failure
of the First Party to give such notice
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shall not affect the indemnification provided hereunder except to the extent the
Second Party has been actually prejudiced as a result of such failure (except
the Second Party shall not be liable for any expenses incurred during the period
in which the First Party failed to give such notice).
With respect to any Tax Claim relating to a Pre-Closing Tax
Period for which Xxxxxx has indemnified MergerCo, Xxxxxx shall control all
proceedings and may make all decisions taken in connection with such Tax Claim
(including selection of counsel) and, without limiting the foregoing, may in its
sole discretion pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with any taxing authority with respect
thereto, and may, in its sole discretion, either pay the Tax claimed and xxx for
a refund where applicable law permits such refund suits or contest the Tax Claim
in any permissible manner. With respect to any Tax Claim related to a
Post-Closing Tax Period or with respect to which MergerCo has otherwise
indemnified Xxxxxx, MergerCo shall control proceedings and may make all
decisions taken in connection with such Tax Claim (including selection of
counsel) and, without limiting the foregoing, may in its sole discretion pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with any taxing authority with respect thereto, and may, in its sole
discretion, either pay the Tax claimed or xxx for a refund where applicable law
permits such refund suits or contest the Tax Claim in any permissible manner. To
the extent that any Tax Claim relates to both a Pre-Closing Tax Period and a
Post-Closing Tax Period, or to a Tax Claim for which both parties may be
obligated, Xxxxxx and MergerCo shall jointly participate in the resolution of
such Tax Claim and shall each proceed in good faith to achieve a mutually
agreeable result.
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Xxxxxx and MergerCo and each of their respective affiliates
shall reasonably cooperate with each other in contesting any Tax Claim, which
cooperation shall include the retention and, upon the request of the party or
parties controlling proceedings relating to such Tax Claim, the provision to
such party or parties of records and information which are reasonably relevant
to such Tax Claim, and making employees available on a mutually convenient basis
to provide additional information or explanation of any material provided
hereunder or to testify at proceedings relating to such Tax Claim.
In no case shall any of MergerCo or the Decorative Products
Companies settle or otherwise compromise any Tax Claim relating to a Pre-Closing
Tax Period for which Xxxxxx has indemnified MergerCo without Xxxxxx'x prior
written consent. In no case shall Xxxxxx or any of its affiliates settle or
otherwise compromise any Tax Claim relating to a Post-Closing Tax Period or for
which MergerCo has otherwise indemnified Xxxxxx without MergerCo's prior written
consent. In the event that any party violates the provisions of this paragraph
(relating to the settlement or compromise of Tax Claims), such party shall not
be entitled to any indemnity payments with respect to any indemnifiable claim
(relating to such Tax Claims) pursuant to this Section 12.1.
(d) Indemnification Calculations. The amount payable with
respect to any Tax Claim and the treatment and adjustment thereof shall be
governed by the provisions of Section 11.3 of this Agreement.
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12.2 Other Tax Matters
(a) Xxxxxx and its subsidiaries and MergerCo shall reasonably
cooperate, and shall cause their respective affiliates, officers, employees,
agents, auditors and other representatives reasonably to cooperate, in preparing
and filing all Tax Returns for Pre-Closing Tax Periods. Neither MergerCo nor any
Decorative Products Company shall file or cause to be filed any amended return
of Xxxxxx or any of its affiliates for any Pre-Closing Tax Period without the
prior written consent of Xxxxxx, which consent may not be unreasonably withheld
or delayed.
(b) The amount or economic benefit of any refunds, credits or
offsets of Taxes of any Decorative Products Company shall be for the account of
Xxxxxx or its affiliates to the extent such refund, credit or offset relates to
any Taxes for which Xxxxxx has indemnified MergerCo. The amount or economic
benefit of any refunds, credits or offsets of Taxes of any Decorative Products
Company shall be for the account of MergerCo to the extent such refund, credit
or offset relates to Taxes for which MergerCo has otherwise indemnified Xxxxxx.
Each party shall forward, and shall cause its affiliates to forward, to the
party entitled pursuant to this Section 12.2(b) to receive the amount or
economic benefit of a refund, credit or offset to Tax, the amount of such
refund, or the economic benefit of such credit or offset to Tax, within ten days
after such refund is received or after such credit or offset is allowed or
applied against other Tax liability, as the case may be. In the event such
refund, credit or offset is later disallowed by the IRS, the account of such
party shall be debited, such party shall repay the amount of the refund, credit
or offset previously received plus interest computed at the rate of the
prevailing federal rate for tax refunds.
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(c) There shall be no withholding pursuant to Section 1445 of
the Code, provided that Xxxxxx delivers to MergerCo at the Closing a certificate
complying with the Code and Treasury Regulations, in form and substance
reasonably satisfactory to MergerCo, duly executed and acknowledged, certifying
that the transactions contemplated hereby are exempt from withholding under
Section 1445 of the Code.
(d) Except as provided in Schedule 12.2, Xxxxxx shall cause
all tax allocation agreements or tax sharing agreements with respect to each of
the Decorative Products Companies to be terminated as of the Closing Date, and
shall ensure that such agreements are of no further force or effect as to any of
the Decorative Products Companies on and after the Closing Date and that there
shall be no further liabilities or obligations imposed on any of the Decorative
Products Companies under any such agreements.
13. TERMINATION
13.1 Termination Events
Without prejudice to other remedies which may be available to the
parties by law or this Agreement, this Agreement may be terminated and the
transactions contemplated herein may be abandoned:
(a) by mutual consent of Xxxxxx and MergerCo;
(b) by Xxxxxx, in its sole discretion, after February 9, 1998,
if either (i) the applicable waiting periods specified under the Xxxx-Xxxxx Act
with respect to the transactions contemplated by this Agreement and the C&A
Transaction have not lapsed or been terminated or (ii) any Enforcement Authority
is seeking to prohibit on antitrust or competition grounds the consummation of
the transactions contemplated herein;
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(c) by MergerCo, in its sole discretion, on November 4, 1997
(the "Imperial Termination Date"), but neither before or after such date, if (i)
MergerCo has not entered into a definitive acquisition agreement to acquire
Imperial or (ii) the audited Annual Financial Statements, at and for the year
ended December 31, 1996, referred to in Section 6.5(b) reflect an adverse
difference from the unaudited Annual Financial Statements at and for the year
ended December 31, 1996 referred to in Section 6.5(a) in any material respect,
as determined by MergerCo, which determination shall be conclusive for all
purposes;
(d) by Xxxxxx or MergerCo by notice to the other party if the
Closing shall not have been consummated on or before March 15, 1998, unless
extended by written agreement of the parties hereto, so long as the party
terminating this Agreement shall not be in default or breach hereunder; and
(e) by MergerCo after February 1, 1998, if Xxxxxx shall have
materially breached any portion of this Agreement and not cured such breach by
the later of (i) February 1, 1998 and (ii) 30 days after written notice thereof.
13.2 Effect of Termination
In the event of any termination of the Agreement as provided
in Section 13.1 above, this Agreement shall forthwith become wholly void and of
no further force and effect and there shall be no liability on the part of
MergerCo or Xxxxxx and the Subsidiaries, except (i) that the obligations of
MergerCo and Xxxxxx and the Subsidiaries under Sections 8.2, 8.11 and 15.6 of
this Agreement shall remain in full force and effect and (ii) as a result of any
prior breach hereof.
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14. ALTERNATIVE DISPUTE RESOLUTION
The parties shall attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by negotiations between
executives who have authority to settle the controversy. Any party may give the
other party(ies) written notice of any dispute not resolved in the normal course
of business. Within 20 days after delivery of said notice, executives of both
parties shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to exchange relevant information and to
attempt to resolve the dispute. If the matter has not been resolved within 60
days of the disputing party's original notice, or if the parties fail to meet
within 20 days, either party may initiate legal proceedings to resolve the
controversy or claim. If a party's negotiator intends to be accompanied at a
meeting by an attorney, the other party's negotiator shall be given at least
three working days' notice of such intention and may also be accompanied by an
attorney. All negotiations pursuant to this clause are confidential and shall be
treated as compromise and settlement negotiations for purposes of the Federal
Rules of Evidence and state rules of evidence.
15. MISCELLANEOUS AGREEMENTS OF THE PARTIES
15.1 Notices
All communications provided for hereunder shall be in writing
and shall be deemed to be given when delivered in person or by private courier
with receipt, when telefaxed and received (receipt electronically confirmed by
Sender's telecopy machine), or five days after being deposited in the United
States mail, first-class, registered or certified, return receipt requested,
with postage paid and,
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If to MergerCo: c/o The Blackstone Group
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Senior Managing Director
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a Copy to: Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Xxxxxx: Xxxxxx Xxxxxxxx
Vice President,
Strategic Planning
Xxxxxx, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000-0000
Fax: 000-000-0000
With a Copy to: Xxxxxxx X. Xxxxx
Senior Vice President and
General Counsel
Xxxxxx, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000-0000
Fax: 000-000-0000
or to such other address as any such party shall designate by written notice to
the other parties hereto.
15.2 Bulk Transfers
MergerCo and BDPH waive compliance with the provisions of all
applicable laws relating to bulk transfers in connection with the Assets
Transfer.
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15.3 Transaction Taxes
MergerCo and Xxxxxx shall each pay one-half of all sales and
transfer taxes, if any, which may be payable with respect to the consummation of
the transactions contemplated by this Agreement and to the extent any exemptions
from such taxes are available MergerCo and Xxxxxx shall cooperate to prepare any
certificates or other documents necessary to claim such exemptions.
15.4 Further Assurances; Asset Returns
Upon request from time to time, Xxxxxx shall execute or cause
its subsidiaries, including without limitation, BDH Two, Inc. to the extent any
intangible property or other assets constituting Assets hereunder are held of
record by BDH Two, Inc., to execute and deliver all documents, take all rightful
oaths, and do all other acts that may be reasonably necessary or desirable, in
the reasonable opinion of counsel for MergerCo, to perfect or record the title
of MergerCo, or any successor of MergerCo, to the Assets transferred or to be
transferred under this Agreement, or to aid in the prosecution, defense or other
litigation of any rights arising from said transfer (provided that MergerCo
shall reimburse the Xxxxxx for all incremental out of pocket costs and expenses
resulting from any such request). In the event that MergerCo receives any assets
of the Asset Seller that are not intended to be transferred pursuant to the
terms of this Agreement, whether or not related to the Business, MergerCo agrees
to promptly return such assets to the Asset Seller at Xxxxxx'x expense.
