<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 18, 1996
REUNION INDUSTRIES, INC.
------------------------
(Exact name of registrant as specified in its charter)
Delaware
--------
(State or other jurisdiction of incorporation)
1-7726 06-1439715
------ ----------
(Commission File Number) (IRS Employer Identification No.)
62 Southfield Avenue, One Stamford Landing, Stamford, CT 06902
------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 324-8858
--------------
Not Applicable
--------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 18, 1996 (the "QMP Closing Date"), Oneida Rostone Corp.
("ORC"), a New York corporation and a wholly-owned subsidiary of Reunion
Industries, Inc. ("Reunion" or "Registrant"), acquired (the "QMP Acquisition")
substantially all of the assets and the business and assumed certain liabilities
of Quality Molded Products, Inc. ("QMP") pursuant to an Asset Purchase Agreement
(the "QMP Agreement") dated as of November 18, 1996. The purchase price paid by
ORC under the QMP Agreement was approximately $3.0 million, subject to
adjustment upon completion of a Closing Date Balance Sheet within 90 days after
the QMP Closing Date (which adjustment is not expected to be material). The
liabilities assumed under the QMP Agreement included approximately $3.1 million
of bank debt and approximately $2.7 million of accounts payable, capital leases
and other operating liabilities. The financial terms of the transaction were
determined by arms length negotiation based on QMP's financial position and
results of operations for the year ended December 31, 1995 and the six months
ended June 30, 1996. The assumed bank debt was immediately repaid from the
proceeds of borrowings under ORC's existing secured credit facility ( the "Loan
Facility") with Congress Financial Corporation ("Congress"), which Loan Facility
was contemporaneously amended as described below. Acquisition costs,
principally broker's commission and legal, accounting and other professional
fees, are estimated to total approximately $0.5 million.
QMP, located in Siler City, North Carolina is a custom injection molder
serving customers in the housewares, office equipment, consumer products,
transportation and construction industries in the southeastern United States.
For the nine months ended September 30, 1996 (unaudited), QMP had net sales of
$9.4 million, an operating loss of $0.1 million and a net loss of $0.3 million.
For the year ended December 31, 1995, QMP had net sales of $16.5 million,
operating profit of $0.7 million and net income of $0.7 million.
Contemporaneously with the QMP Acquisition, ORC and Congress entered into
Amendment No. 2 to the Loan Facility. The Loan Facility, as amended, provides
for an increase in the overall maximum facility to $20.0 million, including an
Overformula Loan (as defined in Amendment No. 2, through February 14, 1997) of
up to $1.0 million and an additional term loan amount of $3.7 million. The Loan
Facility terminates February 2, 1999. To facilitate the closing of the QMP
Acquisition and Amendment No. 2 to the Loan Facility, Reunion and Charles E.
Bradley, President and a Director of Reunion, guaranteed the $1.0 million
Overformula Loan. On the QMP Closing Date, ORC borrowed approximately $4.1
million under the Loan Facility to fund the QMP Acquisition purchase price and
the repayment of the bank debt assumed. The remaining $2.0 million of the bank
debt repayment was funded by Reunion from its cash balances.
Also on November 18, 1996, DPL Acquisition Corp. ("DPLAC"), a Delaware
corporation and a wholly-owned subsidiary of ORC, completed the acquisition (the
"DPL Acquisition") of 68% of the outstanding stock of Data Packaging Limited
("DPL"), a Bermuda corporation operating in Ireland, pursuant to a Stock
Purchase Agreement (the "DPL Agreement") with a creditor of Texon Energy
Corporation ("TEC") and its subsidiaries. The DPL stock had been pledged by such
subsidiaries as collateral for debt obligations, and had been
1
<PAGE>
acquired by the creditor through foreclosure. Charles E. Bradley, President and
a Director of Reunion, is also President and a Director of TEC and beneficial
owner of approximately 14% of TEC's outstanding stock.
The purchase price paid by DPLAC under the DPL Agreement was approximately
$2.8 million, including a cash payment of $1.05 million and an unsecured note,
with interest at 10% and payable in three installments through January 2000, for
the remainder. The cash portion of the purchase price was funded by Reunion from
its cash balances. DPLAC had previously, on October 21, 1996, acquired 27.5% of
the outstanding stock of DPL from a third party. The remaining 4.5% of the
outstanding stock of DPL is owned by Forbairt, an agency of the Irish
government. The financial terms of the transactions were determined by arms
length negotiation based on DPL's financial position and results of operations
for its fiscal year ended April 30, 1996.
DPL, located in Mullingar, Ireland, is a custom injection molder serving
customers in the computer and business equipment industries, principally in
Ireland. For the nine months ended September 30, 1996 (unaudited), DPL had net
sales of $9.5 million, operating profit of $0.4 million and net income of $0.2
million. For its fiscal year ended April 30, 1996, DPL had net sales of $15.1
million, operating profit of $1.1 million and net income of $0.9 million.
Management believes that the DPL Acquisition and the QMP Acquisition will
further Reunion's strategy of increasing ORC's customer base and expanding its
product offerings and service capabilities in the plastic products industries.
Management currently intends to use the assets of DPL and of QMP in
substantially the same manner as they were used prior to the merger, but intends
to consider consolidation of facilities, joint purchasing and other cost
reduction opportunities.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS
a. Financial Statements:
(1) Quality Molded Products, Inc.
Independent Auditors' Report
Balance Sheets, December 31, 1995 and 1994
Statements of Income, Years Ended December 31, 1995 and 1994
Statements of Changes in Stockholder's Equity, Years Ended
December 31, 1995 and 1994
Statements of Cash Flows, Years Ended December 31, 1995 and 1994
Notes to Financial Statements
2
<PAGE>
(2) Data Packaging Limited
Independent Auditors' Report
Consolidated Balance Sheets, April 28, 1996 and April 30, 1995
Consolidated Statements of Operations, Years Ended April 28, 1996 and
April 30, 1995
Consolidated Statements of Shareholders' Equity, Years Ended April 28,
1996 and April 30, 1995
Consolidated Statements of Cash Flows, Years Ended April 28, 1996 and
April 30, 1995
Notes to Financial Statements
b. Pro Forma Financial Information:
Unaudited Pro Forma Consolidated Condensed Balance Sheet,
September 30, 1996
Unaudited Pro Forma Consolidated Condensed Statement of Operations
for the Year Ended December 31, 1995
Unaudited Pro Forma Consolidated Condensed Statement of Operations
for the Nine Months Ended September 30, 1996
Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements
c. Exhibits:
The following exhibits are filed herewith in accordance with Item 601 of
Regulation S-K:
Exhibit No. Exhibit Description
- ----------- --------------------
2.1 Asset Purchase Agreement between Oneida Rostone
Corp., Quality Molded Products, Inc. and Don A.
Owen, dated November 18, 1996
2.2 Stock Purchase Agreement dated as of October 17,
1996 among Frank J. Guzikowski, DPL Acquisition
Corp., Reunion Industries, Inc., Data Packaging
International, Inc. and DPL Holdings, Inc.
(incorporated by reference to Exhibit 2.2 to
Current Report on Form 8-K dated October 17, 1996)
10.1 Amendment No. 2 to Loan and Security Agreement
dated November 18, 1996 modifying original Loan
and Security Agreement dated February 2, 1996
between Congress Financial Corporation as Lender
and Oneida Rostone Corp. and Oneida Molded
Plastics, Corp. of North Carolina as Borrowers.
23.1 Consent of Dixon, Odom & Co., L.L.P., Independent
Auditors
23.2 Consent of Deloitte & Touche, Independent Auditors
99.1 Press release of Reunion Industries, Inc. dated
November 19, 1996
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REUNION INDUSTRIES, INC.
Dated: December 3, 1996 By: /s/ Richard L. Evans
-----------------------------
Name: Richard L. Evans
Title: Executive Vice President
4
<PAGE>
QUALITY MOLDED PRODUCTS, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
<PAGE>
QUALITY MOLDED PRODUCTS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
No.
-------
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Income 3
Statements of Changes in Stockholder's Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 7
</TABLE>
<PAGE>
[LETTERHEAD OF DIXON, ODOM & CO., L.L.P. APPEARS HERE]
INDEPENDENT AUDITORS' REPORT
To the Stockholder
Quality Molded Products, Inc.
Siler City, North Carolina
We have audited the accompanying balance sheets of Quality Molded Products, Inc.
as of December 31, 1995 and 1994, and the related statements of income, changes
in stockholder's equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Quality Molded Products, Inc.
as of December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
DIXON, ODOM & CO., L.L.P.
February 6, 1996
Greensboro, North Carolina
Page 1
<PAGE>
QUALITY MOLDED PRODUCTS, INC.
BALANCE SHEETS
December 31, 1995 and 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
----------- ----------
<S> <C> <C>
CURRENT ASSETS
Accounts receivable - trade $ 1,313,964 $1,296,930
Current portion of note receivable -- 18,690
Inventory 2,139,165 1,728,234
Prepaid expenses 34,948 43,844
----------- ----------
TOTAL CURRENT ASSETS 3,488,077 3,087,698
----------- ----------
PROPERTY AND EQUIPMENT
Land and buildings 1,970,282 1,708,485
Machinery and equipment 8,010,472 7,078,840
Furniture and fixtures 310,806 184,730
Automotive equipment 86,113 88,413
----------- ----------
10,377,673 9,060,468
Less accumulated depreciation 5,709,477 5,134,024
----------- ----------
4,668,196 3,926,444
----------- ----------
OTHER ASSETS
Cash value of officer's life insurance 38,997 36,409
----------- ----------
$ 8,195,270 $7,050,551
=========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Checks written in excess of funds on deposit $ 113,095 $ 207,693
Note payable - bank 683,931 500,000
Current portion of long-term debt 591,803 225,403
Current portion of obligations under
capital leases 16,245 18,184
Accounts payable - trade 1,434,344 686,105
Accounts payable - machinery 54,715 285,154
Accrued expenses 340,129 185,080
Customer deposits 31,925 91,425
----------- ----------
TOTAL CURRENT LIABILITIES 3,266,187 2,199,044
----------- ----------
LONG-TERM DEBT, less current portion 1,578,463 1,685,999
----------- ----------
OBLIGATIONS UNDER CAPITAL LEASES, less
current portion 13,648 29,893
----------- ----------
STOCKHOLDER'S EQUITY
Common stock, $1 par value, 100,000 shares
authorized, 13,438 shares issued 13,438 13,438
Additional paid-in capital 697,500 697,500
Retained earnings 2,626,034 2,424,677
----------- ----------
3,336,972 3,135,615
----------- ----------
$ 8,195,270 $7,050,551
=========== ==========
</TABLE>
See accompanying notes. Page 2
<PAGE>
QUALITY MOLDED PRODUCTS, INC.
STATEMENTS OF INCOME
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
NET SALES $16,470,673 $12,435,748
COST OF SALES 14,003,031 10,674,609
----------- -----------
GROSS PROFIT 2,467,642 1,761,139
SELLING, GENERAL, AND
ADMINISTRATIVE EXPENSES 1,766,056 1,370,885
----------- -----------
INCOME FROM OPERATIONS 701,586 390,254
----------- -----------
OTHER INCOME (EXPENSE)
Interest income 926 4,604
Interest expense (274,296) (188,737)
Gain on disposal of property
and equipment 15,105 1,900
Commission and management fee income 250,000 210,000
----------- -----------
(8,265) 27,767
----------- -----------
NET INCOME $ 693,321 $ 418,021
=========== ===========
</TABLE>
See accompanying notes. Page 3
<PAGE>
QUALITY MOLDED PRODUCTS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained
Stock Capital Earnings Total
---------- -------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE,
December 31, 1993 $13,438 $697,500 $2,296,038 $3,006,976
Net income, 1994 -- -- 418,021 418,021
Dividends paid, 1994 -- -- (289,382) (289,382)
---------- -------- ---------- ----------
BALANCE,
December 31, 1994 13,438 697,500 2,424,677 3,135,615
Net income, 1995 -- -- 693,321 693,321
Dividends paid, 1995 -- -- (491,964) (491,964)
---------- -------- ---------- ----------
BALANCE,
December 31, 1995 $13,438 $697,500 $2,626,034 $3,336,972
========== ======== ========== ==========
</TABLE>
See accompanying notes. Page 4
<PAGE>
QUALITY MOLDED PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------------ ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 693,321 $418,021
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation 577,753 523,116
Loss on disposal of property
and equipment -- (1,900)
Decrease (increase) in:
Accounts receivable - trade (17,034) (938,747)
Accounts receivable - stockholder -- 130,848
Inventory (410,931) (423,939)
Prepaid expenses 8,896 (22,271)
Cash value of officers life insurance (2,588) (11,013)
Increase (decrease) in:
Checks written in excess of funds on deposit (94,598) 207,693
Accounts payable 748,239 48,687
Accrued expenses 155,049 (66,202)
Customer deposits (59,500) 91,425
----------- --------
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES 1,598,607 (44,282)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (1,549,944) (424,388)
Proceeds from disposition of property
and equipment -- 17,700
Collections on loan 18,690 28,913
---------- --------
NET CASH USED BY
INVESTING ACTIVITIES (1,531,254) (377,775)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable 183,931 325,000
Proceeds from issuance of long-term debt 551,956 322,520
Repayments of long-term debt (293,092) (263,551)
Dividends paid (491,964) (289,382)
Repayments of capital lease obligation (18,184) (17,451)
---------- ---------
NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES (67,353) 77,136
----------- --------
</TABLE>
See accompanying notes. Page 5
<PAGE>
QUALITY MOLDED PRODUCTS, INC.
STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
-------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ -- $(344,921)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR -- 344,921
-------- ---------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ -- $ --
======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for interest $262,165 $ 188,465
======== =========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Refinancing of installment notes payable $750,000 $ --
======== =========
See accompanying notes. Page 6
<PAGE>
QUALITY MOLDED PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
- ------------------
Quality Molded Products, Inc. is a manufacturer of molded plastic products. The
company sells to manufacturers and distributors of consumer household products
which have operating facilities in North Carolina and surrounding states.
Cash and Cash Equivalents
- -------------------------
For purposes of reporting cash flows, the Company considers all money market
funds and certificates of deposit to be cash equivalents.
Inventory
- ---------
Inventory is valued at the lower of cost (first-in, first-out basis) or market.
Property and Equipment
- ----------------------
Property and equipment is recorded at cost. Depreciation is computed on the
straight-line method for financial reporting purposes over the following
estimated useful lives of the assets.
Buildings 15 to 33 years
Machinery and equipment 5 to 10 years
Furniture and fixtures 5 to 10 years
Automotive equipment 3 to 5 years
Maintenance, repairs, and minor renewals are charged to expenses as incurred,
while the costs of significant betterments that extend the life of an asset are
capitalized.
Income Taxes
- ------------
The Company has elected to be taxed under Subchapter S of the Internal Revenue
Code. Under this election, the income or loss of the Company is required to be
reported by the sole stockholder on his individual federal and state income tax
returns. Accordingly, no provision has been made for federal or state income
taxes.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Page 7
<PAGE>
QUALITY MOLDED PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE B - INVENTORY
Inventory consists of the following components as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Finished goods $1,014,759 $ 791,087
Raw materials 1,100,282 907,811
Supplies 24,124 29,336
---------- ----------
$2,139,165 $1,728,234
========== ==========
</TABLE>
NOTE C - NOTE PAYABLE - BANK
Under a loan agreement which expires on April 15, 1996, the Company has a line
of credit from BB&T of up to $1,000,000. Advances under the line of credit
carry interest at prime plus .25%. The line is collateralized by all equipment,
receivables, and inventory and is guaranteed by the sole stockholder. The BB&T
line of credit is renewable at the discretion of the bank. At December 31, 1995
and 1994, $683,931 and $500,000, respectively, was outstanding under this line
of credit. The loan agreement requires, among other things, that the Company
maintain certain financial conditions and ratios. At December 31, 1995, the
Company was in compliance with these covenants or had obtained the necessary
waivers for any noncompliance.
