ASSET PURCHASE AGREEMENT
BETWEEN
BLOCK DRUG COMPANY, INC.
(SELLER)
AND
WD-40 COMPANY
(BUYER)
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ('Agreement'), is made and entered into
effective as of the 25th day of March, 1999, by Block Drug Company, Inc. a
corporation organized and existing under the laws of the State of New Jersey
with its principal place of business being located at 257 Cornelison Avenue,
Jersey City, New Jersey 07302 (hereafter referred to as 'Seller') and WD-40
Company, a corporation organized and existing under the laws of the State of
California, with its principal place of business being located at 1061 Cudahy
Place, San Diego, California 92110, (hereafter referred to as 'Buyer');
This Agreement sets forth the terms and conditions upon which Seller
will sell to Buyer, and Buyer will purchase from Seller, certain defined
properties, assets, goodwill and business of Seller, and will assume certain
obligations of Seller, which relate exclusively to the LAVA brand heavy duty
hand cleaner product line.
In consideration of the mutual agreements contained herein, intending to
be legally bound hereby, the parties agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, each of the following terms shall have the
following meanings:
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1.1 ACCOUNTS RECEIVABLE means those orders shipped by Seller prior to
Closing.
1.2 ACQUIRED ASSETS means only the following assets used exclusively in the
Business:
(a) Seller's customer lists, customer files, sales literature, market
research data and the product development information, if any, which are
related exclusively to the Business and which are listed on Schedule 1.2 (a)
hereto;
(b) the Inventory identified by type and cost in Schedule 1.2(b)(i)
('Finished Goods') and Schedule 1.2(b)(ii) (Raw Materials and Packaging);
(c) third party contracts, if any, to be assigned to Buyer at Closing as
listed in Schedule 1.2(c), but only to the extent that those contracts relate
exclusively to the Business and are assignable without the consent of the
other party to such contracts;
(d) all of Seller's and its Affiliates right, title and interest,
including worldwide title, to registered and pending trademarks, registered
and pending trade names, trade dress, logos, copyright interests, slogans,
trade secrets, technological and manufacturing know-how, patents, pending
patent applications, if any, as listed on Schedule 1.2(d), together with
related trademark files;
(e) Equipment as listed in Schedule 1.2(e); and
(f) the goodwill of the Business.
1.3 ADDITIONAL INVENTORY means all orders for packaging components, raw
materials and finished goods which Seller placed with any third party
manufacturer by Seller prior to Closing but which were not paid for by Seller
prior to Closing as listed in Schedule 1.3.
1.4 AFFILIATE OR AFFILIATES means any corporation or other entity that is a
subsidiary of the party in question (defined as being more than fifty percent
directly or indirectly owned by that party), a parent of the party in
question (defined as having more than fifty percent direct or indirect
ownership
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of that party), or any subsidiary of the parent of the party in question, as
those terms are defined by this Section.
1.5 ASSUMED OBLIGATIONS includes but is not limited to obligations or
liabilities: (a) under any open purchase order(s) or portion(s) thereof as
listed in Schedule 1.5(a) for the Additional Inventory; (b) to third party
suppliers as listed in Schedule 1.5(b) for services relating exclusively to
the Business ordered, but not paid for, by Seller prior to the Closing; (c)
all sales and promotional agreements as listed in Schedule 1.5(c); and (d)
for product liability, product returns, and product warranty for all products
of the Business manufactured by or for the Business to the extent those
liabilities arise more than one hundred eighty (180) days after Closing,
except that Seller's financial liability for returns post Closing shall be
limited to twenty thousand dollars ($20,000) in total with the right to sell
to Buyer useable returns at cost.
1.6 BUSINESS means the activities of the Seller in connection with a hand
cleanser bearing the Lava trademark consisting of the Acquired Assets and the
Assumed Obligations, and specifically excludes the Excluded Assets and the
Excluded Liabilities.
1.7 BUYER COMPETITIVE BUSINESS means any Person that competes with Buyer in
marketing any Heavy Duty Hand Cleaner products.
1.8 CLOSING means both the closing of the transactions contemplated by
Article 3 of this Agreement in accordance with the terms and upon the
conditions set forth in this Agreement, and the close of business on the date
on which the Closing occurs, as provided in Section 3.1 of this Agreement.
1.9 ENGAGED PRIMARILY IN A BUYER COMPETITIVE BUSINESS means that greater
than twenty percent
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(20%) of the sales of such Person are in the Heavy Duty Hand Cleaner Market.
1.10 EXCLUDED ASSETS means, without limitation: (a) cash, cash equivalents
(or similar type investments), and Accounts Receivable of the Business; (b)
insurance policies of Seller pertaining to the Business and all rights of
Seller of every nature and description under or arising out of such insurance
policies; (c) claims for refunds of Taxes paid by Seller and/or its
respective Affiliates; (d) all rights of Seller under this Agreement and any
other agreements or instruments delivered or to be delivered to Seller by
Buyer pursuant to this Agreement; (e) any trademarks, trade names, trade
dress, logos, copyright interests, slogans, trade secrets, technological and
manufacturing know-how, patents, pending patent applications, or any rights
under any of the foregoing, of Seller that do not relate exclusively to the
Business or which are not set forth in Schedule 1.2(d); and (f) any and all
assets not expressly listed as Acquired Assets.