15.5 Other Covenants
Without limiting the generality or effect of Articles 9 or 11,
to the extent that any consents needed to assign to MergerCo any of the Acquired
Assets have not been obtained on or prior to the Closing Date this Agreement
shall not constitute an assignment or
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attempted assignment thereof if such assignment or attempted assignment would
constitute a breach thereof. If any such consent or any other consent of a third
party required by the terms of any contract, lease or license included in the
Assets shall not be obtained on or prior to the Closing Date, then (i) Xxxxxx
and MergerCo, if required under applicable law, shall use their reasonable
efforts in good faith to obtain such consent as promptly as practicable
thereafter and (ii) if in the reasonable judgment of MergerCo such consent may
not be obtained, the parties shall use reasonable efforts in good faith to
cooperate, and to cause each of their respective affiliates to cooperate, in any
lawful arrangement designed to provide for MergerCo the benefits under any such
Acquired Assets.
15.6 Expenses
Subject to Section 5.1(a) and Section 15.3, Xxxxxx and
MergerCo shall each pay their respective expenses (such as legal, investment
banker and accounting fees) incurred in connection with the origination,
negotiation, execution and performance of this Agreement. The Decorative
Products Companies shall not be obligated to incur any fees or expenses in
connection with the Financing, except for fees, expenses or indemnification
obligations which are conditioned upon the occurrence of the Closing.
15.7 Non-Assignability
This Agreement shall inure to the benefit of and be binding on
the parties hereto and their respective successors and permitted assigns. This
Agreement shall not be assigned by any party hereto without the express prior
written consent of the other parties, and any attempted assignment, without such
consents, shall be null and void; provided, however, that (i) at or following
the Closing, MergerCo may assign its rights or delegate its duties to any
affiliate of MergerCo or BDPH, provided that no such delegation will relieve
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MergerCo of its obligations hereunder, (ii) MergerCo or BDPH (or any such
assignee) may assign its rights hereunder (or any portion thereof) to any lender
or other person or entity in connection with any financing, provided that no
such delegation will relieve MergerCo of its obligations hereunder and (iii) in
connection with any sale of the Xxxxxx plastics division of the Business in a
single transaction, MergerCo, upon notice to Xxxxxx, may assign its rights to
indemnity under this Agreement in respect of any Excluded Liability (but not
with respect to any other aspect of the indemnity obligations of Xxxxxx
hereunder) to any other party to any such transaction, whereupon Xxxxxx will be
directly liable in respect thereof to such other party as well as to MergerCo
and its other permitted assigns hereunder.
15.8 Amendment; Waiver
This Agreement may be amended, supplemented or otherwise
modified only by a written instrument executed by the parties hereto. No waiver
by any party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and executed by the party so waiving; provided
that MergerCo shall not waive the condition in Section 9.3(b) without the prior
written consent of Xxxxxx. Except as provided in the preceding sentence, no
action taken pursuant to this Agreement, including without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants, or agreements contained herein, and in any other
Transaction Document or document to be delivered in connection with the Closing
hereunder. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
110
115
15.9 Schedules and Exhibits
All exhibits and schedules hereto are hereby incorporated by
reference and made a part of this Agreement. All statements contained in
schedules, exhibits, certificates and other instruments attached hereto or
delivered or furnished on behalf of the Xxxxxx or the Subsidiaries pursuant
hereto or in connection with the transactions contemplated hereby, shall be
deemed representations and warranties by Xxxxxx. Any fact or item which is
clearly disclosed on any Schedule or Exhibit to this Agreement or in the
Financial Statements in such a way as to make its relevance to a representation
or representations made elsewhere in this Agreement or to the information called
for by another Schedule or other Schedules (or Exhibit or other Exhibits) to
this Agreement readily apparent shall be deemed to be an exception to such
representation or representations or to be disclosed on such other Schedule or
Schedules (or Exhibit or Exhibits), as the case may be. Any fact or item
disclosed on any Schedule or Exhibit hereto shall not by reason only of such
inclusion be deemed to be material and shall not be employed as a point of
reference in determining any standard of materiality under this Agreement.
15.10 Third Parties
Except as provided in Section 15.7 or Article 11 (to the
extent contemplated thereby) hereof and except for BDPH's successorship rights
by virtue of the Merger or as otherwise contemplated herein, this Agreement does
not create any rights, claims or benefits inuring to any person that is not a
party hereto nor create or establish any third party beneficiary hereto.
111
116
15.11 Governing Law
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, except for matters relating
to the Real Property, which shall be governed by the laws of the jurisdictions
where such properties are located.
15.12 Consent to Jurisdiction
Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Southern
District of New York located in the borough of Manhattan in the City of New
York, or if such court does not have jurisdiction, the Supreme Court of the
State of New York, New York County, for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of the parties hereto further agrees that service of any process,
summons, notice or document by U.S. registered mail to such party's respective
address set forth in Section 15.1 shall be effective service of process for any
action, suit or proceeding in New York with respect to any matters to which it
has submitted to jurisdiction as set forth above in the immediately preceding
sentence. Each of the parties hereto, irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in (a) the United
States District Court for the Southern District of New York or (b) the Supreme
Court of the State of New York, New York County, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
15.13 Certain Definitions
For purposes of this Agreement, the term:
112
117
(i) "affiliate" of a person means a person that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, the first mentioned
person;
(ii) "person" means an individual, corporation,
partnership, association, trust, incorporated organization, other
entity or group (as defined in Section 13(d)(3) of the Exchange Act);
(iii) "subsidiary" or "subsidiaries" of MergerCo, Xxxxxx
or any other person means any corporation, partnership, joint venture
or other legal entity of which MergerCo, Xxxxxx or such other person,
as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests the holder of which is generally entitled to
vote for the election of the board of directors or other governing body
of such corporation or other legal entity; and
(iv) "the knowledge of" or "the best knowledge of" a
party hereto when modifying any representation and warranty shall mean
(v) that such party has no knowledge that such representation and
warranty is not true and correct to the same extent as provided in the
applicable representation and warranty, and that:
(A) such party has made appropriate investigations
and inquiries of its officers and responsible employees; and
(B) nothing has come to its attention in the course
of such investigation and inquiries or otherwise which would
cause such party, in the exercise of due diligence, to believe
that such representation and warranty is not true and correct.
113
118
Xxxxxx shall be deemed to have satisfied the requirements of Subsection
15.13 above by making appropriate investigations and inquiries of the officers
and employees of Xxxxxx and the Subsidiaries listed on Schedule 15.13, and no
knowledge of any other officer or employee of Xxxxxx or the Subsidiaries shall
be imputed to the persons listed on Schedule 15.13 or to Xxxxxx.
15.14 Construction
The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rule of
strict construction will be applied against any party. Any references to any
federal, state, local or foreign statute or law will also refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Unless the context otherwise requires: (a) a term has the meaning assigned to it
by this Agreement; (b) an accounting term not otherwise defined has the meaning
assigned to it by GAAP; (c) "or" is disjunctive but not exclusive; (d) words in
the singular include the plural, and in the plural include the singular; (e)
provisions apply to successive events and transactions; and (f) "$" means the
currency of the United States of America.
15.15 Specific Performance
Without limiting or waiving in any respect any rights or
remedies of MergerCo under this Agreement now or hereinafter existing at law or
in equity or by statute, each of the parties hereto shall be entitled to seek
specific performance of the obligations to be performed by the other in
accordance with the provisions of this Agreement.
15.16 Conveyance and Transfer Agreement
MergerCo agrees that the terms and provisions of this
Agreement, including the Exhibits and Schedules attached hereto, supersede any
inconsistent terms and provisions
114
119
contained in the Conveyance and Transfer Agreement by and between Xxxxxx, Inc.,
and Decorative Products MergerCo, Inc., dated April 3, 1996, and MergerCo hereby
waives any rights against Xxxxxx under any indemnification or other provisions
of such Conveyance and Transfer Agreement as to which MergerCo would not be
entitled under the terms and provisions of this Agreement.
15.17 Entire Agreement
This Agreement, and the Schedules and Exhibits hereto set
forth the entire understanding of the parties hereto and no modifications or
amendments to this Agreement shall be binding on the parties unless in writing
and signed by the party or parties to be bound by such modification or
amendment.
15.18 Section Headings; Table of Contents
The section headings contained in this Agreement and the Table
of Contents to this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
15.19 Severability
If any provision of this Agreement shall be declared by any
court of competent jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement shall not be affected and shall remain in full
force and effect.
15.20 Counterparts
This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
115
120
IN WITNESS WHEREOF, the parties have caused this
Recapitalization Agreement to be duly executed as of the date first above
written.
XXXXXX, INC.
By: ______________________________
Name:
Title:
BDPI HOLDINGS CORPORATION
By: _______________________________
Name:
Title:
XXXXXX DECORATIVE PRODUCTS
HOLDINGS, INC.
By: _______________________________
Name:
Title:
116
EXHIBIT 1
The "Per Share Consideration" to be received for each share of BDPH Common Stock
("BDPH Shares") to be converted in the Merger will be calculated in accordance
with the formula set forth below. The Per Share Consideration shall be
calculated as if the Aggregate Consideration was paid exclusively in cash,
notwithstanding the fact that a portion of the Aggregate Consideration will be
represented by Retained Shares. Capitalized terms used herein and not otherwise
defined herein are used herein as defined in the Agreement.