NOTE D - LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
-------- ----------
<S> <C> <C>
BB&T
Installment note, payable at $16,550 per month
through July 2000, including interest at
prime plus .85% with the remaining principal
due August 2000, collateralized by machinery
and equipment $721,659 $1,160,136
Installment note, refinanced during 1995 -- 452,517
Installment note payable at $4,717 per month
through September 1996, including interest at
prime plus .85% with the remaining principal
due October 1996, collateralized by machinery
and equipment 240,674 271,902
</TABLE>
Page 8
<PAGE>
QUALITY MOLDED PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE D - LONG-TERM DEBT (Continued)
<TABLE>
<CAPTION>
1995 1994
---------------- ----------
BB&T (Continued)
<S> <C> <C>
Installment note payable at $12,608 per month
through February 1998, including interest at
prime plus 1%, with the remaining principal due
March 1998, collateralized by machinery and
equipment $ 212,694 $ --
Installment note payable at $13,500 per month
through July 2000, including interest at prime
plus .75% with the remaining principal balance
due August 2000, collateralized by machinery
and equipment 978,764 --
Installment note payable at $560 per month
through May 1998 including interest at prime
plus 1%, collateralized by automotive equipment 14,696 19,670
Installment note payable at $490 per month
through March 1996 including interest at prime
plus 1%, collateralized by automotive equipment 1,779 7,177
---------- ----------
TOTAL LONG-TERM DEBT 2,170,266 1,911,402
Less current portion 591,803 225,403
---------- ----------
$1,578,463 $1,685,999
========== ==========
Future maturities of long-term debt as of December 31, 1995 are as follows:
1997 $ 310,223
1998 253,849
1999 275,844
2000 738,547
----------
$1,578,463
==========
</TABLE>
The Company's sole stockholder is a guarantor of the $721,659, $240,674,
$212,694, and $978,764 notes payable to BB&T and the Company is required to
maintain certain financial conditions and ratios under the loan agreement. At
December 31, 1995, the Company was in compliance with these covenants or had
obtained the necessary waivers for any noncompliance.
The Company has an installment note payable in the amount of $240,674 with a
balloon payment due October 1996. It is the intent of management to refinance
the note before the due date, over a 3 to 5 year period.
Page 9
<PAGE>
QUALITY MOLDED PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE D - LONG-TERM DEBT (Continued)
At December 31, 1995, BB&T had committed to two installment notes payable for
$730,000 and $85,000. The Company has borrowed $300,000 against the $730,000
note during 1995 of which $212,694 remained outstanding at December 31, 1995.
The company has not borrowed against the $85,000 note as of December 31, 1995.
NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of note payable - bank at December 31, 1995 approximates
fair value because the interest rate fluctuates with the lending bank's prime
rate.
Based on the borrowing rates currently available to the Company for bank loans
with similar terms and average maturities, the fair value of long-term debt is
$2,170,266 at December 31, 1995.
NOTE F - CAPITAL LEASE OBLIGATIONS
The Company leases certain equipment with lease terms through December 1997.
The obligations under capital leases have been recorded in the accompanying
financial statements at the present value of the future minimum lease payments,
discounted at interest rates from 9.54% to 14%. The assets held under the
capital leases are included in property and equipment in the following
classification:
<TABLE>
<CAPTION>
<S> <C>
Machinery and equipment $ 52,892
Furniture and fixtures 19,319
----------
72,211
Less accumulated depreciation 30,188
----------
TOTAL $ 42,023
==========
</TABLE>
Future minimum lease payments under the capital leases and the net present value
of the future minimum lease payments are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 16,245
1997 13,648
----------
Total future minimum lease payments 29,893
Less amount representing interest 3,336
----------
Present value of future minimum
lease payments 26,557
Less current portion 16,245
----------
$ 10,312
==========
</TABLE>
Page 10
<PAGE>
QUALITY MOLDED PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE G - RELATED PARTY TRANSACTIONS
The Company received a commission of $250,000 in 1995 for assistance on the sale
of assets of a company affiliated through common ownership and management. The
Company received management fees totalling $210,000 in 1994 from the affiliated
company for services performed by the Company.
NOTE H - MAJOR CUSTOMERS
Net sales to two unrelated customers were approximately 27% and 38% for the year
ended December 31, 1995, and 51% and 18% for the year ended December 31, 1994 of
total net sales, respectively.
NOTE I - PROFIT SHARING PLAN
The Company sponsors a profit sharing plan which covers substantially all
employees. The Company matches employee contributions up to specified limits.
Contributions to the plan totalled $34,014 in 1995 and $35,556 in 1994.
NOTE J - CONCENTRATIONS OF CREDIT RISK
The Company is engaged primarily in the manufacture and sale of molded plastic
products. The Company performs ongoing credit evaluations of its customers and
generally requires no collateral from its customers. Financial instruments that
potentially subject the Company to concentrations of credit risk consist
principally of industry concentrations of customers.
Page 11
<PAGE>
DATA PACKAGING, LTD.
CONSOLIDATED FINANCIAL STATEMENTS
AND INDEPENDENT AUDITORS' REPORT
FOR THE YEARS ENDED APRIL 28, 1996 AND APRIL 30, 1995
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders
of Data Packaging, Ltd.
We have audited the accompanying consolidated balance sheets of Data Packaging,
Ltd. as of April 28, 1996 and April 30, 1995, and the related consolidated
statements of operations, shareholders' equity and cash flows for the years
ended April 28, 1996 and April 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Data Packaging, Ltd. as of April
28, 1996 and April 30, 1995, and the results of its operations and its cash
flows for the periods then ended in conformity with accounting principles
generally accepted in the United States of America.
DELOITTE & TOUCHE
August 15, 1996
Hamilton, Bermuda
<PAGE>
DATA PACKAGING, LTD.
CONSOLIDATED BALANCE SHEETS
as of April 28, 1996 and April 30, 1995
1996 1995
CURRENT ASSETS
Cash and cash equivalents $ 13,119 $ -
Accounts receivable 1,845,449 1,804,278
Other receivables (Note 3) 125,052 486,998
Inventories (Note 4) 665,984 615,543
Prepaid expenses 97,558 47,050
---------- ---------
Total current assets 2,747,162 2,953,869
PROPERTY, PLANT AND EQUIPMENT (Note 5) 4,140,300 3,976,264
---------- ---------
TOTAL ASSETS $6,887,462 $6,930,133
========== =========
CURRENT LIABILITIES
Bank overdraft $ - $ 150,219
Accounts payable and accrued expenses 2,314,982 3,006,001
Accrued payroll liability 191,715 209,771
Payable to affiliate (Note 6) 8,352 112,014
Current maturities on long-term debt (Note 7) 509,357 376,165
---------- ---------
Total current liabilities 3,024,406 3,854,170
LONG-TERM DEBT (Note 7) 1,552,913 1,310,137
ACCRUED PENSION COSTS (Note 14) 234,056 298,616
DEFERRED CREDIT (Note 8) 695,385 953,864
---------- ---------
TOTAL LIABILITIES 5,506,760 6,416,787
---------- ---------
COMMITMENTS AND CONTINGENCIES (Note 13)
-2-
<PAGE>
DATA PACKAGING, LTD.
CONSOLIDATED BALANCE SHEETS (CONT'D)
as of April 28, 1996 and April 30, 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
SHAREHOLDERS' EQUITY:
Common shares
Class A, $1 par value; authorized, issued and
outstanding 1996 - 3,642; 1995 - 2,400 3,642 2,400
Class B, $1 par value; authorized, issued and
outstanding 1996 - 9,600; 1995 - 9,600 9,600 9,600
Preferred shares $0.10 par value; authorized, issued
and outstanding: 1996 - 933; 1995 - 933 93 93
Additional paid-in capital 1,346,017 1,315,600
Appropriated retained earnings (Note 9) 1,967,906 1,967,906
Unappropriated deficit (1,978,719) (2,857,537)
Cumulative translation adjustments 32,163 75,284
------------ ----------
Total shareholders' equity 1,380,702 513,346
------------ ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,887,462 $ 6,930,133
============ ==========
</TABLE>
See accompanying notes to the consolidated financial statements
-3-
<PAGE>
DATA PACKAGING, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended April 28, 1996 and April 30, 1995
1996 1995
Sales $15,108,463 $11,837,628
Cost of sales 12,301,720 9,793,439
----------- ----------
Gross profit 2,806,743 2,044,189
----------- ----------
Expenses
Depreciation 767,617 686,832
Grant amortization (221,649) (162,838)
Selling, general and administrative 1,169,026 1,077,923
----------- ----------
1,714,994 1,601,917
----------- ----------
Income from operations 1,091,749 442,272
Interest, net (184,206) (236,116)
Foreign exchange (loss) gain (28,725) 5,851
----------- ----------
Income before income taxes 878,818 212,007
Income taxes (Note 10) - 8,787
----------- ----------
NET INCOME $ 878,818 $ 220,794
=========== ==========
See accompanying notes to the consolidated financial statements
-4-
<PAGE>
DATA PACKAGING, LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the years ended April 28, 1996 and April 30, 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Common shares $ 13,242 $ 12,000
---------- ----------
Preferred shares 93 93
---------- ----------
Additional paid-in capital 1,346,017 1,315,600
---------- ----------
Unappropriated deficit, beginning of period (2,857,537) (3,078,331)
Net income 878,818 220,794
---------- ----------
Unappropriated deficit, end of period (1,978,719) (2,857,537)
Appropriated retained earnings (Note 9) 1,967,906 1,967,906
---------- ----------
Accumulated deficit (10,813) (889,631)
---------- ----------
Cumulative translation adjustments, beginning of period 75,284 36,727
Adjustments during the period (43,121) 38,557
---------- ----------
Cumulative translation adjustments, end of period 32,163 75,284
---------- ----------
$ 1,380,702 $ 513,346
========== ==========
</TABLE>
See accompanying notes to the consolidated financial statements
-5-
<PAGE>
DATA PACKAGING, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended April 28, 1996 and April 30, 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 878,818 $ 220,794
Adjustments to reconcile net income
to net cash (used in) provided by operating activities:
Depreciation and amortization (net) 545,968 523,994
Gain on disposal of assets 30,548) (42,471)
Changes in assets and liabilities:
Accounts receivable (117,605) (111,044)
Other receivables 350,492 45,571
Inventories (77,411) 123,771
Prepaid expenses (53,717) (6,541)
Accounts payable and accrued expenses (582,363) (995,886)
Accrued payroll liability (9,733) (379,569)
Payable to affiliate (101,529) 61,314
Income tax payable - (1,533)
Accrued pension costs (53,666) 285,169
-------- ---------
Net cash provided by (used in) operating activities 748,706 (276,431)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (1,132,176) (262,906)
Proceeds on disposal of assets 57,509 87,479
-------- ---------
Net cash used in investing activities (1,074,667) (175,427)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt 456,279 944,187
Repayment of long-term debt - (725,105)
Proceeds on issuance of shares 31,659 -
-------- ---------
Net cash provided by financing activities 487,938 219,082
-------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,361 (1,644)
-------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH 163,338 (234,420)
EQUIVALENTS
CASH AND CASH EQUIVALENTS , BEGINNING OF PERIOD (150,219) 84,201
-------- ---------
CASH AND CASH EQUIVALENTS (BANK OVERDRAFT), $ 13,119 $ (150,219)
END OF PERIOD ======== =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 249,474 $ 173,931
-------- ---------
Income taxes paid $ - $ -
-------- ---------
</TABLE>
See accompanying notes to the consolidated financial statements
-6-
<PAGE>
DATA PACKAGING, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Data Packaging, Ltd. ("the Company") is incorporated under the laws of
Bermuda. It is 68% owned by subsidiaries of Texon Energy Corporation,
incorporated in the United States of America, 27.5% owned by Allied
Irish Banks (Holdings & Investments Limited) and 4.5% owned by Forbairt,
an agency of the Irish government.
The Company manufactures precision injection moulded plastic products
primarily for the computer hardware and business equipment industries.
The Company's principal manufacturing facility is located in Ireland and
the majority of its sales are made in Ireland.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Data
Packaging, Ltd. and its wholly-owned subsidiary, Data Packaging
(Ireland) Limited. All significant intercompany balances have been
eliminated.
Cash and cash equivalents
For purposes of the statements of cash flows, the Company considers all
highly liquid instruments with a maturity of three months or less when
purchased to be cash equivalents.
Inventories
Inventories are stated at the lower of cost (determined on the first-in,
first-out basis) and net realizable value. Cost is represented by
material cost (inclusive of freight and duty) together with, where
appropriate, direct labor and manufacturing overhead.
Grants
Capital grants have been received from the Irish Government Development
Agency which provide grants towards the cost of new buildings and
equipment. Capital grants have been recorded as follows:
(a) Purchased assets - recorded as deferred credits on the balance sheet
and amortized to income over the useful lives of the related assets.
(b) Leased assets - grants have reduced the net present value of lease
payments capitalized as leased machinery.
Training and feasibility study grants are credited against the related
expenses (principally training and travel expenses) as such costs are
incurred.
-7-
<PAGE>
DATA PACKAGING, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Capital lease obligations
Leased assets are capitalized at an amount which represents the
estimated net present value of future lease payments, after deduction of
applicable capital grants, under the terms of various capital leases.
Leased assets are amortized at the same rates used for depreciating
owned assets.
Depreciation
The Company provides for depreciation and amortization at rates
calculated to write-off the original cost of fixed assets, net of
related grants, over their estimated useful lives on the straight-line
basis as follows:
Buildings 15 to 40 years
Moulding machinery and equipment 8 to 12 years
Other machinery 8 to 10 years
Dies and moulds 5 years
Fixtures and fittings 8 to 10 years
Computer equipment 5 years
Motor vehicles 5 years
Small tools 3 years
A half-year's charge is made in the period in which new
assets are commissioned.
Sales
Sales represent the value of goods shipped to customers,
net of Value Added Tax, returns and discounts allowed.
Translation of foreign currencies
All amounts, unless otherwise designated, in the accompanying
consolidated financial statements are denominated in U.S. dollars.
Assets and liabilities of the foreign branches, whose local currency is
the functional currency, are translated at exchange rates in effect at
the balance sheet date. Revenues and expenses of these subsidiaries are
translated at average exchange rates. Translation gains and losses are
not included in the consolidated statement of operations, but are
accumulated as a separate component of shareholders' equity. Gains and
losses from foreign currency transactions are included in the
consolidated statement of operations.
-8-
<PAGE>
DATA PACKAGING, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Income taxes
Irish Corporation Tax is calculated on the separate taxable profits of
the Company and its subsidiary for the accounting period, net of
allowances and reliefs available.
Use of estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and the disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Fiscal year
The Company's fiscal year is the 52 or 53 weeks ending on
the Sunday closest to April 30.
Fair Value of Financial Instruments
The following methods and assumptions were used by the Company in
estimating fair value disclosures for financial instruments:
Cash and cash equivalents - The carrying amount
reported in the balance sheet approximates fair value
Long term debt - The carrying amount reported in the balance
sheet approximates fair value as the majority of the debt
carries variable interest rates.
Long Lived Assets and Impairment
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long Lived Assets
and for Long Lived Assets to be Disposed of". The Company reviews long-
lived assets for impairment whenever circumstances indicate that the
carrying amount of the asset may not be recoverable and recognizes an
impairment loss when the future cash flows expected to be generated by
the asset are less than the carrying amount of the assets. The effect of
adopting this standard was not material to the financial statements.
Reclassifications
Certain amounts in the 1995 consolidated financial statements have
been reclassified to conform to the presentation for 1996.