1.11 EXCLUDED LIABILITIES means those liabilities retained by Seller and
consisting of: (a) Taxes due from Seller for periods prior to Closing; (b)
any claims brought by an employee of the Seller or an Affiliate of Seller;
and (c) all liability of Seller arising out of any actions, claims,
proceedings, litigation or any investigations by any party relating to the
conduct of Business prior to Closing which arise within one hundred eighty
(180) days after Closing; and (d) all other obligations incurred in the
ordinary course of business not specifically included as an Assumed
Obligation, including but not limited to Inventory transferred at Closing but
not yet paid for by Seller.
1.12 HEAVY DUTY HAND CLEANER means a consumer product which is primarily
promoted for its superior hand washing efficacy against stubborn soils, and
which contains natural abrasive materials providing significant abrasive
effect in the product.
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1.13 INVENTORY means all finished goods inventories, packaging components,
work-in-progress, raw materials and any promotional material exclusively
related to the Business and which is owned by Seller at Closing.
1.14 MATERIAL ADVERSE CHANGE shall mean a change in the Business that has
been or is reasonably likely to be materially adverse to the value of the
Acquired Assets taken as a whole or materially adverse to the financial
condition or results of operations of the Business.
1.15 PERSON means any legal entity, whether individual person, partnership,
firm or corporation.
1.16 TAX AND TAXES means all taxes, charges, fees, levies, or other
assessments, including, without limitation, income, excise, property, value
added, real estate, sales use, payroll, and franchise taxes imposed by the
United States or any state, county, or local government, subdivision or
agency thereof, or any other jurisdiction outside the United States. Such
term shall include any interest, penalties, or additions payable in
connection with such taxes, charges, fees, levies, or other assessments.
ARTICLE 2
SALE AND PURCHASE
2.1 Purchase and Sale of the Business.
Subject to the terms and conditions of this Agreement, Seller agrees to
sell the Business to the Buyer, and Buyer agrees to purchase the Business
from the Seller and assume the Assumed Obligations. The Excluded Assets and
the Excluded Liabilities are expressly excluded from the sale of the Business
to the Buyer, it being understood and agreed by the parties that Seller shall
retain the Excluded Assets and the Excluded Liabilities for its own account.
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2.2 Purchase Price
(a) The Purchase Price shall be:
(i) the sum of nineteen million United States dollars (US
$19,000,000.00) for the goodwill and all Acquired Assets
other than Inventory; plus
(ii) an amount equal to the price of the Inventory as determined
by applying cost on Schedule 1.2(b)(i) and (ii) to the
physical count of Inventory pursuant to Section 2.3.
(b) On the day prior to Closing Date the Buyer shall pay Seller the
Purchase Price set forth in Section 2.2(a)(i) plus ninety percent (90%) of
the estimated Inventory value in immediately available funds by wire transfer
to an account specified by Seller in writing at least two business days prior
to the Closing. The balance of the Inventory value will be paid to Seller by
Buyer with a company check at Closing.
2.3 Physical Count Prior to Closing
Two (2) days prior to Closing, Seller shall cease shipment of Inventory
to any customer. Prior to Closing, the Purchaser shall, at its own expense,
conduct a physical accounting of the Inventory of Seller and deliver a
schedule of such Inventory values (the 'Inventory Certificate') to Seller on
or prior to Closing. Seller may observe such physical count. In the event
that the Inventory Certificate has a significant variance from the inventory
count reflected on Seller's books and records, Purchaser and Seller shall
agree to appropriate adjustments on or prior to the Closing.
2.4 Allocation of the Purchase Price.
The Purchase Price shall be allocated in accordance with the
requirements of Section 1060 of the Internal Revenue Code. Such allocation
shall be completed and delivered to Seller, together
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with a draft Form 8594 (applicable to the U.S. Acquired Assets), no later
than 180 days after Closing for Seller's review and approval, which approval
shall not be unreasonably withheld. In the event that Seller fails to notify
Buyer within 15 days of receipt of such allocation, in writing and with
specificity as to assets and amounts, that it does not approve of the
allocation made by Buyer, Seller shall be deemed conclusively to have approved
such allocation and such Form 8594, and Seller and Buyer shall thereafter be
bound to make all tax filings, including any state and local tax returns, on
a basis consistent with such Purchase Price allocation. In the event that
Seller has not approved and has not been deemed to have approved the
aforementioned allocation in accordance with this Section 2.4, and Buyer and
Seller have not otherwise reached agreement with respect to such matter,
Buyer shall refer the matter to the accounting firm of Ernst & Young, L.L.P.
for resolution, and the determination of such accounting firm with respect to
allocation of the Purchase Price shall be final and binding on the parties.
Each party shall pay one-half of the fees and expenses of such accounting
firm. Seller and Buyer agree not to take a position on any income tax return,
before any governmental agency charged with the collection of any income tax,
or in any judicial proceeding, that is inconsistent with the Purchase Price
allocation made in accordance with this Section 2.4.