The "Per Share Consideration" for the Business shall be determined in
accordance with the following formula (the "Per Share Consideration
Formula"):
PSC = PP - (LP x PS) - [(PSC x OPT) - (EXOP x OPT)]
---------------------------------------------
DS
where DS = Number of shares of BDPH Common Stock
outstanding immediately prior to the Merger
(excluding shares to be cancelled pursuant to
Section 4.1(d))
PP = Aggregate Consideration less Xxxxxx'x
estimate of transaction fees incurred or to
be incurred by Xxxxxx and its affiliates
(other than any of the Decorative Products
Companies in connection with the
transactions contemplated by this Agreement)
(the "Xxxxxx Transaction Fees")
EXOP = Exercise price for each outstanding option
("Option") to purchase BDPH Shares
OPT = Number of shares of BDPH Common Stock
subject to Options outstanding on the
Closing Date less the number of shares of
BDPH Common Stock subject to Options, if
any, that are exchanged for options or
similar rights of MergerCo or an affiliated
entity
LP = Per share liquidation preference of each
outstanding share of Preferred Stock
PSC = Per Share Consideration
PS = Number of shares of Preferred Stock
outstanding on the Closing Date
117
Annex C
TERMS OF STOCKHOLDERS AGREEMENT
Parties: Xxxxxx Decorative Products MergerCo, Inc.
(the "Company"), MergerCo's sole stockholder
immediately prior to the Merger and any
permitted transferees ("Blackstone") and
Xxxxxx, Inc., its affiliates and any
permitted transferees (the "Stockholders").
Dated: The Closing Date. The Stockholders' Agreement
shall terminate (other than with respect to
Piggyback Rights, Demand Rights and Board
Representation) at such time as the Company
consummates an initial public offering.
Restrictions on Transfer: Except for transfers pursuant to the
Drag-Along Rights or Tag-Along Rights or for
transfers following the ROFO Period (as
defined herein) Stockholders may transfer
BDPH Common Stock only to affiliates, and
then only if the permitted transferee agrees
to be bound by the terms of the Stockholders'
Agreement. Transferees will be bound by the
terms of the Drag-Along Rights but will
receive the benefits of the Tag-Along Rights,
the Piggyback and Demand Rights and the
Indemnity Rights. As a condition to any
transfer by Blackstone to an Affiliate of
Blackstone, the Blackstone Affiliate must
agree to be bound by the Stockholders
Agreement.
Tag-Along Rights: For any proposed transfer by Blackstone or
any of its affiliates of the BDPH Common
Stock other than to an affiliate or in a
public offering, Blackstone shall have the
obligation to require the proposed transferee
to purchase from the Stockholders, should any
of the Stockholders exercise its right, a
proportionate number of shares of BDPH Common
Stock at the same price per share and upon
the same terms and conditions (including
payment of proportionate costs).
Right of First Offer: Prior to the earlier of (i) an initial public
offering of the Company and (ii) the five
year anniversary of the Closing (the "ROFO
Period"), the Stockholders will be required
to comply with a 30/90 day right of first
offer provision ("ROFO") and prohibitions on
sales to competitors.
118
2
Drag-Along Rights: If Blackstone or any of its affiliates
receives an offer from a person other than
from an affiliate to purchase at least a
majority of the outstanding shares of BDPH
Common Stock and such offer is accepted by
Blackstone, then the Stockholders will
transfer shares of BDPH Common Stock owned by
them proportionately, if applicable, to such
third party on the terms of the offer so
accepted by Blackstone (including payment of
proportionate costs).
Piggyback Rights: Each time the Company files a registration
statement in connection with the sale of
shares of BDPH Common Stock by the Company
(other than in connection with an initial
public offering comprised solely of the offer
and sale by the Company of primary shares and
with customary exceptions for X-0, X-0 and
any successor registration statements),
Blackstone or any Blackstone affiliates, the
Company, at the request of a majority in
interest of the Stockholders, will use its
reasonable best efforts to effect the
registration of all shares of BDPH Common
Stock owned by the Stockholders which the
Company has been so requested to register by
the Stockholders; provided, that in the event
that the managing underwriter determines that
a proposed offering including shares of the
Stockholders and the Company and/or
Blackstone exceeds the number of shares of
BDPH Common Stock that can be sold without
having an adverse effect on such offering or
that inclusion of selling Stockholders would
adversely affect the offering, the Company
will have priority and the number of shares,
if any, to be registered held by Blackstone,
the Stockholders and any other holder of
registration rights, shall be in proportion
to the relative sizes of their holdings of
BDPH Common Stock.
119
3
Demand Rights: Market
Stand-off The Stockholders shall have the right, on one
occasion (including following such time as
the Stockholders are permitted to Sell their
shares of BDPH Common Stock without regard to
the volume limitations of Rule 144 under the
Securities Act) following 180 days after the
initial public offering of BDPH Common Stock,
to cause the Company to file a registration
statement in connection with the proposed
sale of all shares of BDPH Common Stock by
the Stockholders, provided, that Blackstone
and any other holder of registration rights
shall have the right to participate in such
offering in proportion to the relative sizes
of their holdings of BDPH Common Stock and
the Board may delay such registration for no
longer than 180 days pursuant to a customary
black-out provision, provided, further, that
if the Stockholders are unable to sell all of
the shares requested to be included in such
offering because of Blackstone's and other
holders of registration rights participation
in the offering, then the Stockholders shall
be granted a like additional demand. The
Company shall pay all expenses of such
offerings (other than underwriting discounts,
selling commissions and fees of counsel to
the Stockholders or other experts hired
directly by Stockholders). The Company and
the Stockholders shall reasonably mutually
agree upon the managing underwriters of such
offerings. The Stockholders shall, upon
request, execute 180 day market stand-offs in
connection with the initial public offering
of the Company and 90-day standoffs on any
subsequent offering.
Indemnity Rights: The Company shall indemnify Blackstone and
the Stockholders against any liability or
damage relating to the operations of the
Company or the ownership of the shares of
BDPH Common Stock on terms consistent with
other Blackstone-sponsored transactions.
Board Representation: The Stockholders and Blackstone shall vote
their shares so as to elect 1 designee of the
Stockholders and the designees of Blackstone
to the board of directors of the Company so
long as the Stockholders own at least 75% of
the BDPH Common Stock issued to Xxxxxx in the
Merger. Such person must meet criteria as to
level of seniority if an executive of Xxxxxx,
to be specified in the definitive
Stockholders Agreement or otherwise be
acceptable to the board. The Stockholders'
Board representation rights will terminate
after an IPO if Xxxxxx owns less than 5% of
the post-IPO BDPH Common Stock.
120
4
Assignment: Blackstone may assign its drag-along rights
hereunder to a single transferee of a
majority of Blackstone's shares of BDPH
Common Stock. Such transferee would then be
the only holder of drag-along rights.
Following any assignment actions by either
Blackstone or Stockholders will be by
majority in interest of the affected group.
121
SCHEDULE 8.7(h)-1
SCHEDULE OF CANADIAN ASSUMPTIONS - GOING CONCERN
-----------------------------------------------------------------------------------------------------------------------
Interest: 7.5% per annum, net of all investment and
administrative expenses.
-----------------------------------------------------------------------------------------------------------------------
Mortality: GAM 1983 for pre and post-retirement
mortality
-----------------------------------------------------------------------------------------------------------------------
Termination Rates: During First Five years of employment:
Years Salaried Hourly
----- -------- ------
0 18.1% 28.3%
1 15.3% 20.7%
2 13.4% 15.7%
3 11.4% 11.1%
4 9.4% 7.0%
-----------------------------------------------------------------------------------------------------------------------
After 5 Years of Employment (sample
rates:)
-----------------------------------------------------------------------------------------------------------------------
Age Salaried Hourly
--- -------- ------
25 15.6% 9.3%
30 10.6% 7.4%
35 7.6% 6.1%
40 5.9% 5.3%
45 4.6% 4.8%
50 3.7% 4.5%
55 0.0% 0.0%
-----------------------------------------------------------------------------------------------------------------------
Retirement Rates: Age Salaried Hourly
--- -------- ------
55 8.0% 1.0%
56 8.0% 1.3%
57 8.0% 1.8%
58 8.0% 2.5%
59 8.0% 3.6%
60 8.0% 5.2%
61 10.3% 13.5%
62 16.1% 35.5%
63 21.5% 21.5%
64 37.2% 60.2%
65 100.0% 100.0%
-----------------------------------------------------------------------------------------------------------------------
Family Composition: 85% of the members would have a spouse,
and males would be three years older than
their wives.
-----------------------------------------------------------------------------------------------------------------------
Method: Accrued benefit actuarial cost method.
-----------------------------------------------------------------------------------------------------------------------
122
SCHEDULE 8.7(h)-2
SCHEDULE OF CANADIAN ASSUMPTIONS - SOLVENCY
-----------------------------------------------------------------------------------------------------------------------
Interest: x% per annum for the first 15 years and 6% per annum
thereafter, where x% is determined by applying the Canadian
Institute of Actuaries Recommendations for the Computation
of Transfer Values (effective August 1993) for non-indexed
pensions. X% is determined at Closing Date. The
corresponding rate at January 1, 1995 was 10.0%
-----------------------------------------------------------------------------------------------------------------------
Mortality: GAM 1983 for pre and post-retirement mortality.
-----------------------------------------------------------------------------------------------------------------------
Termination Rates: No allowance for a termination prior to retirement.
-----------------------------------------------------------------------------------------------------------------------
Retirement Rates: Ontario members are assumed to retire at the age between
55 and 65 that maximizes the commuted value of the pension.
-----------------------------------------------------------------------------------------------------------------------
Vesting: All members are assumed to be 100% vested.
-----------------------------------------------------------------------------------------------------------------------
Growing in: For Ontario members whose age plus service exceed
fifty-five (55) points, the provisions of Section 74 of the
PBA of Ontario are applied.
-----------------------------------------------------------------------------------------------------------------------
Method: The accrued benefit actuarial cost method is applied.
Members are assumed to terminate employment on the Closing
Date based on benefits earned to this date.
-----------------------------------------------------------------------------------------------------------------------
Expense: $400 per member expense charge associated with plan
wind-up.