-9-
<PAGE>
DATA PACKAGING, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. OTHER RECEIVABLES
Other receivables at April 28, 1996 and April 30, 1995 consisted of the
following:
1996 1995
Capital grants (branch-owned assets) $ - $ 314,570
Other 52,293 60,501
VAT receivable 72,759 111,927
---------- ---------
Total $ 125,052 $ 486,998
========== =========
4. INVENTORIES
Inventories at April 28, 1996 and April 30, 1995 consisted of the
following:
1996 1995
Raw materials $ 339,807 $ 280,863
Work-in-process/semi-finished 73,685 122,151
Finished goods 252,492 212,529
---------- ---------
Total $ 665,984 $ 615,543
========== =========
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at April 28, 1996 and April 30, 1995,
consisted of the following:
April 28, April 30,
1996 1995
Land $ 117,360 $ 117,360
Buildings and improvements 2,390,492 2,497,158
Machinery and equipment 9,501,905 9,133,963
---------- ---------
Total 12,009,757 11,748,481
Less: accumulated depreciation 7,869,457 7,772,217
---------- ---------
Property, plant and equipment - net $ 4,140,300 $3,976,264
========== =========
-10-
<PAGE>
DATA PACKAGING, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. PAYABLE TO AFFILIATE
The amount payable to affiliate represents amounts due under a
consulting contract with a subsidiary of Reunion Industries, Inc., an
affiliated company (see Note 15). The contract calls for annual payments
of $100,000.
7. LONG-TERM DEBT
Long-term debt at April 28, 1996 and April 30, 1995 consisted of the
following:
1996 1995
Bank loans $ 978,155 $1,286,701
Loan from affiliate 250,000 250,000
Obligations under capital leases (see Note 12) 834,115 149,601
--------- ---------
Total 2,062,270 1,686,302
Less: current maturities (509,357) (376,165)
--------- ---------
Total $1,552,913 $1,310,137
========= =========
Bank loans are comprised of:
a. A term loan from ICC Bank plc of $637,387 (1995 - $654,261). This loan,
which is scheduled for repayment in one installment not later than July
1997 is secured by the Company's premises in Ireland and all of the assets
of the Company with the exception of certain accounts receivable, together
with mortgages over certain of its machinery and a collateral chattel
mortgage over the assets of Data Packaging (Ireland) Limited. The loan
bears interest at 3.5% over the Dublin Inter Bank Offered Rate (DIBOR)
(8.65% at April 28, 1996) and contains restrictive covenants prohibiting
the payment of dividends to shareholders until the term loan is repaid in
full. This loan has been periodically renewed since 1987, and management
expects to be able to renew the loan at maturity, although such renewal can
not be assured.
b. Advances of $159,477 (1995 - $293,400) from ICC Bank plc under a Promissory
Note Purchase Facility. These advances bear interest at the one month DIBOR
rate plus 2.75% (7.92% at April 28, 1996) and are repayable in installments
over the next two years, with the last repayment to be made no later than
February 28, 1997. The advances are secured by an extension of the security
referred to in (a) above.
-11-
<PAGE>
DATA PACKAGING, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. LONG-TERM DEBT (cont'd)
c. A loan from AIB Capital Markets plc, an affiliated company, of
$181,291 (1995 - $339,040). Loan payments are made monthly with the
last payment to be made no later than January 31, 1997. This loan is
interest bearing at approximately 8.88% per annum and secured by a
mortgage debenture, subordinated to ICC, over the assets of the
Company, including the facility in Ireland.
d. A loan from an affiliate, Stanwich Oil & Gas Inc., in the original
principal amount of $250,000. The loan was non-interest bearing until
October 1, 1995 at which time interest was charged at 10% per annum.
The Company's banks have agreed to permit principal repayments of
$5,000 per month in any month that the Irish branch net income
exceeds $23,452. After February 1, 1997, the permitted repayment is
$15,000 per month in any month that the Irish branch net income
exceeds $39,088. This loan is secured by the assets of the Company
but subordinated to ICC Bank plc and pari passu with AIB Capital
Markets plc agreeing to postpone its priority over Debtors in favour
of Bank of Ireland Commercial Finance.
The aggregate principal payments on all long-term debt, excluding the loan
from affiliate and capital lease obligations, for each of the next five years
are as follows:
Year ending: 1997 $ 340,768
1998 637,387
-------
$ 978,155
=======
The Company also has available a line of credit facility provided by Bank of
Ireland Commercial Finance Limited. The facility is limited to a maximum of
$547,225, bears interest at the prime rate plus 4% and is secured by the
Company's accounts receivable and an indemnity from Stanwich Partners Inc., an
affiliated company. At April 28, 1996 and April 30, 1995, no amounts were drawn
against this line of credit by the Company.
-12-
<PAGE>
DATA PACKAGING, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. DEFERRED CREDIT
<TABLE>
<CAPTION>
Land,
Buildings & Fixtures Leased
Improvements Machinery & Fittings Machinery Total
$ $ $ $ $
<S> <C> <C> <C> <C> <C>
GRANTS:
At April 30, 1995 466,001 476,949 10,914 - 953,864
Amortized in period (35,390) (182,152) (4,106) - (221,648)
Disposals - (3,316) - - (3,316)
Translation adjustment (18,163) (15,006) (346) - (33,515)
---------- -------- ------- ------- --------
At April 28, 1996 412,448 276,475 6,462 - 695,385
---------- -------- ------- ------- --------
</TABLE>
9. SHAREHOLDER'S EQUITY
Preferred stock
The preferred shares are redeemable, participating and non-voting.
Appropriated retained earnings
By Resolution of the Directors dated January 24, 1989, Irish pounds
1,400,000 ($1,967,906) was transferred from retained earnings to a special
non-distributable reserve account. This transfer was made to comply with
certain Equity Equivalent requirements specified in grant agreements with
the Industrial Development Authority. Under these requirements, any Equity
Equivalent shortfall arising as a consequence of payment of preferred
dividends to Data Packaging International, Inc. must be replaced, in due
course, by an equal amount of alternative Equity Equivalent.
Unappropriated retained earnings
Under the terms of the agreements entered into upon the change of ownership
during the period ended November 28, 1987, the holders of all common shares
are entitled to an annual dividend, after April 24, 1992, subject to
availability of sufficient accumulated distributable profits, of at least
30% of unappropriated earnings. As of April 28, 1996 and April 30, 1995
there were no dividends due under this agreement.
-13-
<PAGE>
DATA PACKAGING, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. INCOME TAXES
The Company is subject to an effective income tax rate of 10% on any
profits arising from sales of goods manufactured in Ireland. Profits
from other activities are taxable at 38% (1995 - 40%). No income tax
expense arises on the trading results of either period due to the
availability of loss carryforwards and capital allowances.
The components of income tax expense for the years ended April 28, 1996
and April 30, 1995 are as follows:
1996 1995
Corporation tax:
Current period $ - $ -
Adjustments to previous period - 8,787
------ -------
Credit to earnings of the period $ - $ 8,787
====== =======
A reconciliation between the Company's effective tax rate and the
statutory income tax rate of 38% and 40% for the years ended April 28,
1996 and April 30, 1995 respectively, is as follows :
1996 1995
Income tax expense at statutory rate 38% 40%
Statutory manufacturers relief (28)% (30)%
------ -------
Effective tax rate 10% 10%
Utilization of net operating loss carryforwards (10)% (10)%
Other, net (4)%
------ -------
- (4)%
====== =======
The temporary differences, capital allowances and net operating loss tax
credits, which do not expire and aggregate $1,662,000 and $1,956,000
result in a deferred tax asset as of April 28, 1996 and April 30, 1995,
respectively. However, a valuation allowance was set up to fully offset
the tax benefit of these temporary differences and carryforwards because
the Company may not generate sufficient taxable income to realize the
tax benefit in the future. Therefore no net deferred income tax asset
was recorded as of April 28, 1996 and April 30, 1995.
-14-
<PAGE>
DATA PACKAGING, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. RELATED PARTIES
The Company has entered into transactions with various related parties,
including lease arrangements (See Note 12), consulting contracts (See
Note 6) and long term debt agreements (See Note 7).
12. LEASES
The Company has entered into various operating lease agreements with AIB
Capital Markets plc, an affiliated company.
The future minimum lease payments for the next five years under
leases, all of which are classified as capital leases, are as follows:
Period ending: 1997 $ 234,059
1998 226,313
1999 215,555
2000 196,316
2001 140,014
----------
Total minimum lease payments 1,012,257
Less:
Imputed interest (178,142)
----------
Present value of net minimum lease payments $ 834,115
==========
Rental expense incurred under operating leases was $Nil and $4,310 for
the years ended April 28, 1996 and April 30, 1995, respectively.
13. CONTINGENCIES
Capital Grants
The capital grant agreements with the Industrial Development Authority
of Ireland provide that grants received may have to be repaid in the
event of failure to comply with certain conditions, including conditions
relating to production, employment and investment levels. The repayment
contingency is reduced by 10% per annum in each of the five years
following the year of receipt of grant instalments and by a further 50%
at the end of the next three-year period. The repayment contingency in
relation to the above noted grants is estimated to be $579,252 (1995:
$508,941).
-15-
<PAGE>
DATA PACKAGING, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. CONTINGENCIES (cont'd)
Capital Grants (cont'd)
Property rental subsidy grants received may be repayable, in whole or in
part, in the event of failure to comply with the conditions referred to
above. As of April 28, 1996, the Company is in compliance with the
conditions of the capital grant agreements.
Concentration of risk
A substantial portion of the Company's revenues are derived from the
sale of products manufactured at the Company's sole manufacturing
facility which is located in the Republic of Ireland. This manufacturing
facility is subject to the normal hazards of any such facility that
could result in damage to the facility. Any such damage or prolonged
delay in the operations of this facility for repairs or other reason
would have materially adverse effect on the Company's financial position
and results of operations.
Sales to three unrelated customers were approximately 33%, 23% and 13%
of total sales for the year ended April 28, 1996 of which the 13%
relates to a customer who has discontinued its operations in Ireland.
The Company had two customers which represented approximately 53% and
13% of total accounts receivable as of April 28, 1996.
Sales to three unrelated customers were approximately 29%, 20% and 15%
of total sales for the year ended April 30, 1995. The Company had three
customers which represented approximately 26%, 13% and 11% of total
accounts receivable as of April 30, 1995.
14. PENSIONS
The branch operates a defined benefit pension plan for its salaried
staff employees. Benefits are based largely on years of service and
salary over the last three years of employment. A lump sum death benefit
is also provided, which is a multiple of salary. Hourly-paid employees
are included for a modest level of death benefit only. The cost of the
plan is met entirely by contributions paid by the Company.
The funding policy recommended by the actuaries is that the Company
should contribute a level percentage of the salary roll every year,
which is expected to provide the benefits promised, allowing for future
salary increases.
The assets of the plan consist entirely of units in a pooled fund
operated by a life assurance company.
The following information is disclosed in accordance with the
requirements of Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions."
-16-
<PAGE>
DATA PACKAGING, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. PENSIONS (cont'd)
The net pension cost includes the following components:
1996 1995
Service cost - benefits earned during period $ 76,142 $ 80,848
Interest cost on projected benefit obligation 35,648 51,671
Actual gain on investment of plan assets (57,850) (5,053)
Net amortization and deferral 7,348 (46,292)
-------- -------
Net periodic pension cost $ 61,288 $ 81,174
======== =======
The pension plan's funded status and amounts recognized in the
consolidated balance sheets are as follows:
1996 1995
Accumulated (and vested) benefit obligation $336,465 $ 292,911
======= =======
Projected benefit obligation (506,730) (465,528)
Fair value of plan assets 486,874 346,212
------- -------
Excess of projected benefit obligation
over assets (19,856) (119,316)
Unrecognized net loss (gain) (295,032) (268,787)
Unrecognized initial net obligation 80,832 89,487
------- -------
Accrued pension cost $ 234,056 $(298,616)
------- -------
The weighted-average discount rate and rate of increase in future salary
levels used in determining the actuarial present value of the projected
benefit obligation were 8% (1995: 8.5%) and 6% (1995: 6.5%),
respectively. The expected long-term return on assets was 9%. The
unrecognized net loss (gain), which exceeds 10% of the projected benefit
obligation, will be amortized in the statement of operations over 10
years.
-17-
<PAGE>
DATA PACKAGING, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. SUBSEQUENT EVENTS
In October 1996, a subsidiary of Reunion Industries, Inc. ("Reunion")
acquired a 27.5% interest in the Company from Allied Irish Banks
(Holdings & Investments Limited) for $700,000 in cash. In November 1996,
the Reunion subsidiary acquired an additional 68% interest in the
Company from a creditor of Texon Energy Corporation ("TEC") and its
subsidiaries. The stock of the Company had been pledged by such
subsidiaries as collateral for debt obligations, and had been acquired
by the creditor through foreclosure. An individual who is President and
a Director of Reunion is also President and a Director of TEC and
beneficial owner of approximately 14% of TEC's stock. The purchase price
paid to the creditor was $2,825,000, including a cash payment of
$1,050,000 and a 10%, three year, unsecured note for the remainder.
Subsequent to the balance sheet date, the Company contracted to extend
its manufacturing facilities in the branch in Ireland. The contracted
expenditure amounted to $1,015,700. An additional financing facility of
$961,200 from ICC Bank was negotiated, secured on the Irish branch
fixed assets.
******
<PAGE>
REUNION INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
The accompanying unaudited pro forma consolidated condensed financial
statements and related notes are presented in accordance with Securities and
Exchange Commission (the "Commission") rules and regulations to show the pro
forma effects of the acquisitions of (i) substantially all of the assets and
business of Quality Molded Products, Inc. ("QMP") and (ii) 94.5% of the
outstanding stock of Data Packaging Limited ("DPL") by the Registrant's wholly-
owned subsidiary, Oneida Rostone Corp. ("ORC"). The purchase price in the QMP
transaction was approximately $3.5 million, including a cash payment of $3.0
million and $0.5 million of acquisition costs. The Company also assumed
approximately $5.8 million of debt and other liabilities of QMP. DPL was
acquired in two transactions: 27.5% was acquired in October 1996 for a cash
payment of $0.7 million, and 68% was acquired in November 1996 for a cash
payment of $1.05 million and issuance of a $1.77 million 10% three year note.
Acquisition costs for the DPL transactions were approximately $0.1 million.
The unaudited pro forma consolidated condensed balance sheet is based on
the assumption that the QMP and DPL acquisitions were both completed on
September 30, 1996. The unaudited pro forma consolidated condensed statements
of operations for the year ended December 31, 1995 and for the nine months ended
September 30, 1996 are presented as if the QMP and DPL acquisitions had both
occurred on January 1, 1995. The pro forma consolidated condensed statements of
operations for these periods also include the pro forma effects of the Company's
acquisitions of Oneida Molded Plastics Corp. ("Oneida") on September 14, 1995
and of Rostone Corporation ("Rostone") on February 2, 1996 and the sale of the
Company's discontinued oil and gas operations on May 24, 1996 as previously
reported.
Pro forma data are based on assumptions and include adjustments as
explained in the notes to the unaudited pro forma consolidated condensed
financial statements. The pro forma data are not necessarily indicative of the
financial results that would have occurred had the transactions been effective
on January 1, 1995 and as of September 30, 1996, and should not be viewed as
indicative of operations in future periods. The unaudited pro forma
consolidated condensed financial statements should be read in conjunction with
the accompanying notes and with the Company's Annual Report on Form 10-K for the
year ended December 31, 1995 and Quarterly Report on Form 10-Q for the nine
months ended September 30, 1996 which have been previously filed with the
Commission.