ARTICLE 3
THE CLOSING
3.1 Time and Place of Closing.
Subject to the satisfaction or waiver of all of the conditions set forth
in Article 7, the Closing will take place at the offices of Seller at Jersey
City, New Jersey, within five
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(5) business days after the termination of the Hart-Scott-Rodino waiting
period or on April 30, 1999, whichever comes later, or at such other time or
place as the parties may mutually agree. Either party, acting in good faith,
may request in writing an extension of the Closing for an additional five (5)
business days in order to fulfill closing obligations.
3.2 Actions at Closing.
At the Closing, the following actions shall occur:
(a) Seller shall deliver to Buyer, or to such Affiliate of Buyer as
Buyer may designate, the following:
(i) a certificate by the President or appropriate Vice President
of Seller, in the form attached as Exhibit 3.2(a)(i), that
the warranties and representations of Seller set forth in
Article 5 of this Agreement are true and correct as of the
Closing;
(ii) opinion of Seller's General Counsel in the form attached as
Exhibit 3.2(a)(ii) certifying that, to the best of counsel's
knowledge, the representations and warranties set forth in
Sections 5.1, 5.2, and 5.3 of this Agreement are true and
correct as of the Closing;
(iii) a bill of sale for the Acquired Assets in the form attached
as Exhibit 3.2(a)(iii);
(iv) assignments for the Contracts listed in Schedule 1.2(c);
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(v) certified copies of any resolutions by the Executive Committee
of the Seller's Board of Directors or other necessary
corporate actions of Seller authorizing the execution and
performance of this Agreement.
(vi) assignments for those trademarks included within
Schedule 1.2(d) in the form attached as Exhibit 3.2(a)(vi);
(vii) such other documents as are in the reasonable opinion of
counsel for Buyer and Seller necessary or desirable to
transfer the Business to Buyer.
(b) Buyer shall deliver to Seller, or to such Affiliate of Seller as
Seller may designate, the following:
(i) The Purchase Price in immediately available funds;
(ii) a certificate by the President or appropriate Vice President
of Buyer, in the form attached as Exhibit 3.2(b)(ii), that
the warranties and representations of Buyer set forth in
Article 4 of this Agreement are true and correct as of the
Closing;
(iii) opinion of counsel in the form attached as
Exhibit 3.2(b)(iii) certifying that, to the best of counsel's
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knowledge, the representations and warranties set forth in
Sections 4.1, 4.2, and 4.3 of this Agreement are true and
correct as of the Closing; and
(iv) a certificate of Secretary certifying that the execution and
performance of this Agreement was duly authorized at a
meeting of Buyer's Board of Directors substantially in the
form of Exhibit 3.2(b)(iv);
(v) the Assumption Agreement, substantially in the form of
Exhibit 3.2(b)(v), by which Buyer accepts responsibility for
the Assumed Obligations; and
(vi) such other documents as are in the reasonable opinion of
counsel for Buyer and Seller necessary or desirable to
transfer the Business to Buyer.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller the following, which shall be
true and correct on the date of this Agreement and as of the Closing;
4.1 Organization and Good Standing.
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of California and has full corporate
power to own its properties and conduct the business
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presently being conducted by it, and is duly qualified to do business in, and
is in good standing under the laws of the State of California.
4.2 Power and Authority
Buyer has full power and authority to purchase the assets and Business
to be sold pursuant to this Agreement, and this Agreement and the
transactions contemplated hereby have been or shall be duly and validly
authorized by all necessary corporate action on the part of Buyer by the
Closing. Upon the execution and delivery of this Agreement, it will be a
valid and binding obligation of Buyer enforceable in accordance with its
terms.
4.3 Violations Created by this Agreement.
The execution and delivery of this Agreement does not, and the
consummation of the transactions herein contemplated will not, materially
violate any law or the terms of any contract to which Buyer is a party.
4.4 Finder's Fees and Commissions
Buyer has not incurred any liability for finder's fees, brokerage fees,
agent's commissions or other similar forms of compensation in connection with
this Agreement, or the transactions contemplated hereby, for which Seller
shall have any liability.
4.5 Financing.
Buyer has, or has made satisfactory arrangements to provide at the
Closing, funds sufficient for the Purchase Price to be paid by it under the
terms of this Agreement.
4.6 No knowledge of Material Breach
Buyer has no knowledge of any fact or circumstance which would support
any claim or cause
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of action against Seller for a material breach of any representation or
warranty.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
The only representations and warranties of the Seller are those set forth
in this section. Notwithstanding the fact that Buyer will be acquiring certain
trademarks outside of the United States, the Buyer acknowledges that the Seller
has only conducted the Business within the United States and Buyer therefore
understands and agrees that each of the representations and warranties given by
Seller are given only with the respect to the United States. There are no liens
or encumbrances on title to the trademarks; provided, however, the Buyer
understands there may be pre-rights declaration agreements entered into during
the course of prosecution of a trademark application. The details of any
pre-right declaration agreement will be located in the trademark files, which
will be delivered to Buyer by Seller at Closing. To the extent there are any
pre-rights declaration agreements, the ability to use the trademarks in
connection with the goods currently being sold and marketed in the United States
will not be materially effected. The Buyer further understands that all
trademarks are subject to certain use requirements and Seller makes no
representation, warranty or guarantee as to whether the trademarks are subject
to cancellation due to non-use. The representations and warranties given by
Seller to Buyer are as of this date, and shall as of Closing, be true and
correct in all material respects.