-----------------------------------------------------------------------------------------------------------------------
123
SCHEDULE 8.7(h)-3
U.K. DEFINED BENEFIT PROJECTED BENEFIT
OBLIGATIONS DETERMINATION METHODS AND ASSUMPTIONS
-------------------------------------------------------------------------------------------------------------------------
Valuation Approach Ongoing Concern
-------------------------------------------------------------------------------------------------------------------------
Valuation methods:
* Liabilities FAS 87 Projected Unit Credit Method
* Assets Fair Market Value
-------------------------------------------------------------------------------------------------------------------------
Economic Assumptions:
* Price Inflation (RPI) Discount Rate less 4.25%
* Discount Rate Gross Redemption Yield on British
Government Bonds as measured by the
Financial Times index for Fixed Interest, 20
year, medium coupon bonds as of the last day
of the month preceding Closing, plus 0.75%
rounded to nearest 0.25%.
* SALARY INCREASES RPI + 0.5%
* REVALUATION OF NON-GMP BENEFITS IN
DEFERMENT RPI - 0.25%, Maximum 4.5%
* POST-RETIREMENT PENSION INCREASES:
-- PRE-88GMP Nil
-- POST-88 GMP RPI - 0.75%, Maximum 2.75%
-- CORE PRE-97 NON-GMP 3.00%
-- CORE POST-97 NON-GMP RPI - 0.5%, Maximum 4.25%
-- MONEY MATCH RPI - 0.5%, Maximum 4.25%
* RETURN ON ASSETS 9.50%
* RETURN ON GUARANTEED INTEREST FUND RPI + 3.0%
* BUILDING SOCIETY RETURN RPI + 2.0%
* LOWER EARNINGS LIMIT INCREASES RPI
-------------------------------------------------------------------------------------------------------------------------
Demographic Assumptions: A67/70 rated down 3 years for women
* Mortality PA90 rated down one year
-- Pre-retirement 10% of active male members retire at each
-- Post-retirement age from 60 to 64. All other active male
* Retirement members retire at age 65 except for certain
male members who have a normal retirement
age of 62 and who are assumed to retire at
that age. All active female members retire at
age 60.
All deferred members are assumed to retire at
their Normal Retirement Age except that
allowance has been made for retirement at age
60 in respect of:
124
2
-------------------------------------------------------------------------------------------------------------------------
Valuation Approach Ongoing Concern
-------------------------------------------------------------------------------------------------------------------------
* Service of male members between May
17, 1990, and December 31, 1991; and
* Service of female members prior to
January 1, 1992.
Sample rates are set out below:
* Withdrawal Age Rate per 1,000 lives
--- --------------------
25 150
30 150
35 120
40 90
45 50
50 Nil
None
* Disability 90% of members are assumed to be married at
* Family Statistics retirement and on death before retirement.
Husbands are assumed to be three years older
than their wives.
-------------------------------------------------------------------------------------------------------------------------
* Expenses None
-------------------------------------------------------------------------------------------------------------------------
* Market Adjustments: None
-------------------------------------------------------------------------------------------------------------------------
125
2
LIST OF SCHEDULES, EXHIBITS AND ANNEXES TO AGREEMENT
SCHEDULES
---------
Schedule 2.3(a) Non-Acquired Assets
Schedule 2.3(e) Excluded Information Systems
Schedule 2.5(e) Other Excluded Liabilities
Schedule 5.2(a) Working Capital Calculation
Schedule 6.3 Decorative Products Company Stock
Schedule 6.4 Governmental Approvals; Consents
Schedule 6.5 Financial Statements
Schedule 6.5(a) Exceptions to GAAP (Interim Financial Statements)
Schedule 6.6 Changes Since December 31, 1996
Schedule 6.7(a) Real and Personal Property Liens
Schedule 6.7(b) Owned and Leased Real Property
Schedule 6.8 Contracts
Schedule 6.9 Legal Proceedings
Schedule 6.10(a) Patent Rights
Schedule 6.10(b) Trademark Rights
Schedule 6.10(c) Copyright Rights
Schedule 6.11 Insurance
Schedule 6.12(a) Tax Returns
Schedule 6.12(b) Tax Audits
Schedule 6.12(c) Tax Years Closed
Schedule 6.12(e) Tax Sharing Agreements
Schedule 6.13(a) Employment Matters
Schedule 6.13(b)(i) Material Benefit Plans
Schedule 6.13(b)(ii)-1 Material Benefit in Violation of ERISA
Schedule 6.13(b)(ii)-2 Post Retirement Benefits
Schedule 6.13(b)(iii) Tax Qualification Letters
Schedule 6.13(b)(v) Change in Control Arrangements
Schedule 6.13(b)(vi) International Pension Plan Calculations
Schedule 6.13(c) Employment Contracts
Schedule 6.14 Compliance with Laws
Schedule 6.16 Environmental Matters
Schedule 6.17 Entire Business
Schedule 6.18 Millennium Compliance
Schedule 6.19 Affiliate Agreements and Liabilities
Schedule 6.20 Labor Relations
Schedule 6.21 Product Liability
Schedule 6.22 Undisclosed Liabilities
Schedule 7.3 Buyer Governmental Approvals; Consents
Schedule 7.6 Commitment Letters
Schedule 8.1 Operation of Business
Schedule 8.1(e) Capital Expenditures
126
2
Schedule 8.6(b) Intercompany Trademark Licensing Agreements
Schedule 8.7(c) Collective Bargaining Agreements
Schedule 8.7(h) International Benefit Plans
Schedule 8.7(j) Post-Retirement Benefits
Schedule 8.7(l) Vacation Policies
Schedule 8.7(m) Severance Benefits
Schedule 8.10 Intercompany Transactions
Schedule 8.12 Guarantees
Schedule 8.14 BLC Assets
Schedule 12.2 Exceptions to Termination of Tax Agreements
Schedule 15.13 Officers and Employees with Knowledge
ANNEXES
-------
ANNEX A -Terms of Stockholders' Agreement
EXHIBITS
--------
EXHIBIT 1 - Purchase Price
EXHIBIT A - Form of Trademark License Agreement
EXHIBIT B - Form of Services Agreement
EXHIBIT C - Opinion of Xxxxx, Day, Xxxxxx & Xxxxx -Matters
to be Addressed
EXHIBIT D - Opinion of General Counsel of Xxxxxx - Matters
to be Addressed
EXHIBIT E - Form of Xxxx of Sale
EXHIBIT F - Form of Assumption Agreement
127
INDEX OF DEFINED TERMS
Page
----
Acquired Assets ............................................................................3
Affiliate ................................................................................112
Aggregate Consideration ...................................................................19
Agreement ..................................................................................1
Annual Financial Statements ...........................................................28, 30
Antitrust Division ........................................................................60
Asset Transfer .............................................................................2
Assets .....................................................................................3
BDH One ....................................................................................1
BDPH .......................................................................................1
BDPH Capital Stock .........................................................................2
BDPH Common Stock ..........................................................................2
BDPH Management ............................................................................1
BDPH Preferred Stock .......................................................................2
BDPH U.S. Savings Plan ....................................................................67
Benefit Plans .............................................................................41
BLC Assets ................................................................................75
BLC Buy-Out Amount ........................................................................75
BLC Master Lease ..........................................................................75
Books and Records .........................................................................62
Xxxxxx .....................................................................................1
Xxxxxx Affiliates .........................................................................72
Xxxxxx Home License Agreement .............................................................64
Xxxxxx Losses .............................................................................92
Xxxxxx Objection ..........................................................................22
Xxxxxx Transaction Fees ....................................................................1
Xxxxxx U.S. Pension Plan ..................................................................66
Business ...................................................................................1
Business Employees ........................................................................41
Canada Benefit Plans ......................................................................41
Canada Business Employees .................................................................41
Cash Merger Consideration .................................................................14
Certificate of Merger .....................................................................11
Citicorp ..................................................................................75
Closing ...................................................................................87
Closing Balance Sheet .....................................................................21
Closing Calculation .......................................................................22
Closing Date ..............................................................................87
Commitment Letter .........................................................................54
Common Stock Merger Consideration .........................................................13
Computer Systems ..........................................................................47
Confidentiality Letter ....................................................................59
Contracts .................................................................................34
Copyright Rights ..........................................................................38
De Minimis Holdings Losses ................................................................91
DGCL .......................................................................................2
128
Page
----
Disbursing Account ........................................................................16
Disclosed Contracts .......................................................................34
Dissenting Shares .........................................................................15
Effective Time of the Merger ..............................................................11
ERISA .....................................................................................41
Exchange Act ..............................................................................25
Excluded Assets ............................................................................6
Excluded Liabilities .......................................................................9
Facilities ................................................................................32
Facility ..................................................................................32
Financial Statements ......................................................................29
Financing .................................................................................54
First Party ...............................................................................99
Five-Year Reps ............................................................................51
Foreign Governmental Consents .............................................................60
FTC .......................................................................................60
GAAP ......................................................................................21
Guarantees ................................................................................73
Xxxx-Xxxxx Act ............................................................................59
Holdings ...................................................................................1
Holdings Losses ...........................................................................89
Holdings Material Adverse Effect...........................................................51
Holdings Tax Act ..........................................................................98
Holdings Threshold ........................................................................94
Holdings' Accountants .....................................................................21
Indemnity Claim ...........................................................................95
Insurance .................................................................................38
Interim Balance Sheet .....................................................................28
Interim Financial Statements ..............................................................29
International Benefit Plans ...............................................................68
Leased Real Property ......................................................................32
Liens .....................................................................................27
Long-Term Reps ............................................................................55
Losses ....................................................................................92
Machinery ..................................................................................4
Material ..................................................................................49
Material Adverse Effect ...................................................................25
Merger .....................................................................................2
Merger Consideration ......................................................................14
Neutral Accounting Firm ...................................................................23
Option .....................................................................................1
Owned Real Property .......................................................................32
Packaging Materials .......................................................................63
Patent Rights .............................................................................35
Per Share Consideration ....................................................................1
Per Share Consideration Formula ............................................................1
129
Page
----
Permits ...................................................................................44
Permitted Liens ...........................................................................32
Person ...................................................................................112
Pre-Closing Tax Period ....................................................................99
Preferred Stock Merger Consideration.......................................................14
Product Claim .............................................................................49
Products ...................................................................................1
Real Property .............................................................................32
Recalls ...................................................................................49
Receivables ................................................................................5
Required Consents .........................................................................81
Retained Shares ...........................................................................14
Second Party ..............................................................................99
Securities Act ............................................................................54
Services Agreement ........................................................................76
Stockholders ...............................................................................1
Stockholders Agreement ....................................................................78
Subsidiaries .............................................................................112
Subsidiary ...............................................................................112
Tax Claim .................................................................................99
Tax Returns ...............................................................................39