<PAGE>
REUNION INDUSTRIES, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
Reunion QMP DPL Pro Forma
Historical (pre-acquisition) (pre-acquisition) Adjustments Pro Forma
ASSETS
<S> <C> <C> <C> <C> <C>
Current Assets
Cash and Cash Equivalents $ 5,145 $ 4,656 (1)
(6,656) (2)
(1,050) (3) $ 2,095
Receivables 7,640 1,611 1,850 11,101
Inventories 4,175 2,225 758 7,158
Note Receivable-sale of oil & gas 2,200 2,200
Other Current Assets 1,972 136 520 (136) (4) 2,492
------- -------- -------- --------- ---------
Total Current Assets 21,132 3,972 3,128 (3,186) 25,046
Property, Plant and Equipment, Net 26,324 4,351 4,147 728 (4) 35,550
Goodwill 8,595 1,447 (5) 10,042
Other Assets 3,794 53 100 (1)
(53) (4) 3,894
------- -------- -------- --------- ---------
$59,845 $ 8,376 $ 7,275 ($ 964) $74,532
======= ======== ======== ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current Portion of Long Term Debt $ 6,610 $ 2,291 $ 393 $1,673 (1)
(2,275) (2) $ 8,692
Accounts Payable 5,272 1,620 2,882 9,774
Other Current Liabilities 5,152 121 8 600 (6) 5,881
------- -------- -------- --------- ---------
Total Current Liabilities 17,034 4,032 3,283 (2) 24,347
Long-term Debt 7,554 1,378 1,287 3,083 (1)
(1,376) (2)
1,775 (3) 13,701
Long-term Debt - Related Parties 1,145 254 1,399
Other Liabilities 2,296 903 3,199
------- -------- -------- --------- ---------
Total Liabilities 28,029 5,410 5,727 3,480 42,646
------- -------- -------- --------- ---------
Minority Interest 70 (7) 70
Shareholders' Equity
Common Stock 38 13 12 (25) (7) 38
Additional Paid-in Capital 29,242 698 1,351 (2,049) (7) 29,242
Retained Earnings 2,536 2,255 9 (2,264) (7) 2,536
Cumulative Translation Adjustment 176 (176) (7) 0
------- -------- -------- --------- ---------
Total Shareholders' Equity 31,816 2,966 1,548 (4,514) 31,816
------- -------- -------- --------- ---------
$59,845 $ 8,376 $ 7,275 ($ 964) $74,532
======= ======== ======== ========= =========
</TABLE>
<PAGE>
REUNION INDUSTRIES, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Oneida Rostone QMP DPL
------ ------- -------------- --------------
Eight and 1/2 Year Year Fiscal Year
Months Ended Ended Ended Ended
Reunion Sept. 14, 1995 Dec. 31, 1995 Dec. 31, 1995 April 28, 1996
Historical (pre-acquistion) (pre-acquistion) (pre-acquistion) (pre-acquistion)
<S> <C> <C> <C> <C> <C>
Operating Revenue
Plastic Products $10,855 $26,225 $28,310 $16,470 $15,108
------- -------- -------- -------- ---------
$10,855 26,225 28,310 16,470 15,108
Operating Costs and Expenses
Plastic Products - Cost of Sales 9,251 21,948 24,879 14,003 12,847
Agriculture - Operating Costs 291
Selling, General and Administrative 4,648 2,442 2,367 1,766 1,169
-------- -------- ---------- --------- ----------
14,190 24,390 27,246 15,769 14,016
Operating Income (Loss) (3,335) 1,835 1,064 701 1,092
Other Income and (Expense)
Interest Expense (508) (627) (1,363) (274) (184)
Gain on Sale of Property 169
Other, Including Interest Income 93 (122) (106) 266 (29)
-------- --------- ---------- --------- ----------
(246) (749) (1,469) (8) (213)
Income (Loss) Before Taxes (3,581) 1,086 (405) 693 879
Provision for Income Taxes (420) (8)
-------- --------- ---------- --------- ----------
Income (Loss)from Continuing Operations ($ 3,581) $ 666 ($413) $ 693 $ 879
========= ========= ========== ========= ==========
Earnings per Common and Common
Equivalent Share ($0.93)
=========
Weighted Average Number of
Common and Common Equivalent shares 3,832
=========
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Adjustments Pro Forma
<S> <C> <C>
Operating Revenue
Plastic Products $96,968
------- --------
0 96,968
Operating Costs and Expenses
Plastic Products - Cost of Sales (451) (a) 82,477
Agriculture - Operating Costs 291
Selling, General and Administrative 595 (b)
(209) (c) 12,778
-------- ---------
(65) 95,546
Operating Income (Loss) 65 1,422
Other Income and (Expense) (95) (d)
Interest Expense 124 (e)
(136) (f)
(178) (g) (3,241)
Gain on Sale of Property 169
Other, Including Interest Income 266 (b)
(125) (h)
289 (i)
(250) (j)
( 40) (k) 242
-------- ---------
(145) (2,830)
Income (Loss) Before Taxes (80) (1,408)
Provision for Income Taxes 340 (l)
(32) (m) (120)
-------- ---------
Income (Loss) from Continuing
Operations $ 228 ($1,528)
========= =========
Earnings per Common and Common
Equivalent Share ($0.40)
=========
Weighted Average Number of
Common and Common Equivalent shares 3,832
=========
</TABLE>
<PAGE>
REUNION INDUSTRIES, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Rostone QMP DPL
Month Nine Months Nine Months
Ended Ended Ended
Reunion Jan. 31, 1996 Sept. 30, 1996 Sept. 30, 1996 Pro Forma
Historical (pre-acquistion) (pre-acquistion) (pre-acquistion) Adjustments
<S> <C> <C> <C> <C> <C>
Operating Revenue
Plastic Products $42,285 $ 2,326 $ 9,435 $ 9,514
------- -------- -------- -------- ---------
42,285 2,326 9,435 9,514 0
Operating Costs and Expenses
Plastic Products - Cost of Sales 35,245 2,039 8,368 8,238 30 (a)
Agriculture - Operating Costs 225
Selling, General and Administrative 5,992 243 1,137 870 94 (b)
(157) (c)
-------- -------- ---------- --------- ----------
41,462 2,282 9,505 9,108 (33)
Operating Income (Loss) 823 44 (70) 406 33
Other Income and (Expense)
Interest Expense (1,746) (151) (200) (142) 196 (e)
(102) (f)
(133) (g)
Other, Including Interest Income 301 20 3 (44) (10) (k)
-------- --------- ---------- --------- ----------
(1,445) (131) (197) (186) (49)
Income (Loss) Before Taxes (622) (87) (267) 220 (16)
Provision for Income Taxes (65) 30 (1) (30) (l)
-------- --------- ---------- --------- ----------
Income (Loss) from Continuing
Operations ($687) ($57) ($267) $219 ($46)
========= ========= ========== ========= ==========
Earnings per Common and Common
Equivalent Share ($0.17)
=========
Weighted Average Number of
Common and Common Equivalent shares 3,855
=========
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
<S> <C>
Operating Revenue
Plastic Products $63,560
-----------
63,560
Operating Costs and Expenses
Plastic Products - Cost of Sales 53,920
Agriculture - Operating Costs 225
Selling, General and Administrative
8,179
-----------
62,324
Operating Income (Loss) 1,236
Other Income and (Expense)
Interest Expense
(2,278)
270
Other, Including Interest Income -----------
(2,008)
Income (Loss) Before Taxes (772)
Provision for Income Taxes (66)
-----------
Income (Loss) from Continuing
Operations ($838)
===========
Earnings per Common and Common
Equivalent Share ($0.22)
=========
Weighted Average Number of
Common and Common Equivalent shares 3,855
=========
</TABLE>
<PAGE>
REUNION INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The unaudited pro forma consolidated condensed balance sheet is based on
the Company's unaudited balance sheet at September 30, 1996 and upon the
adjustments described below. The unaudited pro forma consolidated condensed
statements of operations for the year ended December 31, 1995 and for the nine
months ended September 30, 1996 are based on the Company's audited financial
statements for the year ended December 31, 1995 and unaudited financial
statements for the nine months ended September 30, 1996; Oneida's unaudited
(pre-acquisition) financial statements for the eight and one-half months ended
September 14, 1995; Rostone's audited (pre-acquisition) financial statements for
the year ended December 31, 1995 and unaudited (pre-acquisition) financial
statements for the month ended January 31, 1996; QMP's audited (pre-acquisition)
financial statements for the year ended December 31, 1995 and unaudited (pre-
acquisition) financial statements for the nine months ended September 30, 1996;
DPL's audited (pre-acquisition) financial statements for its fiscal year ended
April 28, 1996 and unaudited (pre-acquisition) financial statements for the nine
months ended September 30, 1996; and upon the adjustments described below.
NOTE 2. PRO FORMA ADJUSTMENTS
The unaudited pro forma consolidated condensed balance sheet reflects the
following adjustments as though the QMP and DPL acquisitions had each occurred
on September 30, 1996:
(1) To record incremental borrowings and debt issuance costs under ORC's credit
facility
(2) To record payment of QMP purchase price ($3,005) and repayment of assumed
QMP debt ($3,651)
(3) To record payment of cash portion of DPL purchase price ($1,050) and
issuance of acquisition note ($1,775)
(4) To eliminate QMP assets not acquired and record allocation of QMP purchase
price to property, plant and equipment
(5) To record goodwill resulting from the DPL acquisition
(6) To record estimated QMP and DPL acquisition costs
(7) To eliminate QMP's and DPL's stockholders' equity accounts at the
acquisition dates
<PAGE>
The unaudited pro forma consolidated condensed statements of operations
reflect the following adjustments as though the QMP and DPL acquisitions had
each occurred on January 1, 1995:
(a) To record adjustments to depreciation and amortization expense resulting
from the allocation of purchase price to fixed assets in connection with
the Oneida, Rostone and QMP acquisitions.
(b) To reverse amortization of goodwill recorded in Oneida's pre-acquisition
financial statements and record amortization of goodwill resulting from the
Oneida, Rostone and DPL acquisitions on the straight-line method over a 15
year period.
(c) To eliminate executive compensation expense in QMP's pre-acquisition
financial statements for positions being eliminated.
(d) To record incremental interest expense on related party debt resulting from
an interest rate of 10% pursuant to the Oneida acquisition, compared to
7.5% historically, and from reclassification of intercompany interest and
income tax liabilities.
(e) To reduce interest expense for related-party debt repaid with the proceeds
of the disposition of the discontinued oil and gas operations.
(f) To record incremental interest expense for debt incurred in connection with
QMP acquisition.
(g) To record incremental interest expense for debt incurred in connection with
DPL acquisition.
(h) To eliminate interest income earned by Reunion for the pre-acquisition
period resulting from the payment of the Oneida acquisition purchase price.
(i) To eliminate amortization recorded in Rostone's pre-acquisition financial
statements related to a now-expired covenant not to compete.
(j) To eliminate management consulting income in QMP's pre-acquisition
financial statements not expected to recur.
(k) To recognize 4.5% minority interest in DPL earnings.
(l) To eliminate the federal income tax provision (benefit) on Oneida and
Rostone due to the allocation of the Company's net operating losses carried
forward.
(m) To record state tax effect of QMP pro forma results.
<PAGE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BETWEEN
ONEIDA ROSTONE CORP.
QUALITY MOLDED PRODUCTS, INC.
AND
DON A. OWEN
NOVEMBER 18, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Definitions 1
1.2 Additional Definitions 11
ARTICLE II
PURCHASE AND SALE OF THE ASSETS; PURCHASE PRICE; ESCROW
2.1 Purchase and Sale of the Assets 11
2.2 Excluded Assets 13
2.3 Assumption of Liabilities 13
2.4 Excluded Liabilities 14
2.5 Purchase Price 16
2.6 Payment of the Purchase Price at Closing 16
2.7 Post-Closing Purchase Price Adjustment 17
2.8 Payment of the Purchase Price; Escrow 18
2.9 Allocation of the Purchase Price 19
ARTICLE III
THE CLOSING
3.1 Time and Place of Closing 19
3.2 Payment of Purchase Price; Deliveries 19
3.3 Assignment of Contracts, Etc. 19
3.4 Further Assurances 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE STOCKHOLDER
4.1 Organization and Good Standing 20
4.2 Power and Authority 20
4.3 Organizational Documents 21
4.4 No Violation 21
-i-
<PAGE>
4.5 Financial Information; Undisclosed Liabilities 21
4.6 Absence of Certain Changes or Events 22
4.7 Contracts; No Default 22
4.8 Intellectual Property 23
4.9 Actions 23
4.10 Compliance with Laws 24
4.11 Taxes 24
4.12 Title to Property 25
4.13 Insurance 25
4.14 Approvals 25
4.15 Employee Benefit Plans; ERISA 26
4.16 Suppliers and Customers 28
4.17 Environmental Matters 28
4.18 Labor Matters 29
4.19 Personal Property 30
4.20 Real Property 30
4.21 Broker's or Finder's Fees 35
4.22 WARN 35
4.23 Sufficiency of Inventory 35
4.24 Inventory and Accounts Receivable 35
4.25 Sufficiency of Assets 35
4.26 Transactions with Affiliates 35
4.27 Ownership of the Seller's Capital Stock 36
4.28 Stockholder's Authority 36
4.29 No Violation By Stockholder 36
4.30 No Misstatements or Omissions 36
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 Organization and Good Standing 37
5.2 Power and Authority 37
5.3 No Violation 37
5.4 Approvals 37
5.5 Broker's or Finder's Fees 38
5.6 No Misstatements or Omission 38
-ii-
<PAGE>
ARTICLE VI
CERTAIN OBLIGATIONS OF THE SELLER
AND THE STOCKHOLDER PRIOR TO THE CLOSING
6.1 Conduct of Business 38
6.2 Restricted Activities and Transactions 38
6.3 Cooperation 39
6.4 No Solicitation of Transaction. 40
6.5 Access to the Seller 40
6.6 Confidentiality 40
6.7 Notification of Certain Events 40
ARTICLE VII
CERTAIN OBLIGATIONS OF THE PURCHASER PRIOR TO THE CLOSING
7.1 Cooperation 41
7.2 Confidentiality 41
7.3 Delivery of Title Commitment and Survey 42
ARTICLE VIII
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE PURCHASER
8.1 Representations and Warranties True 43
8.2 Performance 43
8.3 No Adverse Change 43
8.4 Approvals 43
8.5 Deliveries 43
8.6 Proceedings 45
8.7 Absence of Litigation 45
8.8 Title Company 45
8.9 Environmental Report 46
ARTICLE IX
CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF THE SELLER
9.1 Representations and Warranties True 47
9.2 Performance 47
-iii-
<PAGE>
9.3 Approvals 47
9.4 Deliveries 47
9.5 Proceedings 48
9.6 Absence of Litigation 48
9.7 Environmental Report 48
ARTICLE X
CERTAIN COVENANTS AND AGREEMENTS
SUBSEQUENT TO THE CLOSING
10.1 Employees. 49
10.2 Books and Records; Access 49
10.3 Confidentiality 50
10.4 Specific Performance; Injunctive Relief 50
10.5 Further Assurances 50
10.6 Name Change 51
10.7 General Liability Endorsement 51
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.1 Survival 51
11.2 Indemnification by the Seller and the Stockholder 52
11.3 Indemnification by the Purchaser 52
11.4 Notice and Payment of Claims;
Limitations on Indemnification 53
11.5 Matters Involving Third Parties 54
11.6 Specific Obligations of the Seller
for Accounts Receivable 55
11.7 Bulk Sales Law 56
ARTICLE XII
TERMINATION
12.1 Termination 56
12.2 Effect of Termination 56
-iv-
<PAGE>
ARTICLE XIII
MISCELLANEOUS
13.1 Public Announcements 57
13.2 Amendment; Waiver 57
13.3 Fees and Expenses 57
13.4 Charges, Fees and Taxes 57
13.5 Notices 58
13.6 Assignment 59
13.7 Governing Law 59
13.8 Headings 59
13.9 Entire Agreement 59
13.10 Severability 59
13.11 No Third Party Beneficiaries 60
13.12 References to Articles, Etc. 60
13.13 References to "Herein," Etc. 60
13.14 Counterparts 60
-v-
<PAGE>
EXHIBITS
Exhibit A Assignment and Assumption Agreement
Exhibit B Bill of Sale
Exhibit C Escrow Agreement
Exhibit D Consulting and Noncompetition Agreement
Exhibit E Deed
Exhibit F Opinion of Counsel to Purchaser
Exhibit G Opinion of Counsel to Seller
SCHEDULES
Schedule A Description of Real Property
Schedule 1.1 Certain Inventory Pricing, etc.Methodologies
Schedule 1.2 Certain Personalty
Schedule 2.1(g) Contracts
Schedule 2.2(d) Excluded Assets
Schedule 4.4 No Violation
Schedule 4.5 Financial Data
Schedule 4.6 Absence of Certain Changes or Events
Schedule 4.7 Contracts
Schedule 4.8 Intellectual Property
Schedule 4.9 Actions
Schedule 4.10 Compliance with Laws
Schedule 4.11 Taxes
Schedule 4.12 Title to Property
Schedule 4.13 Insurance
Schedule 4.14 Approvals
Schedule 4.15 Employee Benefit Plans
Schedule 4.16 Suppliers and Customers
Schedule 4.17 Environmental Matters
Schedule 4.18 Labor Matters
Schedule 4.19 Personal Property
Schedule 4.20(a) Owned Real Property
Schedule 4.20(b) Leased Real Property
Schedule 4.20(c) Title to Owned Real Property
Schedule 4.20(d) Improvements
Schedule 4.20(e) Real Property Permits
Schedule 4.20(f) Compliance with Real Property Laws
Schedule 4.20(g) Real Property Taxes
Schedule 4.20(k) Encumbrances on Real Property
-vi-
<PAGE>
Schedule 4.20(j) Actions Impairing Real Property
Schedule 4.20(r) Applications to Modify Zoning
Schedule 4.24 Sufficiency of Inventory and Accounts Receivable
Schedule 4.25 Sufficiency of Assets
Schedule 4.26 Transactions with Affiliates
Schedule 4.29 No Violations by Stockholder
Schedule 5.5 Purchaser Approvals
Schedule 8.4 Contracts for which Consent is a Condition to Closing
Schedule 10.1 Employees
-vii-
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated November 18, is entered into
among Oneida Rostone Corp., a New York corporation (the "PURCHASER"), Quality
Molded Products, Inc., a North Carolina corporation (the "SELLER") and Don A.