5.1 Organization and Good Standing.
Seller is a corporation duly organized, validly existing, and in good
standing under the laws
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of the State of New Jersey and has full corporate power and authority to carry
on the Business as now being conducted, has all permits and licenses that are
necessary to conduct the Business in the United States as now being conducted
and to ownership or operation of its properties and assets, and is duly
qualified to do business in the State of New Jersey.
5.2 Power and Authority.
Seller has full power and authority to execute, deliver and carry out the
terms and conditions of this Agreement. This Agreement, and the transactions
contemplated hereby, have been duly and validly authorized by all necessary
corporate action on the part of Seller, except where failure to obtain that
authorization is not material in the aggregate. Upon the execution and delivery
of this Agreement, it will be valid and binding obligation of Seller enforceable
in accordance with its respective terms.
5.3 Encumbrances/Violations Created by this Agreement.
The execution and delivery of this Agreement does not, and the consummation
of the transactions herein contemplated will not, create any encumbrances on the
Acquired Assets in favor of third parties and will not violate any law, except
where not material in the aggregate.
5.4 Finder's Fees and Commissions
Seller has not incurred any liability for finder's fees, brokerage fees,
agent's commissions or other similar forms of compensation in connection with
this Agreement, or the transactions contemplated hereby, for which Buyer shall
have any liability.
5.5 Title to Acquired Assets
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Seller has and will convey to Buyer, good and marketable title to all of
the Acquired Assets as necessary and appropriate to continue to conduct the
Business in the United States as it has been conducted, free and clear of any
security interests, liens, pledges, claims, charges, options, intellectual
property infringement claims, or other encumbrances, except as listed in
Schedule 5.5.
5.6 Litigation and Claims.
Seller is not aware of any claim, action, suit, proceeding, arbitration,
or investigation, including product liability, product warranty, tax,
workers' compensation, EEO or other employee-related proceedings, pending or
threatened by or before any court, governmental authority or private
arbitration tribunal in excess of one thousand dollars ($1,000) against
Seller and arising out of the operation or ownership of the Business by the
Seller as of the date hereof.
5.7 Permits and Licenses.
Seller has all permits, approvals, consents, licenses, certificates of
public convenience, orders and other authorizations of all governmental
agencies and authorities, whether federal, state or local required to permit
the operation of the Business, except where failure to do so will not have a
material effect on the Business. So far as Seller is aware, all such
permits, approvals, consents, licenses, certificates of public convenience,
orders and other authorizations are valid and in good standing with the
issuing agencies and not subject to any proceedings for suspension,
modification or revocation as of the date hereof. The Business is in material
compliance with all laws, statutes, ordinances and regulations of the United
States relating to the Business.
5.8 No Material Adverse Change.
Since December 31, 1998 there has not been any Material Adverse Change
in the Business
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except as set forth on Schedule 5.8 or as discovered by Buyer during its due
diligence investigation.
ARTICLE 6
COVENANTS OF THE PARTIES
6.1 Access to Information.
(a) Buyer's Access to Information and Records Before Closing.
Buyer may, prior to the Closing, make or cause to be made such reasonable
investigation of the operation and assets of the Business as Buyer deems
necessary or advisable to familiarize itself with such assets and other matters.
Upon reasonable notice, Seller agrees to permit Buyer and its authorized
representatives (including legal counsel and independent accountants) to have
full access at reasonable business hours and upon reasonable prior notice to any
relevant books and records of the Business, and Seller and its officers will
furnish Buyer with such financial and operating data and other information and
copies of documents with respect to the Business products and operations as
Buyer shall from time to time reasonably request.
(b) Return of Seller's Documents.
In the event of the termination of this Agreement prior to Closing, Buyer
will deliver to Seller all documents, work papers and other materials obtained
from Seller relating to Seller or the transaction contemplated hereby, whether
so obtained before or after the execution hereof, and shall destroy any copies,
charts, analyses or other documents produced from said documents, work papers
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and other materials obtained from Seller. Buyer's counsel shall certify in
writing that the aforementioned actions have been taken.
(c) Use of the Parties' Information.
(i) Prior to Closing, neither Buyer nor Seller shall, except to the
extent mutually agreed upon, disclose to third parties any
information obtained from the other, nor shall the receiving party
use that information to the other's detriment. Each party shall
keep any information so obtained confidential and will not use it
in any way other than to obtain any governmental consents or
approval necessary for the transactions contemplated by this
Agreement, except that such restriction shall not apply to any
information received from the other party (i) which is in or comes
into the public domain through no fault of the receiver of the
information, (ii) which was in the possession of the receiver of the
information before the commencement of negotiations leading to this
Agreement, (iii) which at any time lawfully comes into the
possession of the receiver of the information from third parties who
have a right to disclose such information otherwise than in
connection with this Agreement, (iv) which is disclosed as a result
of the provision set forth in Section 10.1 or (v) which is required
to be disclosed by law.