Taxes .....................................................................................39
Termination Agreement .....................................................................84
The best knowledge of ....................................................................112
The knowledge of .........................................................................112
Threshold .................................................................................91
Trademark .................................................................................63
Trademark Rights ..........................................................................37
Transaction Documents .....................................................................25
U.K. Benefit Plans ........................................................................41
U.K. Business Employees ...................................................................41
U.S Business Employees ....................................................................41
U.S. Benefit Plans ........................................................................41
U.S. Savings Plans ........................................................................66
U.S. Savings Total Transfer Amount ........................................................67
U.S. Savings Transfer Date ................................................................67
Vacation Policy ...........................................................................70
WARN ......................................................................................71
130
TABLE OF CONTENTS
Page
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1. [Intentionally Omitted]................................................................................ 3
2. OWNERSHIP OF ASSETS AND ASSUMPTION OF LIABILITIES...................................................... 3
2.1 Transfer of Assets........................................................................... 3
2.2 Acquired Assets.............................................................................. 3
2.3 Excluded Assets.............................................................................. 6
2.4 Assumed Liabilities.......................................................................... 8
2.5 Excluded Liabilities......................................................................... 9
2.6 Certain Definitions.......................................................................... 10
3. THE MERGER............................................................................................. 11
3.1 The Merger................................................................................... 11
3.2 Effective Time of the Merger................................................................. 11
3.3 Effects of the Merger........................................................................ 12
3.4 Certificate of Incorporation; By-Laws; Purposes.............................................. 12
3.5 Directors.................................................................................... 12
3.6 Officers..................................................................................... 13
4. EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF BDPH AND MERGERCO............................................................................. 13
4.1 Effect on Capital Stock...................................................................... 13
4.2 Exchange of Certificates..................................................................... 16
5. AGGREGATE CONSIDERATION AND ADJUSTMENTS................................................................ 18
5.1 (a) Payment of the Aggregate Consideration.................................................. 18
5.2 Working Capital Adjustment................................................................... 20
5.3 Currency Exchange Values..................................................................... 24
6. REPRESENTATIONS AND WARRANTIES OF XXXXXX............................................................... 24
6.1 Corporate Existence.......................................................................... 24
6.2 Corporate Authority; Shareholder Authorization............................................... 25
6.3 Decorative Products Company Stock............................................................ 27
6.4 Governmental Approvals; Consents............................................................. 27
6.5 Financial Statements......................................................................... 28
6.6 Absence of Changes........................................................................... 30
6.7 Real and Personal Properties................................................................. 31
6.8 Contracts.................................................................................... 33
6.9 Litigation, Agencies......................................................................... 35
6.10 Intangible Property Rights................................................................... 35
6.11 Insurance.................................................................................... 38
6.12 Tax Matters.................................................................................. 38
6.13 Employment and Benefits...................................................................... 40
6.14 Compliance with Laws......................................................................... 43
6.15 Finders; Brokers............................................................................. 44
i
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Page
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6.16 Environmental Matters........................................................................ 45
6.17 Entire Business.............................................................................. 47
6.18 Millennium Compliance........................................................................ 47
6.19 Affiliate Agreements and Liabilities......................................................... 48
6.20 Labor Relations.............................................................................. 48
6.21 Product Liability............................................................................ 49
6.22 No Undisclosed Liabilities................................................................... 50
6.23 BDPH Preferred Stock......................................................................... 50
6.24 No Other Representations or Warranties....................................................... 50
6.25 Expiration of Representations and Warranties................................................. 51
7. REPRESENTATIONS OF MERGERCO............................................................................ 51
7.1 Corporate Existence.......................................................................... 51
7.2 Corporate Authority; Shareholder Authorization............................................... 52
7.3 Governmental Approvals; Consents............................................................. 53
7.4 Finders; Brokers............................................................................. 53
7.5 Purchase for Investment...................................................................... 54
7.6 Financial Capacity........................................................................... 54
7.7 [Intentionally omitted]...................................................................... 54
7.8 No Other Representations or Warranties....................................................... 54
7.9 Expiration of Representations and Warranties................................................. 54
8. AGREEMENTS OF MERGERCO AND XXXXXX...................................................................... 55
8.1 Operation of the Business.................................................................... 55
8.2 Investigation of Business.................................................................... 58
8.3 Mutual Cooperation; No Inconsistent Action................................................... 59
8.4 Public Disclosures........................................................................... 61
8.5 Access to Records and Personnel.............................................................. 62
8.6 Use of Materials Bearing the "Xxxxxx" Trademark.............................................. 63
8.7 Employee Relations and Benefits ............................................................. 64
8.8 Intentionally Omitted........................................................................ 72
8.9 "As Is" Condition............................................................................ 72
8.10 Intercompany Transactions.................................................................... 72
8.11 Non-Solicitation............................................................................. 73
8.12 Guarantees................................................................................... 73
8.13 Financing.................................................................................... 73
8.14 Buy-Out of BLC Assets........................................................................ 75
8.15 Services Agreement........................................................................... 75
8.16 Nondisclosure; Noncompetition................................................................ 76
8.17 PVC Contract................................................................................. 78
8.18 Stockholders Agreement....................................................................... 78
8.19 Insurance Covenant........................................................................... 79
8.20 Certain Purchasers........................................................................... 80
9. CONDITIONS............................................................................................. 81
9.1 Conditions Precedent to Obligations of MergerCo and Xxxxxx................................... 81
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Page
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9.2 Conditions Precedent to Obligation of Xxxxxx................................................. 82
9.3 Conditions Precedent to Obligation of MergerCo............................................... 83
10. CLOSING................................................................................................ 87
10.1 Generally.................................................................................... 87
10.2 MergerCo Deliveries.......................................................................... 88
10.3 Xxxxxx Deliveries............................................................................ 88
11. INDEMNIFICATION........................................................................................ 89
11.1 Indemnification by Xxxxxx.................................................................... 89
11.2 Indemnification by BDPH...................................................................... 92
11.3 Indemnification Calculations................................................................. 95
12. TAX MATTERS............................................................................................ 98
12.1 Tax Indemnification.......................................................................... 98
12.2 Other Tax Matters............................................................................102
13. TERMINATION............................................................................................103
13.1 Termination Events...........................................................................103
13.2 Effect of Termination........................................................................104
14. ALTERNATIVE DISPUTE RESOLUTION.........................................................................105
15. MISCELLANEOUS AGREEMENTS OF THE PARTIES................................................................105
15.1 Notices......................................................................................105
15.2 Bulk Transfers...............................................................................106
15.3 Transaction Taxes............................................................................107
15.4 Further Assurances; Asset Returns............................................................107
15.5 Other Covenants..............................................................................107
15.6 Expenses.....................................................................................108
15.7 Non-Assignability............................................................................108
15.8 Amendment; Waiver............................................................................109
15.9 Schedules and Exhibits.......................................................................110
15.10 Third Parties................................................................................110
15.11 Governing Law................................................................................111
15.12 Consent to Jurisdiction......................................................................111
15.13 Certain Definitions..........................................................................111
15.14 Construction.................................................................................113
15.15 Specific Performance.........................................................................113
15.16 Conveyance and Transfer Agreement............................................................113
15.17 Entire Agreement.............................................................................114
15.18 Section Headings; Table of Contents..........................................................114
15.19 Severability.................................................................................114
15.20 Counterparts.................................................................................114
iii
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================================================================================
RECAPITALIZATION AGREEMENT
among
XXXXXX DECORATIVE PRODUCTS HOLDINGS, INC.,
BDPI HOLDINGS CORPORATION
and
XXXXXX, INC.
Dated as of October 14, 1997
================================================================================
134
SCHEDULE 8.7(h)
INTERNATIONAL BENEFIT PLANS
CANADA
I. Canadian Defined Benefit Plans. (i) The Xxxxxx Company, Limited
Employees Retirement Income Plan ("ERIP").
(A) As of the Closing Date, but in any event, within
ninety (90) days thereof, MergerCo shall establish and register with the
applicable regulatory authorities, or shall otherwise cause to be provided, a
pension plan (the "MergerCo' Canadian DB Plan") for all those Business Employees
who are accruing benefits under ERIP prior to the Closing Date. Each such
Business Employee shall be enrolled as a member of Buyer's Canadian DB Plan
effective on the Closing Date and shall cease to actively participate in and
accrue benefits under ERIP (all such Business Employees are herein called the
"Canadian ERIP Transferred Participants"). MergerCo shall also cause to be
provided a trust fund or other funding arrangement for Buyer's Canadian DB Plan.
Buyer's Canadian DB Plan shall provide that for the purposes of vesting and all
other purposes required by applicable laws, service by Canadian Transferred
Participants recognized under ERIP shall be recognized as continuous unbroken
service for purposes of Buyer's Canadian DB Plan. MergerCo agrees to provide the
Xxxxxx Companies with such documentation and information as it may reasonably
require to satisfy itself that Buyer's Canadian DB Plan and the trust fund or
other funding arrangement therefore has been properly established, amended or
otherwise provided, as applicable, and registered in accordance with this
provision.
(B) Buyer's Canadian DB Plan shall assume the labilities
under ERIP relating to the Canadian ERIP Transferred Participants together with
the liabilities under ERIP relating to all persons who were employees of the
Business (and their spouses, dependents and estates) and who, immediately prior
to the Closing Date, have an immediate or future entitlement to benefits under
ERIP as retired or deferred vested members thereof (all assumed liabilities
under this clause (B) being referred to as the "Canadian ERIP Transferred
Liabilities").
