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 Subsidiary"), that is a wholly owned subsidiary of Xxxxxx Company
Limited, a company organized under the
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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, fixtures, easements, privileges, rights-of-way,
riparian and other water rights, lands underlying any
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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
(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
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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 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.
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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 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
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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.
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,
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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;
(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;
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(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;
(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);
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(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.
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
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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").
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.
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(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.
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
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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 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
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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
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.
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(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 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
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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 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.
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(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 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.
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(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 "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) 0.000000 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.
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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 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
19
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 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
20
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 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
21
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 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 XxxxxxXx.
00
(x) 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 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
23
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 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
24
each such entity, enforceable in accordance with its terms except as
enforceability may be (i) 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
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.
25
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 hereto,
26
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
date (the "Interim Financial Statements" and together with the Annual Financial
Statements, the "Financial Statements"). The Interim Financial Statements
27
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 & 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
28
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 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
29
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 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
30
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 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
31
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
"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
32
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 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.
33
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 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,
34
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 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.
35
(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, 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
36
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
(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
37
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.
(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.
38
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.
(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
39
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 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
40
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 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
41
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 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
42
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.
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
43
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 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,
44
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.
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
45
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;
(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.
46
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.
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,
47
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 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.
48
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 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.
49
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").
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
50
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 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
51
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 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
52
(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
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
53
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 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)
54
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 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
55
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;
(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.
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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. 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
57
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 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
58
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 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
59
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 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
60
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
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
61
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 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
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(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
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.
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(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, 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
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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 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.
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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. 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).
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(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 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
PostRetirement Benefits from BDPH following Closing.
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(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
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,
PostRetirement 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
68
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.
(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.
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(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.
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
70
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.
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
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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.
(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
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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 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
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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
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
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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.
(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
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injunction enjoining and 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 rights and
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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 obligations under Section 11.2 will not be affected by the provisions
hereof and (ii)
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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.
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:
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(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 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.
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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.
(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
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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 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
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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 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;
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(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 consummation
of the C&A Transaction (or the operative acquisition agreements in connection
therewith) on antitrust or competition grounds.
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(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 provided to MergerCo and Xxxxxx shall have delivered
to MergerCo evidence satisfactory to MergerCo that the Stock Transfer has been
consummated.
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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.
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
85
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 shall have the right to
assume the defense of any
87
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.
(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
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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 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
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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 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
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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.
(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,
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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 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
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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 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
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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.
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 ss.
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
95
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 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.
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"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 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,
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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.
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.
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(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.
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
99
offset previously received plus interest computed at the rate of the prevailing
federal rate for tax refunds.
(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
100
(ii) any Enforcement Authority is seeking to prohibit on antitrust or
competition grounds the consummation of the transactions contemplated herein;
(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 attempted
104
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
MergerCo of its obligations
105
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.
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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.
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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:
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(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.
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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 contained in the Conveyance and Transfer Agreement by and between
Xxxxxx, Inc., and
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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.
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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:
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