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(ii) Following Closing, the parties shall not disclose to third parties
any information obtained from the other, nor shall the receiving
party use that information to the other's detriment. The parties
shall keep any information so obtained confidential, except that
such restriction shall not apply to any information received from
the other party (i) which is in or comes into the public domain
through no fault of the receiver of the information, (ii) which was
in the possession of the receiver of the information before the
commencement of negotiations leading to this Agreement, (iii) which
at any time lawfully comes into the possession of the receiver of
the information from third parties who have a right to disclose
such information or (iv) which is required to be disclosed by law.
6.2 Obligations of the Parties Prior to Closing.
Except for the steps or actions taken pursuant to prior written consent
of Buyer, Seller from the date of this Agreement until the Closing will
conduct the Business consistent with historical practices, and during that
period Seller shall:
(a) conduct the Business only in the normal course;
(b) not transfer any of the assets or properties of the Business
except in the normal course;
(c) except for customary agreements in the nature of pre-rights
declarations in trademark
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matters, not enter into any patent, know-how, trademark or trade name licenses,
purchase orders for raw materials, packaging and/or finished goods, or any other
leases, licenses, contracts or other commitments relating exclusively to the
Business, unless each such lease, license, contract, purchase order or
commitment is disclosed to and approved by Buyer - the foregoing notwithstanding
Seller may enter into new sales contracts in the ordinary course of business.
(d) continue to meet the contractual obligations of, and to pay
obligations relating to, the Business as they mature in the normal course; and
(e) subject to the disclosures on Schedule 5.8, maintain the business
relations of Seller with its suppliers, business customers and others with whom
it has business relations relating to the Business.
6.3 Best Efforts of the Parties.
Each of Seller and Buyer shall use its best efforts to cause all of the
conditions to the obligations of the other to consummate the transactions
contemplated hereby, as specified in Article 7, to be met as soon as practicable
after the date of this Agreement and to do, or cause to be done, all things
necessary to consummate the transactions contemplated hereby.
6.4 Obligations of the Parties After Closing
(a) Additional Documents. From time to time after the Closing, Buyer and
Seller agree to execute and deliver, without further consideration, such
documents as either party hereto may reasonably request, in such form as may be
appropriate, if necessary or advisable in connection with the consummation of
the transactions contemplated hereby or any other agreement delivered in
connection herewith.
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(b) Cooperation in Litigation. Buyer and Seller agree that, in the
defense of any litigation, hearing, regulatory proceeding, or investigation or
other similar matter relating to the Business, they will make available during
normal business hours, but without unreasonably disrupting their respective
businesses, all personnel and original records of the Business reasonably
necessary or desirable to permit the effective defense or investigation of such
matters. If business information of Seller other than that pertaining to the
Business is contained in such records, Buyer and Seller will enter into
appropriate secrecy commitments to protect such information.
6.5 Seller's Agreement Not to Compete.
(a) Neither Seller, nor any Affiliate of Seller, shall market any Heavy
Duty Hand Cleaner within the United States for a period of five (5) years
following Closing. For a period of three years from Closing, neither Seller,
nor any Affiliate of Seller, shall introduce any Heavy Duty Hand Cleaner of its
own outside of the United States; provided, however, nothing hereunder shall be
construed to prevent an Affiliate from acting as a distributor for Heavy Duty
Hand Cleaner outside of the United States on behalf of a third party for not
more than ninety (90) days after the date that Seller has been given written
notice by Buyer of such Affiliate's activity.
(b) Seller shall not be deemed to be in violation of Section 6(a) by
virtue of the fact that Seller, or any of its Affiliates: (i) invests in or owns
an interest in any Person which is not Engaged Primarily in a Buyer Competitive
Business; or (ii) invests in securities having less than ten percent (10%) of
the outstanding voting power of any Person which is Engaged Primarily in a Buyer
Competitive Business, the securities of which are publicly traded or listed on
any securities exchange or automated quotation system; or (iii) acquired a Buyer
Competitive Business as part of an
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acquisition, by joint venture, merger, or other business combination, or the
assets of, or the majority of the voting interest in, another Person
(hereinafter a 'Target Business') if the revenue derived by the Target
Business from the Buyer Competitive Business in the fiscal year preceding
such acquisition constituted less than twenty percent (20%) of the aggregate
net sales of the Target Business.
(c) In the event Seller or an Affiliate acquires a Buyer Competitive
Business under the circumstances described in Section 6.5(b)(iii) above, and if
the sales of the Buyer Competitive Business contained within the Target Business
exceed five million U.S. dollars (U.S. $5,000,000.00) on an annual basis,
Seller or such Affiliate shall thereafter divest such Buyer Competitive Business
with twenty four (24) months from the date of purchase of the Buyer Competitive
Business by way of 'auction' or other competitive bidding process, negotiated
sale, or such other manner of divestiture as Seller, in its sole and
non-reviewable discretion, deems appropriate.
6.6 Ecolab Inc.
(a) Based upon Buyer's desire to negotiate a new arrangement directly
with Ecolab Inc. which Buyer believes will be attractive to Ecolab Inc., and at
Buyer's request, Seller shall give Ecolab notice, no later than May 15, 1999, to
terminate its existing agreements with Ecolab Inc. relating to the Lava product
and the Lava trademark. Buyer shall enable Seller to continue to fully perform
under the agreements between Ecolab Inc. and Seller for the economic benefit of
Buyer (less reasonable out-of-pocket expenses incurred by Seller), until their
termination, but in no event later than September 30, 1999. Buyer shall attempt
to negotiate with Ecolab Inc. for an earlier termination than September 30, 1999
of Seller's obligations under the Ecolab agreements.