(C) Immediately following the Closing Date, but in any
event within ninety (90) days thereof, Xxxxxx shall cause the actuary for ERIP
to calculate, as of the Closing Date, the Canadian ERIP Transferred Liabilities
determined on the higher of a going concern or solvency basis using the
actuarial assumptions and methods set out in Schedules 8.7(h)-1 and 8.7(h)-2. At
the same time, Xxxxxx shall cause the actuary for ERIP to calculate, as of the
Closing Date, on the same basis but using employee data from the immediately
prior fiscal year end if Xxxxxx'x actuary determines there has been no
significant change therein, the actuarial present value of all the ERIP
liabilities which are not being assumed by MergerCo determined on the higher of
a going concern or solvency basis (the "Canadian ERIP Retained Liabilities")
(the sum of the Canadian ERIP Transferred Liabilities and the Canadian ERIP
Retained Liabilities so calculated being referred to as the "Canadian ERIP Total
Liabilities"). Xxxxxx shall also cause to be determined as at the Closing Date,
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the market value of the investments held in the trust fund for ERIP together
with all other assets including, without limitation, any cash balances and
accrued or receivable amounts in respect of ERIP (collectively the ("ERIP Fund
Value").
(D) Forthwith upon determination of the Canadian ERIP
Transferred Liabilities, Canadian ERIP Retained Liabilities, Canadian ERIP Total
Liabilities and ERIP Fund Value, Xxxxxx shall report or cause its actuary to
report such determinations to MergerCo and its actuary and furnish to each of
them such other information and data as may be reasonably requested by them and
afford them a period of thirty (30) days (or such longer period as is mutually
agreed) to review and indicate their approval of same. If Xxxxxx and MergerCo
cannot agree on such determinations such determinations shall be referred to and
finally determined by such independent actuary as the parties may agree, using
the actuarial assumptions and methods set out in Schedule 8.7(h)-1 and the costs
and expenses of such independent actuary shall be borne equally by Xxxxxx and
MergerCo.
(E) Forthwith after such determinations have been made,
Xxxxxx shall cause the actuary for ERIP to determine the portion of the ERIP
Fund Value that the Canadian ERIP Transferred Liabilities is of the Canadian
ERIP Total Liabilities (such portion is herein called the "Canadian ERIP
Transfer Amount"). Upon determination of the Canadian ERIP Transfer Amount,
Xxxxxx shall forthwith file with the regulatory authorities all documents and
information required to effect the transfer of the Canadian ERIP Transfer Amount
as herein provided. Notwithstanding the foregoing, if the amount approved by the
regulatory authorities for transfer from ERIP to Buyer's Canadian DB Plan
pursuant to this Agreement is different from the Canadian ERIP Transfer Amount,
the Canadian ERIP Transfer Amount shall be deemed for all purposes of this
Agreement to be the amount so approved by the regulatory authorities. Written
confirmation of any and all required regulatory approvals shall be forwarded by
each party to the other forthwith upon receipt.
(F) Upon receipt by Xxxxxx and MergerCo of such regulatory
approvals as may be required, Xxxxxx shall cause the funding agent of ERIP to
transfer to the funding agent of Buyer's Canadian DB Plan cash or other assets
as selected by Xxxxxx equal to the Canadian Transfer Amount, adjusted by the
fund rate of return earned by ERIP from the Closing Date to the date of such
transfer (the "Canadian ERIP Transfer Date").
(G) From the Closing Date to the Canadian ERIP Transfer
Date, Xxxxxx on behalf of MergerCo, shall cause the funding agent of ERIP to pay
and record as required, all benefit payments for service accrued prior to the
Closing Date relating to the Canadian ERIP Transferred Participants and others
entitled to payments from ERIP. The amount of the aforesaid payments and any
applicable administrative expenses shall be deducted from the amount required to
be transferred hereunder. During this period, Xxxxxx will calculate, on behalf
of MergerCo, all benefits and other disbursements payable under ERIP in respect
of the Canadian ERIP Transferred Liabilities and shall be entitled to deduct
from the Canadian ERIP Transfer Amount its reasonable administrative costs for
so doing.
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(H) MergerCo shall not take any steps which would result
in a wind-up of ERIP in whole or in part.
(ii) The Xxxxxx Company, Limited Pension Plan for Salaried
Employees (the "Quebec Plan").
(A) As of the Closing Date, but in any event, within
ninety (90) days thereof, MergerCo shall establish and register with the
applicable regulatory authorities, or shall otherwise cause to be provided, a
pension plan (the "Buyer's Quebec DB Plan") for all those Business Employees who
are accruing benefits under the Quebec Plan prior to the Closing Date. If the
MergerCo determines that a separate Quebec-registered plan is not required to
meet necessary regulatory requirements, it is understood that the Buyer's Quebec
DB Plan might be one and the same as the Buyer's Canadian DB Plan, referred to
above, and need not be registered in Quebec. Each of such Business Employees
shall be enrolled as a member of Buyer's Quebec DB Plan effective on the Closing
Date and shall cease to actively participate in and accrue benefits under the
Quebec Plan (all such Business Employees are herein called the "Quebec
Transferred Participants"). MergerCo shall also cause to be provided a trust
fund or other funding arrangement for Buyer's Quebec DB Plan. Buyer's Quebec DB
Plan shall provide that for the purposes of vesting and all other purposes
required by applicable laws, service by Quebec Transferred Participants
recognized under the Quebec Plan shall be recognized as continuous unbroken
service for purposes of Buyer's Quebec DB Plan. MergerCo agrees to provide
Xxxxxx with such documentation and information as it may reasonably require to
satisfy itself that Buyer's Quebec DB Plan and the trust fund or other funding
arrangement therefore has been properly established, amended or otherwise
provided, as applicable, and registered in accordance with this provision.
(B) Buyer's Quebec DB Plan shall assume the liabilities
under the Quebec Plan relating to the Quebec Transferred Participants together
with the liabilities under the Quebec Plan relating to all persons who were
employees of the Business (and their spouses, dependents and estates) and who,
immediately prior to the Closing Date, have an immediate or future entitlement
to benefits under the Quebec Plan as retired or deferred vested members thereof
(all assumed liabilities under this clause (B) being referred to as the "Quebec
Transferred Going Concern Liabilities" if determined using the going concern
assumptions and the "Quebec Transferred Solvency Liabilities" if determined
using the solvency assumptions using in either case the actuarial assumptions
and methods set out in Schedules 8.7(h)-1 and 8.7(h)-2.
(C) Immediately following the Closing Date, but in any
event within ninety (90) days thereof, Xxxxxx shall cause the actuary for the
Quebec Plan to calculate, as of the Closing Date, the Quebec Transferred Going
Concern Liabilities and the Quebec Transferred Solvency Liabilities. At the same
time, Xxxxxx shall cause the actuary for the Quebec Plan to calculate, as of the
Closing Date, on the same basis but using employee data from the immediately
prior fiscal year end if Xxxxxx'x actuary determines there has been no
significant change therein, the actuarial present value of all the Quebec Plan
liabilities which are not being assumed by MergerCo determined on a going
concern basis (the "Quebec
137
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Retained Liabilities") the sum of the Quebec Going Concern Transferred
Liabilities and the Quebec Retained Liabilities so calculated being referred to
as the "Quebec Total Liabilities"). Xxxxxx shall also cause to be determined as
at the Closing Date, the market value of the investments held in the trust fund
for the Quebec Plan together with all other assets including, without
limitation, any cash balances and accrued or receivable amounts in respect of
the Quebec Plan (collectively the ("Quebec Fund Value").
(D) Forthwith upon determination of the Quebec Transferred
Liabilities, Quebec Transferred Solvency Liabilities, Quebec Retained
Liabilities, Quebec Total Liabilities and Quebec Fund Value, Xxxxxx shall report
or cause its actuary to report such determinations to MergerCo and its actuary
and furnish to each of them such other information and data as may be reasonably
requested by them and afford them a period of thirty (30) days (or such longer
period as is mutually agreed) to review and indicate their approval of same. If
Xxxxxx and MergerCo cannot agree on such determinations such determinations
shall be referred to and finally determined by such independent actuary as the
parties may agree, using the actuarial assumptions and methods set out in
Schedule 8.7(h)-1 and the costs and expenses of such independent actuary shall
be borne equally by Xxxxxx and MergerCo.
(E) Forthwith after such determinations have been made,
Xxxxxx shall cause the actuary for the Quebec Plan to determine which amount is
greater (1) the portion of the Quebec Fund Value that the Quebec Transferred
Liabilities is of the Quebec Total Liabilities or (2) the Quebec Transferred
Solvency Liabilities. Such greater amount is herein called the "Quebec Transfer
Amount". Upon determination of the Quebec Transfer Amount, Xxxxxx shall
forthwith file with the regulatory authorities all documents and information
required to effect the transfer of the Quebec Transfer Amount as herein
provided. Notwithstanding the foregoing, if the amount approved by the
regulatory authorities for transfer from the Quebec Plan to Buyer's Quebec DB
Plan pursuant to this Agreement is different from the Quebec Transfer Amount,
the Quebec Transfer Amount shall be deemed for all purposes of this Agreement to
be the amount so approved by the regulatory authorities. Written confirmation of
any and all required regulatory approvals shall be forwarded by each party to
the other forthwith upon receipt.
(F) Upon receipt by Xxxxxx and MergerCo of such regulatory
approvals as may be required, Xxxxxx shall cause the funding agent of the Quebec
Plan to transfer to the funding agent of Buyer's Quebec DB Plan cash or other
assets as selected by Xxxxxx equal to the Quebec Transfer Amount, adjusted by
the fund rate of return earned by the Quebec Plan from the Closing Date to the
date of such transfer (the "Quebec Transfer Date").