Owen, the sole stockholder of the Seller (the "STOCKHOLDER").
W I T N E S E T H:
WHEREAS, the Seller desires to transfer, sell, convey, assign and
deliver to the Purchaser, and the Purchaser desires to acquire from the Seller,
all of the assets comprising the Business (as defined herein) and Purchaser
desires to assume certain of the liabilities of the Business, as more
specifically provided herein, in accordance with the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms, as used in this Agreement, shall have
the following meanings:
(a) "ACQUISITION DOCUMENTS" shall mean, collectively, this Agreement,
the Escrow Agreement, the Consulting and Noncompetition Agreement, the Bill of
Sale, the Assignment and Assumption Agreement, the Deed and all agreements,
instruments, certificates and other documents executed and delivered in
connection herewith or contemplated hereby.
(b) "ACQUISITION PROPOSAL" shall have the meaning ascribed to such
term in Section 6.4 hereof.
(c) "ACTION" shall mean any claim, dispute, action, arbitration,
litigation, proceeding, suit or investigation, and any appeal therefrom.
(d) "ADJUSTMENT NET TRANSFERRED ASSETS" shall mean the Net Transferred
Assets as reflected on the Closing Date Balance Sheet.
<PAGE>
(e) "AFFILIATE" shall mean, with respect to any Person, any Person
that, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person.
(f) "AGREEMENT" shall mean this Asset Purchase Agreement and shall
include all of the Schedules and Exhibits, attached hereto.
(g) "ALLOCATION" shall have the meaning ascribed to such term in
Section 2.9 hereof.
(h) "APPROVAL" shall mean any approval, authorization, consent,
license, franchise, order or permit of or by, notice to, or filing or
registration with, a Person.
(i) "ARBITRATOR" shall mean a representative of a nationally-recognized
firm of independent certified public accountants other than the Purchaser's
Accountant or the Seller's Accountant, as agreed to by the Purchaser and the
Seller.
(j) "ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean the instrument of
assignment and assumption of the Assumed Liabilities by the Purchaser,
substantially in the form attached hereto as Exhibit A.
(k) "ASSUMED LIABILITIES" shall have the meaning ascribed to such term
in Section 2.3 hereof.
(l) "ASSUMED PLANS" shall mean the Seller's Plans funded with insurance
contracts that provide for the payment of health, dental and life insurance
benefits to Seller's employees and their eligible dependents on a group basis,
including the Seller's Cafeteria Plan.
(m) "BILL OF SALE" shall mean the bill of sale transferring to the
Purchaser the Transferred Assets, substantially in the form attached hereto as
Exhibit B.
(n) "BOOKS AND RECORDS" shall have the meaning ascribed to such term in
Section 2.1(i) hereof.
(o) "BUSINESS" shall mean the Seller's business of manufacturing,
distributing, marketing and selling molded plastic products and manufacturing
and repairing tooling.
(p) "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
-2-
<PAGE>
(q) "CLOSING" shall mean the consummation of the transactions
contemplated by this Agreement.
(r) "CLOSING DATE" shall mean November 18, 1996 or such other date as
the parties shall determine, if the conditions to Closing described in Article
VIII and Article IX hereof have been fully satisfied or waived by the
appropriate party or parties hereto on or prior to such date.
(s) "CLOSING DATE BALANCE SHEET" shall mean the unaudited balance
sheet of the Seller as of the Closing Date prepared by the Purchaser based on
the Review and the physical count of the Inventory performed by the Seller and
observed by the Purchaser on November 16, 1996. Except as otherwise specifically
provided for in this Agreement, the Closing Date Balance Sheet shall be prepared
in accordance with GAAP applied on a consistent basis with the same practice
standards and procedures utilized by the Seller for prior accounting periods (in
particular, Inventory shall be determined on a basis consistent with the
Inventory shown on the October Balance Sheet) and Section 2.7(a) hereof;
provided that the Closing Date Balance Sheet shall include $37,000 of spare
parts. The Closing Date Balance Sheet shall not include any Excluded Assets or
Excluded Liabilities.
(t) "CODE" shall mean the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
(u) "CONSULTING AND NONCOMPETITION AGREEMENT" shall mean the
Consulting and Noncompetition Agreement to be entered into between the Purchaser
and the Stockholder.
(v) "CONTRACT" shall mean each instrument, contract and other
agreement (including, without limitation, all employment agreements, non-
competition, confidentiality and secrecy agreements, collective bargaining
agreements and all agreements relating to the Real Property) to which the Seller
is a party or by which it or any of its properties or assets is bound.
(w) "DAMAGES" shall mean any claim, loss, deficiency (financial or
otherwise), Liability, cost or expense (including, without limitation,
reasonable attorneys' and accountants' fees, costs and expenses) or damage of
any kind or nature whatsoever.
(x) "DEED" shall mean a general warranty deed for the Real Property in
statutory form for recording, sufficient to convey the fee simple title to the
Real Property to the Purchaser free and clear of all Liens, except as provided
in this Agreement, substantially in the form attached hereto as Exhibit E.
(y) "DISABILITY POLICIES" shall mean the disability insurance policies
maintained by the Seller for the benefit of each of Tom Condon and Earl Stoltz.
-3-
<PAGE>
(z) "EFFECTIVE TIME" shall mean 12:01 a.m. New York Time on the
Closing Date.
(aa) "ENVIRONMENTAL LAWS" shall mean any and all Laws relating to the
protection of the environment (including air, water, soil and natural resources)
and/or human health and safety from environmental effects or the generation,
management, removal, remediation, emission, discharge, control, processing, use,
treatment, storage, disposal, transport, release, recycling, or handling of
Hazardous Materials including, without limitation, CERCLA, the Hazardous
Materials Transportation Control Act of 1970 (49 U.S.C. (S) 1802 et seq.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. (S) 6901 et seq.), the
Water Pollution Control Act (33 U.S.C. (S) 1251 et seq.), the Safe Drinking
Water Act (42 U.S.C. (S) 300h et seq.), the Clean Air Act (42 U.S.C. (S) 1857 et
seq.), the Solid Waste Disposal Act (42 U.S.C. (S) 6901 et seq.), the Toxic
Substances Control Act (15 U.S.C. (S) 2601 et seq.), the Emergency Planning and
Community Right-to-Know Act of 1986 (42 U.S.C. (S) 11001 et seq.), the Radon Gas
and Indoor Air Quality Research Act (42 U.S.C. (S) 7401 et seq.), the Superfund
Amendment Reauthorization Act of 1986 (42 U.S.C. (S) 9601 et seq.), the Lead-
Based Paint Poisoning Prevention Act (42 U.S.C. (S) 4821 et seq., and the
counterparts of such statutes as enacted by any Governmental Authority having or
asserting jurisdiction over the Real Property or the Seller.
(ab) "EQUIPMENT" shall mean each item of machinery, equipment and
fixture owned by the Seller (i) which is located on the Real Property on the
date hereof or (ii) which is not so located but has been or is now used by the
Seller in connection with the Business or the Transferred Assets.
(ac) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
(ad) "ESCROW AGENT" shall mean Branch Banking & Trust Company, as
escrow agent.
(ae) "ESCROW AGREEMENT" shall mean the escrow agreement among the
parties hereto and the Escrow Agent, substantially in the form attached hereto
as Exhibit C.
(af) "ESCROWED AMOUNT" shall have the meaning ascribed to such term in
Section 2.8 hereof.
(ag) "ESTIMATED ADJUSTMENT NET TRANSFERRED ASSETS" shall have the
meaning ascribed to such term in Section 2.6(a) hereof.
-4-
<PAGE>
(ah) "EXCLUDED ASSETS" shall have the meaning ascribed to such term in
Section 2.2 hereof.
(ai) "EXCLUDED LIABILITIES" shall have the meaning ascribed to such
term in Section 2.4 hereof.
(aj) "FACILITIES" shall mean the Real Property, plant and fixtures
owned and operated by the Seller in Siler City, North Carolina.
(ak) "FINANCIAL DATA" shall have the meaning ascribed to such term in
Section 4.5(a) hereof.
(al) "GAAP" shall mean generally accepted accounting principles in the
United States.
(am) "GOVERNMENTAL AUTHORITY" shall mean any foreign, federal, state,
local or other governmental, administrative or regulatory authority, body,
agency, court, tribunal or similar entity including any arbitrator or
arbitration panel.
(an) "HAZARDOUS MATERIALS" means any substance: (i) the presence of
which requires or may require investigation or remediation of any kind under any
Environmental Laws; or (ii) which is or becomes listed, defined, designated or
classified as "hazardous", "toxic", "radioactive", "hazardous waste", "hazardous
material", "hazardous substance", "asbestos", "industrial waste", "radioactive
material", "radioactive waste", "low-level radioactive waste", "oil",
"petroleum", "petroleum derivatives or products", "polychlorinated biphenyls",
"pollutant", or "contaminant" under any Environmental Law and the regulations
promulgated thereunder.
(ao) "IMPROVEMENTS" shall have the meaning ascribed to such term in
Section 4.20(d) hereof.
(ap) "INDEMNIFIED PARTY" shall mean any party entitled to
indemnification pursuant to Article XI hereof and shall include such party's
Affiliates, successors and assigns and the Representatives of each of them.
(aq) "INDEMNIFYING PARTY" shall mean any party liable for
indemnification pursuant to Article XI hereof and shall include such party's
successors and assigns.
(ar) "INTANGIBLE ASSETS" shall mean all intangible property owned by
the Seller relating to the Business, including, without limitation, the
Intellectual Property, all warranties and similar guarantees of quality or
performance given by third parties in respect of goods delivered or services
performed, goodwill, Approvals, confidential or proprietary information,
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covenants not to compete, and any other assets, identifiable or unidentifiable,
normally considered an "INTANGIBLE ASSET" under GAAP.
(as) "INTELLECTUAL PROPERTY" shall mean all of the following
irrespective of where any of the same were issued, are pending or exist that are
owned by or issued to the Seller and that have been, are or are proposed to be
used in the running of the Business: United States and foreign patents of any
description, and applications therefor; United States (federal and state) and
foreign trademarks (and goodwill associated therewith) and other trade names
(including but not limited to "Quality Molded Products" and "QMP"), labels,
trade dress, advertising and package designs, and other trade rights, whether or
not registered and all applications therefor (including copyrights in computer
software and computer software documentation, source code and systems
documentation); United States and foreign copyrights, whether or not registered
and all applications therefor; know-how, trade secrets, business leads, research
and results thereof, technology, techniques, data, methods, processes,
instructions, drawings and specifications (whether or not such items have been
reduced to written, computer-readable or other tangible form) inventions,
discoveries, improvements, designs, processes, formulae, recipes, whether
patented or patentable or not; shop rights and license agreements and other
agreements of every kind and character relating to any of the foregoing; and all
claims and causes of action relating to any of said foregoing, including claims
and causes of action for past infringement.
(at) "INVENTORY" shall mean all inventories owned by the Seller
relating to the Business or the Transferred Assets wherever located including
without limitation all packaging, finished goods, raw materials, work in process
and other miscellaneous items of tangible property normally considered a part of
"INVENTORY" under GAAP and shall include $37,000 of "spare parts".
(au) "IRS" shall mean the Internal Revenue Service.
(av) "JUNE 29 BALANCE SHEET" shall mean the unaudited balance sheet of
the Seller as of June 29, 1996 prepared by the Seller in accordance with GAAP
and applied on a consistent basis with the same practice standards and
procedures utilized by the Seller for prior accounting periods.
(aw) "LAW" shall mean any law, statute, rule, regulation, ordinance,
standard, requirement, administrative ruling, order, process, interpretations or
policies promulgated by any Governmental Authority as in effect from time to
time (including, without limitation, any zoning or land use law or ordinance,
building code, Environmental Law, securities, blue sky, civil rights or
occupational health and safety law or regulation and any court or arbitrator's
order or process), as the same have been or may hereafter be amended, modified
or supplemented from time to time.
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(ax) "LIABILITY" shall mean any debt, liability, commitment or
obligation of any kind, character or nature whatsoever, whether known or
unknown, secured or unsecured, accrued, fixed, absolute, potential, contingent
or otherwise, and whether due or to become due.
(ay) "LIEN" shall mean any lien, statutory lien, mechanics' lien,
pledge, mortgage, deed of trust, security interest, charge, easement, right of
way, covenant, claim, restriction, right, option, conditional sale or other
title retention agreement, or any other defect in title, adverse claim or
encumbrance of any kind or nature other than a Permitted Lien.
(az) "NET TRANSFERRED ASSETS" shall mean, at any time, the remainder
of (i) the Transferred Assets, less (ii) the Assumed Liabilities, as reflected
on the Seller's balance sheet as of such time; provided, however, such balance
sheet shall not include any Excluded Assets or Excluded Liabilities and shall be
prepared in accordance with GAAP applied on a consistent basis with the same
practice standards and procedures utilized by Seller for prior accounting
periods.
(ba) "OCTOBER BALANCE SHEET" shall mean the Seller's unaudited balance
sheet as of October 26, 1996, prepared by the Seller in accordance with GAAP
applied on a consistent basis with the June 29 Balance Sheet, except as
otherwise expressly provided in this Agreement, and the same practice standards
and procedures utilized by Seller for prior accounting periods; provided that
the October Balance Sheet shall reflect in the inventory the physical count of
the Inventory performed by the Seller and reviewed by the Purchaser on October
30 and 31, 1996. The pricing and obsolescence methodologies regarding obsolete
and other inventory issues used in preparing the October Balance Sheet are shown
on Schedule 1.1 hereto.