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(b) Seller shall indemnify Buyer and hold it harmless against any loss,
claim or liability arising from any dispute(s) between Ecolab Inc. and Seller
which arise prior to Closing and relate solely to Buyer's performance under the
Ecolab Inc. agreements or any subsequent post-termination notice claim that the
Ecolab Inc. agreements will not terminate effective September 30, 1999.
(c) Buyer shall indemnify Seller and hold it harmless against any loss,
claim, or liability arising from any dispute relating to Ecolab Inc. which arise
on or after March 25, 1999 other than those caused by Seller's failure to ship
product properly ordered by Ecolab Inc. through no fault of Buyer.
6.7 Lava Institutional
Buyer agrees that Seller shall retain Lava 7.5 oz. Institutional product
and also have the right to sell such product to a third party(s) of its
choosing. Should Buyer wish to purchase this product and Seller has not yet
sold this product to a third party, Seller will consider an offer from Buyer.
6.8 CCL
If CCL does not agree to manufacture Liquid Lava at its Rexdale, Ontario,
Canada plant then Seller shall store free of charge to Buyer the Liquid Lava raw
materials and packaging for a period of up to ninety (90) days post-closing.
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ARTICLE 7
CLOSING CONDITIONS
7.1 Conditions of Performance by Buyer.
All obligations of Buyer to be performed at the Closing are subject to
the fulfillment, prior to or at the Closing, of each of the following
conditions, any of which may be waived by Buyer:
(a) all representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the
Closing as if made again at Closing;
(b) Seller shall have fully performed all commitments hereunder up to
the Closing and shall tender the required documents at the Closing as set
forth in Article 3; and
(c) All applicable waiting periods in respect of the transactions
contemplated by this Agreement under the Hart-Scott-Rodino Act have expired
or early termination shall have been obtained.
7.2 Conditions of Performance by Seller.
All obligations of Seller to be performed at the Closing are subject to
the fulfillment, prior to or at the Closing, of each of the following
conditions, any of which may be waived by Seller:
(a) all representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as of the
Closing as if made again at Closing;
(b) Buyer shall tender the cash and required documents at the Closing
as set forth in Articles 2 and 3; and
(c) all applicable waiting periods in respect of the transactions
contemplated by this
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Agreement under the Hart-Scott-Rodino Act have expired or early termination
shall have been obtained.
ARTICLE 8
INDEMNIFICATIONS: PROCEDURES FOR CLAIMS: ARBITRATION
8.1 Indemnification by Seller.
(a) Seller hereby assumes, undertakes, and will pay or otherwise
discharge, and will indemnify and hold Buyer harmless against:
(i) all claims, losses, liabilities, damages, costs and expenses,
including, without limitation, reasonable fees and expenses of
attorneys incurred in the investigation, prosecution or
defense (at trial and appellate levels and otherwise) of any
claim or action brought by or against Buyer (hereinafter
collectively called 'Losses') arising out of, based upon, or
alleging any matter involving an Excluded Liability or breach
of a representation and warranty or covenant made by Seller
herein, and;
(ii) all costs and expenses of Buyer (including, without
limitation, reasonable fees and expenses of attorneys)
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incurred in connection with the enforcement of any rights of
Buyer under the indemnity provided in this Section.
(b) Seller's liability under Section 8.1(a) with respect to Losses arising out
of an Excluded Liability described in Section 1.11(c) or breach of a
representation and warranty or covenant by Seller shall not arise unless Buyer's
Losses, in the aggregate, exceed two hundred thousand ($200,000.00) dollars,
except that the foregoing limitation shall not apply to any claims for
indemnification arising with respect to broker or finder's fee under Section 5.4
or with respect to title to the Acquired Assets in the United States under
Section 5.5; but in no event shall Seller's liability to Buyer with respect to
any Losses exceed a total of five million ($5,000,000.00) dollars.
(c) Promptly after receipt by Buyer of notice of the assertion of any
claim or the commencement of any action in respect of which indemnity or
reimbursement may be sought against Seller hereunder (for purposes of this
Section, an 'Assertion'), Buyer shall notify Seller in writing of the Assertion,
but the failure to so notify Seller shall not relieve Seller of any liability it
may have to Buyer. If the matter involves litigation or governmental
investigation (including a tax audit), Seller shall be entitled to participate
in and, to the extent Seller elects by written notice to Buyer within thirty
(30) days after receipt by Seller of notice to such Assertion, to assume the
defense of such Assertion, at its own expense, with counsel chosen by it which
shall be reasonably satisfactory to Buyer. Notwithstanding that Seller shall
have elected by such written notice to assume the defense of any Assertion,
Buyer shall have the right to participate in the investigation and defense
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thereof, with separate counsel chosen by Buyer, but in such event the fees
and expenses of such separate counsel shall be paid by Buyer.