(G) From the Closing Date to the Quebec Transfer Date,
seller on behalf of MergerCo, shall cause the funding agent of the Quebec Plan
to pay and record as required, all benefit payments for service accrued prior to
the Closing Date relating to the Quebec Transferred Participants and others
entitled to payments from the Quebec Plan. The amount of the aforesaid payments
and any applicable administrative expenses shall be deducted from the amount
required to be transferred hereunder. During this period, Xxxxxx will calculate,
on
138
5
behalf of MergerCo, all benefits and other disbursements payable under the
Quebec Plan in respect of the Quebec Transferred Liabilities and shall be
entitled to deduct from the Quebec Transfer Amount its reasonable administrative
costs for so doing.
(H) MergerCo shall not take any steps which would result
in a wind-up of the Quebec Plan in whole or in part.
(iii) The Retirement Plan for Hourly Employees of
Sunworthy Wallcovering (the "Sunworthy Plan"):
(A) On and after the Closing Date and effective as of the
Closing Date, the Xxxxxx hereby assigns to MergerCo, and MergerCo hereby assumes
from the Xxxxxx, all liability and responsibility under and pursuant to the
Sunworthy Plan so that the MergerCo at all times after the Closing Date shall be
the successor Company thereunder; provided, however, that the Buyer's
administrative responsibility to make the actual benefit payments to
participants shall become effective only upon the assignment of sponsorship of
the Sunworthy Pension Trust (as herein defined) to the MergerCo. The Xxxxxx and
MergerCo will execute any additional documents which may be necessary, in the
reasonable opinion of Xxxxxx and MergerCo, to effect this assignment as soon as
practicable on or after the Closing Date.
(B) On the Closing Date, the Xxxxxx hereby assigns to
MergerCo, and MergerCo hereby assumes from Xxxxxx, all rights, duties and
obligations of Xxxxxx pursuant to The Xxxxxx Company, Limited Sunworthy
Participating Trust Agreement dated August 15, 1988, (the "Sunworthy Pension
Trust"). Xxxxxx and MergerCo shall execute any additional documents which may be
necessary, in the reasonable opinion of Xxxxxx and MergerCo, to effect the
transfer of the sponsorship of the Sunworthy Pension Trust as soon as
practicable on or after the Closing Date.
(C) Prior to the Closing Date Xxxxxx shall direct the
Trustee of the Sunworthy Pension Trust to redeem all of the units in the Xxxxxx
Company, Limited Master Trust Agreement dated August 15, 1988, owned by
Sunworthy Pension Trust in cash or securities as determined by Xxxxxx.
(D) Within sixty (60) consecutive calendar days next
following the Closing Date and effective as of the Closing Date, Xxxxxx shall
cause:
(1) The Sunworthy Plan to be amended as may be
necessary to permit such plan to be assumed and adopted by MergerCo and to
permit MergerCo to be substituted in place of Xxxxxx on and after the Closing
Date as the "Company" thereunder, and shall thereafter provide MergerCo with a
copy of the Sunworthy Plan as so amended; and
(2) Sponsorship of the Sunworthy Pension Trust shall
be assigned to MergerCo as a successor employer to Xxxxxx which shall permit
MergerCo to assume and adopt the rights, duties, and obligations of the Xxxxxx.
Within a period of forty-five (45) days following receipt by MergerCo of the
amended Sunworthy Plan, MergerCo shall duly
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6
execute and adopt the Sunworthy Plan amendment referred to above, and shall
adopt such sponsorship of trust agreement. Xxxxxx shall pay into the Sunworthy
Pension Trust any contributions in respect of current service accrued but not
yet paid in respect of all periods of operation of the Sunworthy Plan prior to
the Closing Date, as determined by Xxxxxx in accordance with Xxxxxx'x current
actuarial and accounting practices and the applicable provisions of the Pension
Benefits Act of Ontario. In addition, Xxxxxx shall pay any contributions
relating to any unfunded liability or solvency deficiency of the Sunworthy Plan,
which were due and payable prior to the Closing Date but which were not paid,
but Xxxxxx shall not be obligated to make any additional contributions to the
Sunworthy Pension Trust by reason of any unfunded actuarial liability or
solvency deficiency under the Sunworthy Plan.
(E) As soon as practicable after the Closing Date, and in
any event within sixty (60) days, Xxxxxx shall deliver to MergerCo such copies
of Xxxxxx'x applicable records concerning the participants and such copies of
any other applicable records of Xxxxxx regarding the Sunworthy Plan and the
Sunworthy Pension Trust, as MergerCo may reasonably require and request, to the
extent that such information is not then already in the possession of MergerCo
or any of its representatives.
(F) Xxxxxx shall be responsible for satisfying any and all
governmental reporting and/or disclosure requirements applicable to the
Sunworthy Plan and or the Sunworthy Pension Trust with respect to plan years
ending prior to the Closing Date, and MergerCo shall be responsible for
satisfying any and all such governmental reporting and/or disclosure
requirements applicable to the Sunworthy Plan and/or the Sunworthy Pension Trust
with respect to plan years ending on or after the Closing Date.
(G) As and from the Closing Date, MergerCo shall defend,
indemnify, and hold Xxxxxx harmless from and against any and all third party
suits, demands, and/or claims which may arise under, or on account of, or in
connection with, the Sunworthy Plan and the Sunworthy Pension Trust, except to
the extent that the same shall arise form any breach of any representation or
warranty on the part of the Xxxxxx.
II. Canadian Defined Contribution Plans. (i) Xxxxxx sponsors
the following Savings Plans in which Canadian Business Employees participate:
The Xxxxxx Company, Limited Retirement Savings Plan for Salaried
Employees, which is a consolidation of The Xxxxxx Company, Limited Group
Retirement Savings Plan for Salaried Employees; The Xxxxxx Company, Limited
Deferred Profit Sharing Plan for Salaried Employees; and The Xxxxxx Company,
Limited Employees Personal Savings Plan for Salaried Employees.
The Xxxxxx Company, Limited Retirement Savings Plan for Hourly
Employees, which is a consolidation of The Xxxxxx Company, Limited Group
Retirement Savings Plan for Hourly Employees; The Xxxxxx Company, Limited
Deferred Profit Sharing Plan for Hourly Employees; and The Xxxxxx Company,
Limited Employees Personal Savings Plan for Hourly Employees.
140
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The Xxxxxx Company, Limited Retirement Savings Plan for Union
Employees, which is a consolidation of The Xxxxxx Company, Limited Group
Retirement Savings Plan for Union Employees; The Xxxxxx Company, Limited
Deferred Profit Sharing Plan for Union Employees; and The Xxxxxx Company,
Limited Employees Personal Savings Plan for Union Employees.
(All of the above savings plans being hereinafter collectively referred
to as the "Canadian Savings Plans").
(ii) As of the Closing Date, each Canadian Business Employee
who is accruing benefits under any of the Canadian Savings Plans immediately
prior to the Closing Date will cease to participate in and accrue benefits
thereunder. Xxxxxx will cause the funding agents of the Canadian Savings Plans
to transfer out of the Canadian Savings Plans cash and/or assets in kind as
determined by Xxxxxx equal to the value of each account maintained for the
Canadian Business Employees and the plans shall be amended to provide that all
transferred employer contributions shall be fully vested.
(iii) Subject to the requirement of MergerCo to comply with
the terms of any collective agreements, from the Closing Date, for service
accrued from and after the Closing Date, MergerCo will provide to the Canadian
Business Employees employed by MergerCo comparable benefits to those benefits
the Canadian Business Employees were receiving under the Canadian Savings Plans
immediately prior to the Closing Date, recognizing service under the Canadian
Savings Plans as continuous unbroken service for vesting and all other purposes
required by applicable laws.
UNITED KINGDOM
I. United Kingdom Pension Plan. (a) Definitions. In this
Schedule 8.7(h) the following words and expressions shall unless the context
otherwise requires have the meanings set opposite them:
"Actuarial Assumptions" - the actuarial methods and assumptions set out
in Schedule 8.7(h)-3.
"Xxxxxx'x Actuary" - Xxxxx Xxxxx of Towers Xxxxxx or such other actuary
as Xxxxxx may for the time being appoint for the purposes of this Schedule
8.7(h).
"Buyer's Actuary" - [ ] or such other actuary as MergerCo
may for the time being appoint for the purposes of this Schedule 8.7(h).
"Xxxxxx Chemical" - Xxxxxx Chemical UK Limited (3104655).
"Xxxxxx Scheme" - the retirement benefits scheme known as The Xxxxxx UK
Pension Plan which is governed by a Deed dated 3 October 1995.
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8
"Interim Period" - the period commencing on Closing and ending on the
UK Transfer Date.
"New Scheme" - the retirement benefits scheme or personal pension
scheme nominated, established or to be established by or at the instance of
Xxxxxx Chemical or to which Xxxxxx Chemical has adhered in accordance with
paragraph (ii) of this Schedule 8.7(h).
"Relevant Members" - those employees of Xxxxxx Chemical and Xxxxxx
Foods who are (A) active members of the Xxxxxx Scheme immediately before Closing
(whether or not they cease to be active members before the U.K. Transfer Date)
or (B) those persons who were formerly employed by Xxxxxx Chemical and Xxxxxx
Foods (and in both cases their dependents) and who are now either (X) entitled
to a deferred pension payable from the Xxxxxx Scheme or (Y) are in receipt of a
pension from the Xxxxxx Scheme;
"U.K. Payment Date"- the date which is seven days after the date on
which the U.K. Transfer Amount is either agreed in accordance with paragraph
(ii) of this Schedule 8.7(h) or determined by the Independent Actuary in
accordance with paragraph (vii) of this Schedule 8.7(h) or, if later, the date
which is seven days after receipt by the trustees of the Xxxxxx Scheme of the
approval (if required) of the Revenue Authorities to the payment by the trustees
of the Xxxxxx Scheme of the U.K. Transfer Amount to the trustees of the New
Scheme (which approval MergerCo shall use its best endeavors to obtain or be
obtained as soon as practicable after the date of this Agreement).