(bb) "OTHER PERSONALTY" shall mean all personal property (including
parts, other than $37,000 of "spare parts", office furniture, furnishings and
supplies, including those listed on Schedule 1.2), other than Equipment,
Intangible Assets and Inventory owned, held or leased by the Seller and which
has been or is now used by the Seller in connection with the Business or the
Transferred Assets.
(bc) "PERMITTED LIEN" shall mean (i) mechanics', carriers',
warehousemens', workmens' and other similar Liens arising in the ordinary course
of the Business which are not yet due and payable or are being contested in good
faith by appropriate proceedings, which will be satisfied in full by the Seller
on or before the Closing Date and omitted from the Purchaser's title insurance
policy, and which could not, individually or in the aggregate, have a Seller
Material Adverse Effect, (ii) Liens for Taxes, assessments and other
governmental charges which are not yet due and payable or that may subsequently
be paid without penalty or that are being contested in good faith by appropriate
proceedings and will be satisfied in full by the Seller on or before the Closing
Date and which could not,
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individually or in the aggregate, have a Seller Material Adverse Effect, (iii)
with respect to the Real Property, the matters set forth on Schedule 4.20(c)
attached hereto, none of which, individually or in the aggregate, could have a
Seller Material Adverse Effect and (iv) such other matters shown on Schedule
4.12 attached hereto.
(bd) "PERSON" shall mean any individual, general or limited
partnership, corporation, limited liability company, association, business
trust, joint venture, Governmental Authority, business entity or other entity of
any kind or nature.
(be) "PLANS" shall mean each plan, contract, program and arrangement,
including, but not limited to, pension, bonus, deferred compensation, incentive
compensation, stock purchase, supplemental retirement, severance or termination
pay, employment contract, stock option, hospitalization, medical, life
insurance, dental, disability, salary continuation, vacation, supplemental
unemployment benefits, profit-sharing, retirement and each other employee
benefit plan, program, policy or arrangement, maintained, contributed to, or
required to be contributed to, by the Seller for the benefit of its employees,
former and retired employees and their dependents.
(bf) "PRE-CLOSING BALANCE SHEET" shall mean the Seller's unaudited pro
forma balance sheet as of the Closing Date, which reflects the Purchaser's and
the Seller's good faith estimate of the Net Transferred Assets, including
$37,000 of "spare parts", as of the Closing Date.
(bg) "PRIME RATE" shall mean the rate of interest announced from time
to time by the New York, New York office of Citibank, N.A. as its base, prime or
reference rate, adjusted as of the first business day of each calendar quarter.
(bh) "PURCHASE ORDERS" shall mean purchase orders with respect to
Inventory, supply, maintenance and repair used in conducting the operations of
the Business in the ordinary course.
(bi) "PURCHASE PRICE" shall have the meaning ascribed to such term in
Section 2.5 hereof.
(bj) "PURCHASER" shall have the meaning ascribed to such term in the
preamble to this Agreement.
(bk) "PURCHASER'S ACCOUNTANTS" shall mean Price Waterhouse LLP.
(bl) "PURCHASER MATERIAL ADVERSE EFFECT" shall mean any change or
effect that taken alone or together with other changes or effects has had or is
likely to have a
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material adverse effect on the Purchaser's ability to consummate the
transactions contemplated by this Agreement or the other Acquisition Documents.
(bm) "PURCHASER RECIPIENTS" shall have the meaning ascribed to such
term in Section 7.2 hereof.
(bn) "REAL PROPERTY" shall mean the real property owned by the Seller
located in Siler City, North Carolina generally known as and by the street
address 920 East Raleigh Street, Siler City, North Carolina, as more
particularly described in Schedule A attached hereto, together with all
buildings and improvements thereon erected and all fixtures located thereon, and
all other real property, buildings, improvements and fixtures owned, in whole or
in part, by the Seller or in respect of which the Seller has the right or option
to acquire an ownership interest (excluding, however, any real property,
buildings, improvements and fixtures which constitute Excluded Assets), and
which has been, is now or is intended to be used or occupied by the Seller in
connection with the Business or the Transferred Assets, including without
limitation, the Facilities and all rights, privileges, hereditaments,
appurtenances, easements and rights-of-way in any manner belonging or relating
thereto, all strips and gores relating to or affecting any such real property
and all right, title and interest, if any, of the Seller in and to any land
lying in the bed of any street, road or avenue, opened or proposed, in front of
or adjoining any such real property, to the center line thereof, and all right,
title and interest of the Seller in and to any award made or to be made in lieu
thereof and in and to any unpaid award for damages to any of such properties by
reason of change of grade of any street.
(bo) "REPRESENTATIVE" shall mean, with respect to a Person, any
employee, officer, director, stockholder, partner, accountant, attorney,
investment banker, broker, finder, investor, subcontractor, consultant or other
authorized agent or representative of such Person.
(bp) "RESTRICTED ASSETS" shall have the meaning ascribed to it in
Section 3.3 hereof.
(bq) "REVIEW" shall have the meaning ascribed to such term in Section
2.7 hereof.
(br) "SELLER" shall have the meaning ascribed to such term in the
preamble to this Agreement.
(bs) "SELLER'S ACCOUNTANTS" shall mean Dixon, Odom & Co., L.L.P.
(bt) "SELLER MATERIAL ADVERSE EFFECT" shall mean any change or effect
that taken alone or together with other changes or effect has had or is likely
to have a material adverse effect on the Business or the Seller's ability to
consummate the transactions
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contemplated by this Agreement or the other Acquisition Documents and, with
respect to the Real Property, any Lien, easement, covenant, right-of-way, claim,
restriction, encumbrance, state of facts, zoning, building and other similar
restriction and any other matter or thing affecting the Real Property (A) which
is not of record, or (B) which taken alone or together with other matters to
which the Real Property is sold and conveyed subject to (1) would have or is
likely to have a material adverse effect on the ability of Purchaser to use,
maintain and occupy the Real Property in the same manner as carried on by
Seller, (2) would prohibit the continued use, maintenance and occupancy of the
existing buildings and improvements, (3) would render title to the Real Property
unmarketable, or (4) would restrict access to or from the Real Property, or (C)
which the Title Company will not affirmatively insure is not violated or not
subject the Real Property to forfeiture or reversion of title or, with respect
to any encroachment, that such encroachment may remain.
(bu) "SELLER RECIPIENTS" shall have the meaning ascribed to such term
in Section 6.6 hereof.
(bv) "SURVEY" shall have the meaning ascribed to it in Section 7.3(a)
hereof.
(bw) "TAX" shall mean any foreign, federal, state or local income,
gross receipts, franchise, license, severance, occupation, premium,
environmental (including taxes under Code Section 59A), customs, duties,
profits, disability, registration, alternative or add-on minimum, estimated,
withholding, payroll, employment, unemployment insurance, social security (or
similar), excise, sales, use, value-added, occupancy, franchise, real property,
personal property, business and occupation, mercantile, windfall profits,
capital stock, stamp, transfer (including any excise tax on the transfer of the
Real Property), workmen's compensation or other tax, fee or imposition of any
kind whatsoever, including any interest, penalties, additions, assessments or
deferred liability with respect thereto, whether disputed or not.
(bx) "TAX RETURN" shall mean any return, report, declaration, claim
for refund, estimate, election, or information statement or return relating to
any Tax, including any schedule or attachment thereto, and any amendment
thereof.
(by) "THIRD PARTY CLAIM" shall have the meaning ascribed to such term
in Section 11.5(a) hereof.
(bz) "TITLE COMPANY" shall have the meaning ascribed to it in Section
7.3(a) hereof.
(ca) "TITLE REPORT" shall have the meaning ascribed to it in Section
7.3(a) hereof.
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(cb) "TRANSFER" shall mean any sale, transfer, conveyance, assignment,
delivery or other disposition, and "TRANSFER" or "TRANSFERRED," used as a verb,
shall each have a correlative meaning.
(cc) "TRANSFERRED ASSETS" shall have the meaning ascribed to such term
in Section 2.1 hereof.
(cd) "WARN" shall mean the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. (S) 2101, et seq., as it may be amended from time to
time.
1.2 Additional Definitions. In addition to the foregoing defined
terms, (i) other capitalized terms appearing in this Agreement shall have the
respective meanings ascribed to such terms where they first appear in the text
of this Agreement and (ii) all accounting terms not specifically defined in this
Agreement shall be construed in accordance with GAAP.
ARTICLE II
PURCHASE AND SALE OF THE ASSETS; PURCHASE PRICE; ESCROW
2.1 Purchase and Sales of the Assets. Subject to the terms and
conditions of this Agreement, and on the basis of the covenants, representations
and warranties set forth herein, at and as of the Effective Time, the Seller
shall Transfer to the Purchaser, and the Purchaser shall purchase and accept
from the Seller, all of the Seller's rights, title and interests in and to all
of the assets and properties of the Seller that are used or usable in the
conduct and operation of the Business, whether tangible, real, personal or
mixed, wherever located, free and clear of all Liens, excluding only the
Excluded Assets, and including, without limitation or duplication, the
following, (collectively, the "TRANSFERRED ASSETS"):
(a) all Equipment;
(b) all Intangible Assets;
(c) all Inventory;
(d) all Real Property as it exists on the date hereof;
(e) all cash, cash equivalents, bank accounts and bank deposits;
(f) all accounts receivable;
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(g) all of the Contracts listed on Schedule 2.1(g) hereto to the
extent related to the Business or the Transferred Assets that are (i) validly
assigned to the Purchaser and (ii) according to the terms of such Contracts,
relate to periods on or after the Effective Time or are to be paid, performed or
ratified on or after the Effective Time;
(h) all Other Personalty;
(i) all books, financial and other records and any confidential
information which has been reduced to written, recorded or encoded form relating
to the Business or the Transferred Assets, including without limitation, to the
extent relating to the Business, customer lists and related sales histories,
credit policies and credit information with respect to existing customers,
existing cost and pricing data, equipment and inventory lists, employee records
for former and current employees of the Business, existing business plans,
advertising and promotion plans, product development plans, forecasts, market
research reports, competitor information, reference catalogs and all real and
personal property, records, plot plans, zoning records and plant plans and
specifications (collectively, the "BOOKS AND RECORDS");
(j) all computer hardware, computer software, computer software
documentation, including source code, and systems documentation used in the
Business, to the extent transferable;
(k) all motor vehicles (owned or leased) used in the Business;
(l) except as provided in Section 2.2(f), the prepaid expenses and
security deposits relating to the Business or the Transferred Assets, to the
extent transferable;
(m) all refunds of Taxes;
(n) the Business as a going concern, including its goodwill and all
other tangible and intangible assets associated therewith;
(o) all government licenses, permits and approvals issued with respect
to the Business to the extent transfer is permitted by law;
(p) all causes of action, demands, judgments, claims (including
insurance claims), indemnity rights or other rights relating to the Transferred
Assets, Assumed Liabilities or arising under expressed or implied warranties
from suppliers with respect to the Transferred Assets;
(q) all rights of the Seller under warranties and guaranties, express
or implied, relating to the Transferred Assets;
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(r) all post office boxes maintained by the Seller that are used in
connection with the Business; and
(u) all of the Seller's right, title and interest in the names
"Quality Molded Products, Inc.," "Quality Molded Products" and "QMP".
2.2 Excluded Assets. Notwithstanding anything to the contrary
contained herein, including Section 2.1 above, the Seller shall retain all of
its right, title and interest in and to, and shall not Transfer to the
Purchaser, the assets of the Seller set forth below (collectively, the "EXCLUDED
ASSETS"):
(a) any proceeds paid or payable in connection with this Agreement;
(b) any minute books, stock books and similar corporate records and
any other documents which the Seller is required by law to retain in its
possession;
(c) the Seller's right, title and interest in and to the assets held
with respect to any Plan not listed on Schedule 2.1(g);
(d) those assets listed on Schedule 2.2(d);
(e) the key man life insurance policy maintained by the Seller with
respect to the Stockholder;
(f) those assets listed in 2.1(j) and 2.1(l), to the extent such
assets are not transferable; and
(g) the prepaid expenses of the Seller relating to the insurance
policies maintained by the Seller other than those relating to the Disability
Policies and the Assumed Plans.
2.3 Assumption of Liabilities. Subject to the terms and conditions of
this Agreement, at and as of the Effective Time, the Purchaser shall assume and
agree to pay, perform, discharge and satisfy when due, only those Liabilities of
the Seller which are specifically enumerated below and no others, and then only
to the extent that such enumerated Liabilities are attributable to the Business
and are not Excluded Liabilities set forth in Section 2.4 below (collectively,
the "ASSUMED LIABILITIES"):
(a) all Liabilities of the Seller relating to the period on and after
the Closing Date under the Contracts set forth on Schedule 2.1(g) to the extent
related to the Business or the Transferred Assets that are (i) validly assigned
to the Purchaser and (ii) according to the
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terms of such Contracts, relate to periods after the Effective Time and are to
be paid, performed or satisfied after the Effective Time;
(b) those Liabilities of the Seller specifically recorded on the
Closing Date Balance Sheet;
(c) all Liabilities for Damages to persons or property arising out of
alleged defects in products of the Business manufactured after the Effective
Time; provided, however, that where the allegedly defective products were
manufactured in part before the Effective Time and in part after the Effective
Time, the Purchaser shall assume under this Section 2.3(d) only the portion of
such Liabilities that arise out of defects attributable to the manufacturing
performed after the Effective Time;
(d) all Liabilities in respect of product warranties; provided,
however, that where the allegedly defective products were manufactured in whole
or in part before the Effective Time, the Seller shall reimburse the Purchaser
after the Closing Date upon demand by the Purchaser for the portion of such
Liabilities that arise out of defects attributable to the manufacturing
performed before the Effective Time. Amounts reimbursed by the Seller to the
Purchaser under this Section 2.3(e) shall be treated as a reduction of the
Purchase Price; and
(e) the Liabilities with respect to the Assumed Plans, except as
specifically set forth in Section 10.1(b).
2.4 Excluded Liabilities. Notwithstanding anything in Section 2.3
above to the contrary, except for the Assumed Liabilities, the Purchaser shall
not assume, and shall have no liability or obligation whatsoever, at any time,
for any Liabilities arising from the operation of, or any act or omission
occurring in respect of, the Business or the ownership of the Transferred Assets
prior to the Effective Time (collectively, the "EXCLUDED LIABILITIES"). Without
limiting the foregoing, the following shall be Excluded Liabilities:
(a) all Liabilities of the Seller under Contracts that are not listed
on Schedule 2.1(g) or, with respect to Contracts listed on Schedule 2.1(g), that
are (i) not validly assigned to the Purchaser or (ii) according to the terms of
such Contracts, relate to periods prior to the Effective Time or are to be paid,
performed or ratified prior to the Effective Time;
(b) all Liabilities for Damages to persons or property arising out of
alleged defects in products of the Business manufactured in the Business prior
to the Effective Time; provided, however, that where the allegedly defective
products were manufactured in part before the Effective Time and in part after
the Effective Time, such Liabilities that arise out of defects attributable to
the manufacturing performed prior to the Effective Time shall be Excluded
Liabilities;
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(c) all Liabilities relating to the Excluded Assets;
(d) all Liabilities with respect to the Seller's employees, former and
retired employees and their dependents for, including without limitation,
Liabilities for wages, salaries, sick days, individual or group life or health
insurance or benefits, property damage or personal injury claims including
workers' compensation claims or proceedings, discrimination claims or
proceedings, benefits or severance or other Liabilities relating to employment
with the Seller or in connection with any accident or incident while employed by
the Seller, except for any continuation coverage under Title X of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") arising on or
after the Closing Date under any Assumed Plan that is a group health plan;
(e) all Liabilities under, or directly or indirectly relating to, any
Plans maintained by the Seller with respect to its employees, former and retired
employees and their dependents, whether or not identified on Schedule 4.15
attached hereto, except for Liabilities attributable to the period on and after
the Closing Date as to any Assumed Plan;
(f) all Liabilities of Seller for any Taxes including Taxes for which
the Seller is liable or that relate to the operation of the Business prior to
the Closing Date or which are incurred by the Seller as a result of the transfer
of assets contemplated hereby;
(g) all Liabilities of the Seller under any collective bargaining,
non-competition, consulting, employment or any similar agreement;
(h) all Liabilities for expenses incurred by the Seller in connection
with or resulting from or attributable to the transactions contemplated by this
Agreement;
(i) all Liabilities for any investment banking, brokerage or similar
charge or commission payable or incurred by the Seller in connection with this
Agreement or the transactions contemplated hereby;
(j) all Liabilities with respect to all Actions that relate to the
conduct of the Business prior to the Effective Time.