(d) Notwithstanding anything in this Section to the contrary,
(i) Seller shall have no obligation with respect to an Assertion
if, in connection therewith, Buyer, without the written
consent of Seller, shall settle or compromise any action or
consent to the entry of any judgment, and
(ii) Seller shall not, without the written consent of Buyer, (A)
settle or compromise any action or consent to the entry of any
judgment which does not include as an unconditional term
thereof the delivery by the claimant or plaintiff to Buyer of
a duly executed written release of Buyer from all liability in
respect of such action, which release shall be satisfactory in
form and substance to counsel for Buyer, or (B) settle or
compromise any action in any manner that, in the sole judgment
of Buyer or their counsel, may materially and adversely affect
Buyer other than as a result of money damages or other money
payments.
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8.2 Indemnification by Buyer.
(a) Buyer hereby assumes, undertakes, and will pay or otherwise
discharge, and will indemnify and hold Seller harmless against:
(i) all claims, losses, liabilities, damages, costs and expenses,
including, without limitation, reasonable fees and expenses of
attorneys incurred in the investigation, prosecution of
defense (at trial and appellate levels and otherwise) of any
claim or action brought by or against Seller (hereinafter
collectively called 'Losses') arising out of, based upon, or
alleging any matter involving an Assumed Obligation or breach
of any representation, warranty or covenant by Buyer herein,
and
(ii) all costs and expenses of Seller (including, without
limitation, reasonable fees and expense of attorneys) incurred
in connection with the enforcement of any rights of Seller
under the indemnity provided in this Section.
(b) Promptly after receipt by Seller of notice of the assertion of any
claim or the commencement of any action in respect of which indemnity or
reimbursement may be sought against
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Buyer hereunder (for purposes of this Section, an 'Assertion'), Seller shall
notify Buyer in writing of the Assertion, but the failure to so notify Buyer
shall not relieve Buyer of any liability it may have to Seller. If the
matter involves litigation or governmental investigation (including a tax
audit), Buyer shall be entitled to participate in and, to the extent Buyer
elects by written notice to Seller within thirty (30) days after receipt by
Seller of notice of such Assertion, to assume the defense of such Assertion,
at its own expense, with counsel chosen by it which shall be reasonably
satisfactory to Seller. Notwithstanding that Buyer shall have elected by
such written notice to assume the defense of any Assertion, Seller shall have
the right to participate in the investigation and defense thereof, with
separate counsel chosen by Seller, but in such event the fees and expenses of
such separate counsel shall be paid by Seller.
(d) Notwithstanding anything in this Section to the contrary,
(i) Buyer shall have no obligation with respect to an Assertion
if, in connection therewith, Seller, without the written
consent of Buyer, shall settle or compromise any action or
consent to the entry of any judgment, and
(ii) Buyer shall not, without the written consent of Seller, (A)
settle or compromise any action or consent to the entry of any
judgment which does not include as an unconditional term
thereof the delivery by the claimant or plaintiff to Seller of
a duly executed written release of Seller from all liability
in respect of such action, which release shall be satisfactory
in form and substance to counsel for Seller, or (B) settle or
compromise any action in any
28
manner that, in the sole judgment of Seller or its counsel,
may materially and adversely affect Seller other than as a
result of a money damages or other money payments.
8.3 Arbitration
(a) Any dispute, controversy or claim asserted by either party against
the other, including any issue as to whether or not a claim is arbitrable,
arising out of or relating to this Agreement or any document or agreement
executed pursuant to this Agreement or the breach thereof, and including without
limitation any claim for indemnification pursuant to Article 8 hereof, shall be
settled by arbitration if so requested by either party pursuant to
Section 8.3(b) below. The party intending to file a notice of arbitration shall
provide the other party fifteen (15) days prior written notice of its intent to
file for an arbitration. During such fifteen (15) day period the parties agree
that a senior officer of each party shall meet personally in Chicago, Illinois
to discuss, in good faith efforts, to resolve the dispute(s). If the party
receiving notice refuses to meet or fails to appear on the agreed upon date of
such meeting, the notifying party may file its notice of arbitration and include
a statement indicating the receiving party's unwillingness to informally meet to
resolve the dispute(s). The arbitration shall be conducted by one arbitrator,
who shall be appointed pursuant to the Commercial Arbitration Rules of the
American Arbitration Association ('AAA'). The arbitration shall be held in
Chicago, Illinois and shall be conducted in accordance with the Commercial
Arbitration Rules of the AAA, except that the rules set forth in this
Section 8.3 shall govern such arbitration to the extent that they conflict with
the rules of the AAA.
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(b) Upon written notice by a party to the other party of a request for
arbitration hereunder, the parties shall use their best efforts to cause the
arbitration to be conducted in an expeditious manner, the parties using their
best efforts to cause the arbitration to be completed within sixty (60) days
after selection of the arbitrator. The arbitration shall apply New Jersey law
in accordance with Section 10.13 of this Agreement, except to the extent that
those laws conflict with either the Commercial Arbitration Rules of the AAA or
the provisions of this Section 8.3. All other procedural matters shall be
within the discretion of the arbitrator. In the event a party fails to comply
with the procedures in any arbitration in a manner deemed material by the
arbitrator, the arbitrator shall fix a reasonable period of time for compliance
and, if the party does not comply within said period, a remedy deemed just by
the arbitrator, including an award of default, may be imposed.