"U.K. Transfer Amount" - such amount as shall be calculated by: (A)
determining at the U.K. Transfer Date the ratio of the total assets of the
Xxxxxx Scheme (less the value of the assets of the Xxxxxx Scheme which relate to
money purchase benefits) to the total liabilities of the Xxxxxx Scheme (less the
value of the liabilities of the Xxxxxx Scheme which relate to money purchase
benefits), such liabilities being calculated in accordance with the Actuarial
Assumptions; (B) applying the ratio calculated in (A) to the value of that part
of the Unadjusted U.K. Transfer Amount which is not money purchase in nature;
(C) adjusting the result by the investment return between the U.K. Transfer Date
and the U.K. Payment Date on the assets of the Xxxxxx Scheme which relate to
defined benefits under the Xxxxxx Scheme; (D) adding to (C) the value of that
part of the Unadjusted U.K. Transfer Amount which is money purchase in nature
adjusted to reflect the investment return (positive or negative) on the relevant
money purchase accounts in the period from the U.K. Transfer Date up to the last
dealing date before the U.K. Payment Date;
"U.K. Transfer Date" - such date as shall be agreed by Xxxxxx and
MergerCo.
"U.K. Transferring Members" - those of the Relevant Members who
(whether active members, pensioners or deferred pensioners of the Xxxxxx Scheme)
become members of the New Scheme with effect on and from the U.K. Transfer Date
pursuant to the offer of membership referred to in paragraph (b)(B) below.
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"U.K. Unadjusted Transfer Amount" - such amount as shall be calculated
by Buyer's Actuary in accordance with the Actuarial Assumptions and agreed by
Xxxxxx'x Actuary (or in the absence of agreement determined in accordance with
paragraph (b)(C)(iv) below as is equal to the aggregate of: (A) in the case of
benefits under the Final pay section of the Xxxxxx Scheme, the value as at the
U.K. Transfer Date as is equal to the aggregate of: (1) the value of the accrued
benefits prospectively and contingently payable to and in respect of the U.K.
Transferring Members under the Xxxxxx Scheme by reference to pensionable service
up to the U.K. Transfer Date and final pensionable earnings at that time (making
allowance in accordance with the Actuarial Assumptions for projected increases
in final pensionable earnings of the U.K. Transferring Members from the U.K.
Transfer Date to the assumed date of retirement or earlier death or withdrawal
from service); and (2) the value of such guarantees as apply to the U.K.
Transferring Members under the Final Pay section of the Xxxxxx Scheme; and (3)
the value of those benefits under the Final Pay section of the Xxxxxx Scheme
which are money purchase in nature; and (B) in the case of benefits under the
Money Match section of the Xxxxxx Scheme, the value as at the U.K. Transfer Date
as is equal to the aggregate of:
(1) the value of the Member's Interest (as defined
in the Xxxxxx Scheme) applicable to the U.K. Transferring Members; and
(2) the value of such guarantees as apply to U.K.
Transferring Members under the Money Match section of the Xxxxxx Scheme;
(b) The New Scheme
(A) Xxxxxx hereby undertakes that with effect from a date
not later than the U.K. Transfer Date Xxxxxx Chemical will have nominated or
established or adhered to one or more retirement benefits schemes or one or more
nominated personal pension scheme shall have been nominated:
(1) each of which is approved or capable of
approval under Chapter I or Chapter IV of Part XIV of the Taxes Act; and
(2) each of which is a contracted-out scheme or an
appropriate personal pension scheme (as defined in the Pension Schemes Act
1993);
(3) to each of which the trustees of the Xxxxxx
Scheme can make a transfer or cash and/or assets without prejudicing the
approval of the Xxxxxx Scheme as an exempt approved scheme.
Membership of the New Scheme will during the Interim Period be offered
to the Relevant Members;
(B) Xxxxxx undertakes that the offer of membership
referred to in paragraph A shall include a request or an invitation to consent
to the transfer of benefits from
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the Xxxxxx Scheme to the New Scheme. Such request or invitation to consent shall
be in such form and shall include such discharges as the trustees of the Xxxxxx
Scheme may reasonably require. Xxxxxx shall procure (subject to receipt by the
trustees of the New Scheme of the U.K. Transfer Amount) that the New Scheme
shall provide benefits for and in respect of the U.K. Transferring Members in
respect of their pensionable service under the Xxxxxx Scheme which are either
(1) in the opinion of the trustees of New Scheme
no less favorable overall in value terms than the benefits under the Xxxxxx
Scheme in respect of the U.K. Transferring Members' pensionable service
thereunder up to the U.K. Transfer Date on the terms of the Xxxxxx Scheme in
force immediately prior thereto; or
(2) money purchase benefits such that each U.K.
Transferring Member shall be entitled to an opening credit equal to the part of
the U.K. Transfer Amount paid in respect of him.
(C) The MergerCo will give its consent to and will procure
that Xxxxxx Chemical may remain a participating employer under the Xxxxxx Scheme
in respect of the Relevant Members during the Interim Period on the same terms,
including rates of contributions payable, as are in force immediately prior to
Closing. MergerCo shall procure that all other participating employers in the
Xxxxxx Scheme shall participate in the Xxxxxx Scheme on the terms (including
rates of contributions) as are in force immediately prior to Closing. During the
Interim Period Xxxxxx will procure that Xxxxxx Chemical complies with the
obligations on it as a participating employer under the Xxxxxx Scheme, such
obligations (otherwise than where required by law)( being those which applied to
it immediately prior to the commencement of the Interim Period). MergerCo will
not appoint or remove any trustee (or any director thereof) of the Xxxxxx Scheme
during the Interim Period.
Xxxxxx Chemical shall continue to be able to exercise such powers and
discretions under the Xxxxxx Scheme during the Interim Period as were available
to it immediately prior to Closing provided that Xxxxxx Chemical shall procure
that no action is taken in relation to the Xxxxxx Scheme during the Interim
Period which results or would result in any additional or increased costs or
liabilities to MergerCo or BDPH.
MergerCo shall procure that no action is taken in relation to the
Xxxxxx Scheme during the period between Closing and the U.K. Payment Date which
results or would result in any additional or increased contributions being
required from Xxxxxx Chemical or Xxxxxx Foods in relation either to the Xxxxxx
Scheme or the New Scheme or any additional or increased liability in either the
Xxxxxx Scheme or the New Scheme without Xxxxxx'x prior written agreement (not to
be unreasonably withheld). Where such action is taken, MergerCo will pay to
Xxxxxx Chemical an amount agreed between Buyer's Actuary and Xxxxxx'x Actuary as
being required to fund the additional contributions or liability.
(i) Determination of Transfer Amount. On or immediately
after the U.K. Transfer Date, MergerCo shall instruct Buyer's Actuary to
calculate the U.K. Transfer Amount
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and within thirty (30) days after the U.K. Transfer Date to submit his findings
to Xxxxxx'x Actuary for verification and agreement by him. If Xxxxxx'x Actuary
is unable (within thirty (30) days (or such longer period as the parties may
agree) of the submission to him of the findings of Buyer's Actuary) to agree the
U.K. Transfer Amount as aforesaid the matter shall be referred to an independent
actuary pursuant to this Schedule.
(ii) Payment of Transfer Amount. (A) The MergerCo shall use
its best endeavors to procure that on the U.K. Payment Date the Trustees of the
Xxxxxx Scheme make a payment to the trustees of the New Scheme of an amount
equal to the U.K. Transfer Amount.
(B) MergerCo shall procure that all payments to be made
(whether to be made by the trustees of the Xxxxxx Scheme or otherwise under this
paragraph) shall be made in cash unless (in the case of any payment to them) the
trustees of the New Scheme shall agree otherwise.
(iii) Additional Voluntary Contributions. Any additional
voluntary contributions made by the U.K. Transferring Members to Xxxxxx'x Scheme
together with the accrued investment return thereon shall be disregarded for the
purposes of determining the U.K.
Transfer Amount.
MergerCo shall use its reasonable endeavors to procure that
if before the U.K. Payment Date the trustees of the Xxxxxx Scheme have not done
so that they shall pay or transfer to the trustees of the New Scheme in addition
to the U.K. Transfer Amount any sums or policies as at the U.K. Payment Date
which under the Xxxxxx Scheme relate to the additional voluntary contributions
paid by the U.K. Transferring Members.
(iv) Disputes. Any disputes between Xxxxxx'x Actuary and
Buyer's Actuary concerning the calculation of the U.K. Transfer Amount in
accordance with this Schedule 8.7(h) and/or the Actuarial Assumptions or any
other matter of an actuarial nature shall, in the absence of agreement between
them, be referred to an independent actuary agreed by Xxxxxx and MergerCo or,
failing such agreement within 14 days of one party calling upon the other in
writing so to agree, appointed by the President for the time being of the
institute of Actuaries. Any such independent actuary shall reach his decision on
the basis of the provisions of this Schedule 8.7(h) and the Actuarial
Assumptions and shall act as an expert and not as an arbitrator and his decision
shall (in the absence of manifest error) be final and binding upon Xxxxxx and
MergerCo. The charges and expenses of the independent actuary in respect of any
such reference shall be borne equally by Xxxxxx and MergerCo.
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EXHIBIT C
The opinion of Xxxxx, Day, Xxxxxx & Xxxxx referred to in
Section 9.2(i) of the accompanying Agreement will be substantially to the effect
set forth in the first and second sentences of Section 7.1, the first and second
sentences of Section 7.2 and the third sentence of Section 7.2 (but only as to
MergerCo's certificate of incorporation or by-laws or other constituent
documents of MergerCo) and will be subject to such limitations and
qualifications as are customary for such opinions.
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EXHIBIT D
The opinion of the General Counsel or Assistant General
Counsel of Xxxxxx referred to in Section 9.3(k) of the accompanying Agreement
will be substantially to the effect set forth in the first and second sentences
of Section 6.1, the first and second sentences of Section 6.2, the third
sentence of Section 6.2 (but only as to the certificate of incorporation or
by-laws or other constituent documents of Xxxxxx or any subsidiary) and the
first sentence of Section 6.3 and will be subject to such limitations and
qualifications as are customary for such opinions.