(k) all Liabilities arising out of activities undertaken by, or
omissions of, the Seller subsequent to the Effective Time;
(l) all Liabilities giving rise to a Permitted Lien prior to the
Effective Time of the type included in clauses (i) or (ii) of the definition of
Permitted Liens;
(m) all Liabilities under any lease of personal property if the
property covered thereby is not located on the Real Property on the Closing
Date, is not otherwise included in
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the Transferred Assets or is not made available on the Closing Date for the
exclusive use of the Purchaser as contemplated by this Agreement;
(n) all Liabilities for all Plans of the Seller and all Liabilities
with respect thereto, except as specifically provided in Section 10.1(b).
(o) all Liabilities of the Seller related to any and all amounts
claimed by Alliedsignal, Inc. to be owing to it, related to raw materials
purchased by the Seller for use in manufacturing products for Homelite,
currently estimated to be approximately $37,000;
(p) all Liabilities under any Environmental Law to treat, remove,
remediate, dispose of or manage any Hazardous Materials that were released, as
such term is defined in CERCLA, on, in, under, about or from the Real Property
prior to the Effective Time; and all Liabilities for claims (whether asserted in
common law or under statute and regardless of form, including strict liability
and negligence) arising out of or in respect of Hazardous Materials (i) that
were present or stored on the Real Property in compliance with applicable
Environmental Laws prior to the Effective Time and which were shipped,
transferred, removed, released, disposed of, arranged for disposal, or otherwise
transported off the Real Property prior to the Effective Time or (ii) that were
released on, in, under, about or from the Real Property prior to the Effective
Time; and
(q) all Liabilities not included in the Assumed Liabilities.
2.5 Purchase Price. Subject to adjustment pursuant to SECTION 2.6
hereof, the aggregate purchase price to be paid by the Purchaser to the Seller
at the closing for the Transferred Assets shall be $3,427,000 (the "Purchase
Price") plus the Liabilities of the Seller specifically recorded on the Closing
Date Balance Sheet. The Purchase Price shall be subject to adjustment after the
Closing pursuant to Section 2.7 hereof.
2.6 Payment of the Purchase Price at Closing.
(a) The Seller and the Purchaser agree that a reasonable estimate of
the Seller's Adjustment Net Transferred Assets as of the Closing Date (the
"ESTIMATED ADJUSTMENT NET TRANSFERRED ASSETS") shall be the Net Transferred
Assets of the Seller as reflected on the Pre-Closing Balance Sheet.
(b) On the Closing Date, the Purchaser shall pay (i) $200,000 to the
Escrow Agent by wire transfer of immediately available funds and (ii) to the
Seller by wire transfer of immediately available funds to an account identified
in writing by the Seller to the Purchaser at least two days prior to the Closing
Date an amount equal to the balance of the Purchase Price; provided, however, if
the Estimated Adjustment Net Transferred Assets (i) exceed $3,253,820 or (ii)
are less than $3,203,820, then the amount of the Purchase Price to be
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delivered by Purchaser to Seller at the Closing shall be adjusted up or down,
respectively, on a dollar-for-dollar basis by the amount by which the Estimated
Adjustment Net Transferred Assets exceed or are less than, respectively,
$3,228,820 (the "ESTIMATED PURCHASE PRICE ADJUSTMENT").
2.7 Post-Closing Purchase Price Adjustment.
(a) Within 90 days after the Closing Date, the Purchaser shall conduct
an internal review of the operations and Books and Records of the Business as of
the Closing Date (the "REVIEW") and shall prepare and deliver to the Seller the
Closing Date Balance Sheet. The Review may be witnessed by the Seller, at the
Seller's expense. The Purchaser shall bear and pay the costs and expenses
incurred in connection with the preparation of the Closing Date Balance Sheet.
(b) Within 120 days after the Closing Date, the Seller shall review
the Closing Date Balance Sheet and shall deliver to the Purchaser a written
description (the "OBJECTION NOTICE") of its objections, if any (the "DISPUTED
ITEM(S)"), to the Closing Date Balance Sheet. The Seller shall bear and pay the
costs and expenses incurred in connection with such review of the Closing Date
Balance Sheet.
(c) If the Seller and the Purchaser fail to resolve any of the
Disputed Items within 30 days after delivery of the Objection Notice to the
Seller, they shall together appoint the Arbitrator to arbitrate such dispute
with respect to the unresolved Disputed Item(s). The Seller and the Purchaser
shall present their positions with respect to such Disputed Item(s) to the
Arbitrator together with such other materials as the Arbitrator may deem
appropriate. The Arbitrator shall, within 20 days after the date of the hearing,
submit a written decision with respect to each such Disputed Item to the Seller
and the Purchaser, which determination shall be final and binding on all of the
parties hereto and shall have the legal effect of an arbitral award. The Seller
and the Purchaser shall each bear and pay one-half of the Arbitrator's fees and
expenses incurred in connection therewith.
(d) To the extent that the Adjustment Net Transferred Assets as
reflected on the Closing Date Balance Sheet, as finally determined by agreement
of the Seller and the Purchaser or by the Arbitrator, are (i) equal to or exceed
$3,203,820 and (ii) less than or equal to $3,253,820, there shall be no post-
Closing adjustment to the Purchase Price. If an Estimated Purchase Price
Adjustment was made at Closing under Section 2.6, the Seller, in the case of an
upward Estimated Purchase Price Adjustment, or the Purchaser, in the case of a
downward Estimated Purchase Price Adjustment, shall refund to the other party
the full amount of such Estimated Purchase Price Adjustment (the "PURCHASE PRICE
REFUND"), in accordance with Section 2.7(f).
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(e) To the extent the Adjustment Net Transferred Assets (x) exceed
$3,253,820 or (y) are less than $3,203,820, then the Purchase Price shall be
adjusted up or down, respectively, on a dollar-for-dollar basis equal to the
amount by which the Adjustment Net Transferred Assets exceed or are less than,
respectively, $3,228,820 (the "PURCHASE PRICE ADJUSTMENT"); provided, however,
if an Estimated Purchase Price Adjustment was made at the Closing under Section
2.6, the Purchase Price Adjustment to be made post-Closing shall be as follows:
(i) The Purchase Price shall be adjusted up or down, respectively,
on a dollar-for-dollar basis in an amount equal to the remainder of (x) the
Adjustment Net Transferred Assets, less (y) the Estimated Adjustment Net
Transferred Assets.
(ii) If the calculation in clause (i) results in a negative
amount, the Purchase Price Adjustment shall be paid by the Seller to the
Purchaser in accordance with Section 2.7(f). If the calculation in clause
(i) results in a positive amount, the Purchase Price Adjustment shall be
paid by the Purchaser to the Seller in accordance with Section 2.7(f).
(f) Within five business days following the date on which the Seller
and the Purchaser shall reach agreement on the Closing Date Balance Sheet or the
Arbitrator shall make its determination, as the case may be (the "CLOSING DATE
BALANCE SHEET DETERMINATION DATE"), the party owing the Purchase Price Refund or
the Purchase Price Adjustment, as the case may be, shall pay to the party
entitled to the Purchase Price Refund or the Purchase Price Adjustment, as the
case may be, by certified or cashier's check or wire transfer of immediately
available funds, to an account identified in writing by the payee at least two
days prior to such payment date, the amount of the Purchase Price Refund or the
Purchase Price Adjustment, as the case may be, together with interest thereon
calculated at the Prime Rate from the Closing Date to the date on which such
Purchase Price Refund or the Purchase Price Adjustment, as the case may be, is
paid.
2.8 Payment of the Purchase Price; Escrow. At the Closing, the
Purchaser shall, to secure the Seller's obligations under Section 11.6, (i)
deliver to the Escrow Agent $200,000 (the "ESCROWED AMOUNT") by wire transfer of
immediately available funds to an account identified in writing by the Escrow
Agent to the Purchaser at least two business days prior to the Closing Date,
which Escrowed Amount shall be held and disbursed by the Escrow Agent pursuant
to the terms of the Escrow Agreement, and (ii) deliver to the Seller an amount
equal to the Purchase Price, adjusted in accordance with Section 2.6 and less
the Escrowed Amount, by wire transfer of immediately available funds to an
account identified in writing by the Seller to the Purchaser at least two
business days prior to the Closing Date.
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2.9 Allocation of the Purchase Price. The Seller and the Purchaser
agree that the Purchase Price and the Assumed Liabilities shall be allocated
among the Transferred Assets on the basis of an allocation (the "Allocation") to
be mutually agreed by the Purchaser and the Seller. Such Allocation shall, upon
delivery to the Seller, become part of this Agreement for all purposes. The
Seller and the Purchaser agree to report, pursuant to Section 1060 of the Code
and the regulations promulgated thereunder, if and when required, the Allocation
of the Purchase Price, as adjusted, in a manner entirely consistent with such
Allocation in the preparation and filing of all Tax Returns (including IRS form
8594). Neither the Seller nor the Purchaser will take any action that would
call into question the bona fides of such Allocation.
ARTICLE III
THE CLOSING
3.1 Time and Place of Closing. The Closing shall take place at 10:00
a.m., New York time, on the Closing Date at the offices of Richards & O'Neil,
LLP, 885 Third Avenue, New York, New York 10022, or at such other time or place
as may be mutually agreed upon by the parties hereto. The Closing, the Transfer
of the Transferred Assets, the effectiveness of the documents, agreements,
opinions and certificates delivered in accordance with this Agreement, and the
consummation of the transactions contemplated hereby shall be deemed to occur at
the Effective Time.
3.2 Payment of Purchase Price; Deliveries. At the Closing, the
Purchaser shall pay the Purchase Price in accordance with Section 2.6 above, and
the parties hereto shall deliver such documents as required by Article VIII and
Article IX hereof.
3.3 Assignment of Contracts, Etc. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
Transfer any Contract or any claim or right, or any benefit arising thereunder
or resulting therefrom (collectively, "RESTRICTED ASSETS"), if an attempted
Transfer thereof, without the consent of a third party thereto, would constitute
a breach thereof or in any way affect the rights of the Seller or the Purchaser,
as the case may be, thereunder. If such consent is not obtained, the Seller
will cooperate with the Purchaser without further consideration in any
reasonable arrangement designed to provide for the Purchaser the benefits of or
under any such Restricted Asset, including without limitation enforcement for
the benefit of the Purchaser of any and all rights of the Seller against a third
party thereto arising out of the breach or cancellation thereof by such third
party. Any Transfer to the Purchaser of any Restricted Asset which shall
require the consent or approval of any third party for such Transfer as
aforesaid shall be made subject to such consent or approval being obtained.
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3.4 Further Assurances. In addition to the actions, documents and
instruments specifically required to be taken or delivered by this Agreement, at
the Closing or from time to time thereafter, and without further consideration,
each party hereto shall take such other actions, and execute and deliver such
other documents and instruments, as any other party hereto or its counsel may
reasonably request in order to effectuate and perfect the transactions
contemplated by the Acquisition Documents.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE STOCKHOLDER
The Seller and the Stockholder hereby represent and warrant to the
Purchaser (which representations and warranties constitute the basis upon which
the Purchaser has been induced to enter into and perform this Agreement) as of
the date hereof and as of the Closing Date as follows: Disclosure under any
schedule shall constitute disclosure under all schedules without the need for
cross-reference if, but only if, the substance and relevance of the disclosure
as it relates to the representation and corresponding schedule with respect to
which it is deemed to have been made is evident from the substance of the
disclosure in the context in which it is actually made.
4.1 Organization and Good Standing. The Seller is a company duly
incorporated or otherwise organized, validly existing and in good standing under
the laws its jurisdiction of incorporation and has the requisite power and
authority to own, operate and lease its properties and assets and to conduct its
business as they are now being owned, operated, leased and conducted. The
Seller is not required to be qualified or licensed to do business as a foreign
corporation in any jurisdiction.
4.2 Power and Authority. The Seller has the full legal power and
authority to execute and deliver this Agreement and each other Acquisition
Document, perform its obligations hereunder and thereunder and consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and each other Acquisition Document to which the Seller is a
party by the Seller, the performance by the Seller of its obligations hereunder
and thereunder and the consummation by the Seller of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate actions on the part of the Seller. This Agreement and each other
Acquisition Document to which the Seller is a party constitutes (or will
constitute upon the execution thereof) the legal, valid and binding obligation
of the Seller, enforceable against it in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar Laws now or hereafter in effect relating to creditors' rights generally
and general principles of equity.
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4.3 Organizational Documents. The copies of the certificate of
incorporation and bylaws of the Seller heretofore delivered or made available by
the Seller to the Purchaser are true and complete copies of such instruments as
amended and are in full force and effect.
4.4 No Violation. Except as set forth on Schedule 4.4 hereto, neither
the execution and delivery of this Agreement or any other Acquisition Document
to which the Seller is a party by the Seller, the performance by the Seller of
its obligations hereunder or thereunder, nor the consummation by the Seller of
the transactions contemplated hereby or thereby, will (i) contravene any
provision of the certificate of incorporation or bylaws of the Seller; (ii) with
or without the giving of notice or the lapse of time or both, violate, be in
conflict with, constitute a default under, permit the termination of, cause the
acceleration of the maturity of any debt or obligation of the Seller relating to
the Business under, require the consent of any other party to, constitute a
breach of, create a Liability or loss of a benefit under, or result in the
creation or imposition of any Lien upon any of the Transferred Assets under, any
Contract, other than such violations, conflicts, defaults, terminations,
accelerations, breaches, Liabilities or loss of benefits which will be cured
prior to or concurrently with the Effective Time; (iii) violate or conflict
with, any Law or any judgment, decree or order of any Governmental Authority to
which the Seller is subject or by which the Seller or any of its assets or
properties is bound; or (iv) result in the loss of any Approval necessary to or
benefitting the Business.
4.5 Financial Information; Undisclosed Liabilities.
(a) The Seller has previously delivered to the Purchaser certain
financial data relating to the Business including, without limitation, the June
29 Balance Sheet, the audited balance sheets of the Seller as of December 31,
1995, 1994 and 1993 and the related statements of operations and cash flows for
the years or periods then ended (collectively, the "FINANCIAL DATA"). Except as
may otherwise be indicated therein or on Schedule 4.5 attached hereto, the
Financial Data (i) were prepared in accordance with GAAP, consistently applied,
(ii) were compiled from the Books and Records of the Seller regularly maintained
by management, (iii) are used by the Seller in the ordinary conduct of the
Business, (iv) are true, correct and complete in all material respects, and (v)
present fairly the financial information purported to be reflected thereby.
(b) There is no Liability of the Seller that is not specifically
recorded in the Financial Data, other than (i) Liabilities incurred in the
ordinary course of business since June 29, 1996, none of which, individually or
in the aggregate with themselves and with all liabilities of the Seller incurred
prior to such date, could have a Seller Material Adverse Effect, (ii) any
Liability which (if known) would not be required to be presented in any
financial statements or the notes thereto prepared in accordance with GAAP,
(iii) Liabilities under the Contracts disclosed in this Agreement or any
Schedule hereto, or (iv) Liabilities under or disclosed in this Agreement or any
Schedule hereto.