(c) Neither party shall be entitled to seek, nor shall the arbitrator
be empowered to award, punitive, consequential, exemplary or indirect
damages. The determination of the arbitrator shall be final and binding on
the parties. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
ARTICLE 9
TERMINATION AND ABANDONMENT
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9.1 Termination.
This Agreement may be terminated at any time prior to the Closing by
mutual consent of Seller and Buyer.
9.2 Procedure and Effect of Termination.
In the event of termination of this Agreement and abandonment of the
transactions contemplated hereby by either of the parties pursuant to this
Section, written notice thereof shall promptly be given to the other party and
this Agreement shall terminate and the transactions contemplated hereby shall
be abandoned without further action by either of the parties hereto, and neither
of the parties hereto shall have any liability or further obligation to the
other party hereto pursuant to this Agreement except as stated in this Section
and in Sections 6.1(b) and 6.1(c), which obligations shall continue in
perpetuity.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Public Announcements.
Any announcements or similar publicity with respect to this Agreement or
the transactions contemplated herein shall be approved by both Seller and Buyer
in advance, provided that such approval shall not be unreasonable withheld or
delayed and that nothing herein shall prevent either party upon notice to the
other from making public announcements to comply with the requirements of law or
contract.
10.2 Amendment and Modification.
31
This Agreement may be amended, modified, or supplemented only by the
written agreement of the parties hereto.
10.3 Waiver of Compliance.
Except as otherwise provided in this Agreement, any failure of either of
the parties to comply with any obligation, covenant, agreement or condition
herein may be waived by the party entitled to the benefit thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. The failure of any party hereto to
enforce at any time any of the provision of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be waiver of any other or subsequent breach.
10.4 Survival of Representations and Warranties.
Each and every representation and warranty of Seller or Buyer contained
herein or in any other document delivered prior to or at Closing shall survive
for a period of six (6) months (except that in the case of Seller's
representation and warranties contained in Section 5.3 and Section 5.5 which
shall be for a period of twelve (12) months) from the Closing or from
termination of this Agreement pursuant to Article 9.
10.5 Cost and Expenses.
Except as expressly otherwise provided in this Agreement, each party
hereto shall bear its
32
own costs and expenses in connection with this Agreement and the transactions
contemplated hereby.
10.6 Notices.
All notices required or permitted hereunder shall be in writing and
shall be deemed to be properly given: (a) when personally delivered to the
party entitled to receive the notice; (b) upon receipt of a facsimile message
confirmed by first-class mail, postage prepaid; (c) upon receipt of package
delivered by overnight courier; or (d) when sent by certified or registered
mail, postage prepaid properly addressed to the party entitled to receive
such notice at the address stated below or such other address as one party
may so notify other.
Seller: Block Drug Company, Inc.
257 Cornelison Avenue
Jersey City, New Jersey 07302
Attention: Senior Vice President and General Counsel
Fax: (201) 451-2534
Buyer: WD-40 Company
1061 Cudahy Place
San Diego, California 92110
Attention: Garry O. Ridge
Fax: (619) 275-4958
With a copy to: John B. Sidell, Esq
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Harmsen Carpenter Sidell & Olson
Symphony Towers
750 B Street, Ste. 1800
San Diego, California 92101
Fax: (619) 238-0087
10.7 Exhibits and Schedules.
The Exhibits and Schedules attached to this Agreement are made a part of
this Agreement, and reference to a document or agreement in one Exhibit or
Schedule shall deemed reference to such document or agreement in all Exhibits or
Schedules.
10.8 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Neither Seller nor
Buyer may assign this Agreement or any of its rights or liabilities hereunder
without the prior written consent of the other party hereto, except that Seller
may so assign to one or more of its Affiliates.
10.9 Entire Agreement.
This Agreement, including the Exhibits and Schedules attached hereto and
any documents referred to herein, shall constitute the entire Agreement between
the parties hereto with respect to the subject matter hereof and shall supersede
all previous negotiations, commitments, and writings with respect to such
subject matter.
10.10 Illegality and Severability.
In the event a court of competent jurisdiction holds any part or provision
of this Agreement
34
to be illegal, invalid, unenforceable or in conflict with the applicable laws or
regulations, shall be ineffective to the extent of such holding and shall be
replaced with a part or provision that accomplishes, to the extent possible, the
original commercial purpose and economic benefit of such part or provision in a
valid and enforceable manner, without affecting, impairing or invalidation the
remaining provisions which shall remain binding on the parties hereto and in
full force and effect.
10.11 Captions
The captions appearing in this Agreement are inserted only as a matter of
convenience and as a reference and in no way define, limit or describe the scope
or intent of this Agreement or any of the provisions hereof.
10.12 Counterpart.
This Agreement may be executed in on or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one
agreement.
10.13 Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey, but in no event shall any conflict of law
provision be applied in the governance and interpretation of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written.
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Block Drug Company, Inc. WD-40 Company
By: /s/ Peter C. Mann By: /s/ Garry O. Ridge
------------------------------ -------------------------------
Name Printed: Peter C. Mann Name Printed: Garry O. Ridge
-------------------- ---------------------
Title: President - Americas Division Title: President/CEO
-------------------------------- ----------------------------
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Asset Purchase Agreement - Block Drug Co. Inc. and WD-40 Co.
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