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4.6 Absence of Certain Changes or Events. Except as set forth on
Schedule 4.6 attached hereto or as otherwise contemplated by this Agreement,
since June 29, 1996:
(a) there has not occurred any change or event that has had or could
reasonably be expected to have, individually or in the aggregate, a Seller
Material Adverse Effect;
(b) the Seller has not, to the extent the following relates to the
Business, (i) incurred any Liability, except normal trade or business
Liabilities incurred in the ordinary course of business in a manner and amount
consistent with past practice, (ii) mortgaged, pledged or subjected to or
permitted the imposition of any Lien (other than Permitted Liens) upon any of
the Transferred Assets, (iii) entered into any commitment or transaction
(including, without limitation, any capital expenditure) not in the ordinary
course of business in a manner and amount consistent with past practice, (iv)
disposed of, or permitted to lapse, any rights to use the Intellectual Property,
(v) granted any increase in the compensation of any employee, including any such
increase pursuant to any bonus, pension, profit-sharing or other plan or
commitment, or any increase in the compensation payable or to become payable to
any such employee, except in the ordinary course of conducting and operating the
Business in a manner consistent with past practice, (vi) entered into or agreed
(whether in writing or otherwise) to enter into any agreement or other
arrangement to take any action referred to in this Section 4.6, (vii) sold,
transferred, otherwise disposed of or agreed to sell, transfer or otherwise
dispose of any of the Transferred Assets (or assets that would have, but for
such actions, qualified as Transferred Assets) other than in the ordinary course
of business, (viii) waived, compromised or cancelled any right, or cancelled or
compromised any claim or Liability, related to the Business or any of the
Transferred Assets, other than in the ordinary course of business, (ix)
terminated, discontinued, closed or disposed of any plant, facility, or business
operation related to the Business, or (x) introduced any change with respect to
the operation of the Business or changed in any respect its accounting methods
or practices; and
(c) other than acts relating to the transactions contemplated by this
Agreement or disclosed in the Schedules hereto, the Business has been conducted
in all significant respects only in the ordinary course of business in a manner
consistent with past practice, including with respect to advertising, marketing,
pricing, purchasing, personnel, sales, credit, rebates, returns, budgets,
product acquisitions or discounts.
4.7 Contracts; No Default.
(a) Schedule 4.7 attached hereto sets forth a true and complete list
of all agreements of the following types (each a "CONTRACT" and collectively,
the "CONTRACTS") with respect to the Business to which the Seller is a party or
by which the Seller or any of the Transferred Assets are bound or affected: (i)
employment, commission and brokerage
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agreements, (ii) non-competition, confidentiality and secrecy agreements, (iii)
collective bargaining agreements, (iv) loan agreements, notes, mortgages,
indentures, security agreements and other agreements and instruments relating to
the borrowing or lending of money, (v) distributor, manufacturing, franchise,
broker or license agreements, (vi) powers of attorney, (vii) partnership or
joint venture agreements or agreements for the purchase or sale of assets
outside the ordinary course of business or for the merger or consolidation or
sale of capital stock involving the Seller, (viii) all leases of personal
property, (ix) agreements for the purchase or sale of materials, supplies,
equipment or services involving payments of more than $50,000 over the remaining
term thereof, (x) purchase orders and other contracts for the sale of Inventory
which involve payments of more than $50,000 over the remaining term thereof and
which cannot be cancelled on 30 days or less notice without penalty and (xi) all
other agreements material to the operation of the Business, including without
limitation, agreements which involve payments by or to the Seller in excess of
$50,000 in any 12-month period (each such Contract being included in the
Transferred Assets only to the extent such Contract is listed on Schedule
2.1(g)). The Seller has delivered or made available to the Purchaser a true and
complete copy of each of the Contracts.
(b) Except as set forth on Schedule 4.7 hereto, the Seller and each
other party thereto has performed or is now performing its obligations under,
and is not in default (and would not by the lapse of time or the giving of
notice or both be in default) under, or in breach or violation of, nor has the
Seller received notice of any asserted claim of a default by the Seller under,
or a breach or violation by the Seller of, any of the Contracts to which it is a
party.
4.8 Intellectual Property. The Seller owns or otherwise has the sole
right or license to use the Intellectual Property used in or relating to the
Business as currently conducted or currently proposed to be conducted. Schedule
4.8 attached hereto contains a true and complete list of all patents,
trademarks, trade names and copyrights included in the Intellectual Property,
all pending applications therefor and all licenses and other agreements relating
thereto, whether as licensor or licensee. Except as set forth on Schedule 4.8
attached hereto, the Seller owns the Intellectual Property free and clear of all
Liens. No consent of any third party will be required for the use by the
Purchaser of any of the Intellectual Property or the Transfer of the Seller's
rights therein to the Purchaser. Except as set forth on Schedule 4.8 attached
hereto, no claims are currently being asserted by any Person involving or
questioning the Seller's sole right to use any of the Intellectual Property or
challenging or questioning the validity or effectiveness of any license or
similar agreement. The use of the Intellectual Property by the Seller does not
infringe the rights of any Person, which infringement would have a Seller
Material Adverse Effect. To the knowledge of the Seller, no infringing use is
currently ongoing by any Person.
4.9 Actions. Except as set forth on Schedule 4.9 attached hereto,
there is no Action pending or, to the knowledge of the Seller, threatened,
against the Seller or any
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Transferred Asset or any of the Seller's other assets, properties or rights
relating to the Business, before any Governmental Authority which questions or
challenges the validity of this Agreement or the other Acquisition Documents or
any action taken or proposed to be taken by the Seller pursuant hereto or
thereto or in connection with the transactions contemplated hereby or thereby,
or would, if adversely determined, have a Seller Material Adverse Effect, and no
condition exists which could reasonably expect to lead to any such Action.
4.10 Compliance with Laws. Except as set forth on Schedule 4.10
attached hereto, (i) the Seller has complied with all Laws binding on it
relating to the Business or binding on the Transferred Assets, (ii) the Seller
has not been charged with or, to the knowledge of the Seller, threatened with,
any charge concerning, or is under any investigation with respect to, any
violation of any provision of any Law relating to the Business or the
Transferred Assets, and (iii) the Seller is not in violation of, or in default
under, and no event has occurred which, with the lapse of time or the giving of
notice or both, would result in the violation of or default under, the terms of
any judgment, decree, order, injunction or writ of any Governmental Authority
relating to the Transferred Assets or the Business, the violation of, or default
under, would have a Seller Material Adverse Effect. Without limiting the
foregoing, the Seller has, or prior to the Closing Date will have, complied in
full with its obligations, if any, to give prior notifications under WARN to the
Seller's employees employed in the Business.
4.11 Taxes.
(a) Except as set forth on Schedule 4.11 attached hereto, all Taxes of
the Seller have been paid when due or are adequately provided for and will
continue to be adequately reserved (excluding for this purpose the liability for
deferred taxes) and paid when due. Except as set forth on Schedule 4.11 attached
hereto, the Seller has filed all federal, state, local and foreign income Tax
Returns when due. Except as set forth on Schedule 4.11 attached hereto, the
Seller has paid and withheld all Taxes required to have been paid and withheld
in connection with amounts paid or owing to any employee, creditor, independent
contractor or other party. The Seller has previously made available to the
Purchaser for inspection accurate copies of all requested Tax Returns filed by
the Seller.
(b) Except as set forth on Schedule 4.11 attached hereto, there are no
agreements, waivers or other arrangements providing for extension of time with
respect to the assessment or collection of unpaid Taxes of the Seller, nor are
there any actions, suits, proceedings, investigations or claims now pending
against the Seller in respect of any such unpaid Taxes, or any matters under
discussion with any Federal, state, county or local authority relating to any
amount of any such unpaid Taxes. Except as otherwise set forth on Schedule 4.11
attached hereto, the Tax Returns of the Seller have not been audited and are not
in the process of being audited by the applicable taxing authorities, and there
is no Tax
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deficiency outstanding, proposed or assessed against the Seller, or any basis
for any additional claim or assessment in respect of Taxes for any period for
which Tax Returns have been filed.
(c) The Seller is not a "foreign person" within the meaning of Section
1445 of the Code and the Treasury Regulations promulgated thereunder.
4.12 Title to Property. Except as set forth on Schedule 4.12 attached
hereto, the Seller has good and marketable title to, or a valid leasehold
interest in, all of the Transferred Assets (whether real, personal, mixed,
tangible and intangible, and including specifically all Intellectual Property),
free and clear of all Liens.
4.13 Insurance. Schedule 4.13 attached hereto sets forth a true and
complete list and description of the insurance policies or binders currently
insuring the property, assets or Liabilities of the Seller with respect to the
Business. Except as set forth on Schedule 4.13 attached hereto, (i) the
Transferred Assets have been covered on an uninterrupted basis by valid and
effective insurance policies or binders which are in the aggregate reasonable in
scope and amount in light of the risks attendant to the Business, (ii) all such
policies or binders are in full force and effect and no premiums due and payable
thereon are delinquent, (iii) there are no pending claims against such insurance
by the Seller as to which the insurers have denied liability, (iv) the Seller
has complied with the provisions of such policies, (v) there exist no claims
under such insurance policies or binders with respect to the Transferred Assets
that have not been properly and timely submitted by the Seller to its insurers
and (vi) there is no inaccuracy in any application for such policies or binders
which would render such policies or binders invalid or unenforceable.
4.14 Approvals.
(a) Except as set forth on Schedule 4.14 attached hereto, no Approval
of any Governmental Authority or other Person is required to be made, obtained
or given by or with respect to the Seller in connection with the execution or
delivery by the Seller of this Agreement and the other Acquisition Documents,
the performance by it of its obligations hereunder or thereunder or the
consummation by it of the transactions contemplated hereby or thereby including
without limitation the Transfer of the Transferred Assets to the Purchaser.
(b) The Seller has all Approvals required for the operation of the
Business and the use, occupancy and ownership or leasing of the Transferred
Assets, as currently operated, used, occupied, owned or leased. All of such
Approvals are listed on Schedule 4.14 attached hereto, are valid, in full force
and effect, in good standing and are assignable and transferable to the
Purchaser without the consent or approval of any Governmental Authority or other
Person or the payment of any fee or charge, except as set forth in Schedule
4.14. There is no Action pending or, to the knowledge of the Seller,
threatened, that disputes the validity of any
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such Approval or that is likely to result in the revocation, cancellation or
suspension, or any adverse modification of, any such Approval.
4.15 Employee Benefit Plans; ERISA.
(a) Schedule 4.15 attached hereto contains a true and complete list of
each Plan. The Seller has delivered to the Purchaser copies of the Plans.
(b) Except as set forth in Schedule 4.15 hereto:
(i) no prohibited transaction within the meaning of Section 406 or
407 of ERISA (which is not exempt under Section 408 of ERISA) or
Section 4975 of the Code with respect to any Assumed Plan has occurred
and no action has been committed or omission has occurred which could
subject the Assumed Plans, their related trusts and contracts, or the
Seller or its directors, officers, employees or affiliates to any tax,
fine, penalty or liability under Section 405, 409 or 502(i) of ERISA
or Section 4972 and Sections 4975 through 4980, inclusive, of the
Code;
(ii) each of the Assumed Plans is, and its administration is and
has been during the five-year period preceding the date of this
Agreement in all respects in compliance with, and the Seller has not
received any claim or notice that any such Assumed Plan is not in
compliance with, all applicable laws and orders and prohibited
transaction exemptions, including, without limitation, the
requirements of ERISA and the Code;
(iii) all returns, reports, statements and summary plan
descriptions with respect to any Assumed Plan required under ERISA,
the Code, the Securities Exchange Act or other applicable law to be
filed with the Department of Labor, the Internal Revenue Service, the
Pension Benefit Guaranty Corporation, the Securities Exchange
Commission or any other governmental agency have been timely filed and
are true and correct in all material respects, and neither a tax nor a
penalty could be properly assessed against the Seller with respect to
any such return, report, statement or summary plan description;
(iv) No Annual Reports described in Section 104 of ERISA have been
filed on the Form 5500 series for any of the Assumed Plans for any
plan years because those Plans are or were exempt from filing as a
result of having fewer than 100 participants at the beginning of each
plan year;
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(v) the Seller is not in material default in performing any of its
contractual obligations under any of the Assumed Plans or any related
trust agreement or insurance contract;
(vi) there are no material outstanding liabilities of any Assumed
Plan other than liabilities for benefits to be paid to participants in
such Assumed Plan and their beneficiaries in accordance with the terms
of such Assumed Plan which are, as of the Effective Time, either fully
funded or fully insured;
(vii) the Seller does not maintain nor is it obligated to provide
benefits or does it otherwise have any current or projected liability
under any life, medical or health plan, program or arrangement which
provides benefits to one or more retirees or other terminated
employees other than benefit continuation rights under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended;
(viii) (1) there has been no violation of Section 4980B of the
Code or Sections 601 through 608 of ERISA with respect to any Assumed
Plan that is a group health plan; (2) no such Assumed Plan is a
"multiple employer welfare arrangement" within the meaning of Section
3(40) of ERISA; (3) the Seller does not maintain or have any
obligation to contribute to any "voluntary employees' beneficiary
association" within the meaning of Section 501(c)(9) of the Code or
other funding arrangement for the provision of welfare benefits (such
disclosure to include the amount of any such funding); and (4) each
Assumed Plan that is a group health plan is and has been fully
insured; and
(ix) any of the Assumed Plans to which the applicable non-
discrimination requirements of Section 125 of the Code apply have been
annually tested for this purpose and the Seller represents that, on
the basis of such tests, no "highly compensated individual", within
the meaning of that Section, must include any additional amounts in
income for any year in which the Assumed Plan(s) was maintained by the
Seller.
(c) With respect to each Assumed Plan, true, correct, and complete
copies of the applicable following documents have been delivered or expressly
made available to the Purchaser: (i) all current Plan documents and related
trust documents, insurance contracts and service provider agreements, and any
amendments thereto; (ii) Forms 5500, financial statements, and actuarial reports
for the last three (3) Plan years; (iii) summary plan descriptions; and (iv)
all written communications to employees relating to the Assumed Plans.
(d) Except for the Assumed Plans, no Plan is or will be directly or
indirectly binding on the Purchaser by virtue of the transactions contemplated
hereby. The Seller does
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not maintain any Plan which provides severance benefits to current or former
employees or other service providers of the Business. Each Assumed Plan may be
amended and terminated in accordance with its terms without additional
liability, and each such Assumed Plan provides for the unrestricted right of the
Seller to amend or terminate such Plan upon proper notice.
(e) To the best knowledge of the Seller, each of the Assumed Plans is
freely assignable by the Seller to the Purchaser.
(f) Other Benefits. Seller shall be responsible for all Plans of
Seller and liabilities with respect thereto, except as specifically provided in
Section 10.1(b).
(g) None of the Plans is a "multiemployer plan" as defined in ERISA
Section 3(37) or a Plan covered by Title IV of ERISA and the Seller has no
liability in respect of any such Plan.
4.16 Suppliers and Customers. Schedule 4.16 attached hereto sets forth
the Seller's ten largest suppliers and customers by volume over the last 12
months. The relationships of the Seller with its suppliers and customers
relating to the Business are good commercial working relationships and no
supplier or customer of the Seller relating to the Business has within the last
12 months cancelled or otherwise terminated, or threatened in writing to cancel
or otherwise terminate, its relationship with the Seller or has within the last
12 months decreased materially, or threatened to decrease or limit materially,
its services, supplies or materials to the Seller relating to the Business or
its purchases or usage of any of the Seller's products, as the case may be. The
Seller is not aware that any such supplier or customer intends to cancel or
otherwise modify its relationship with the Seller relating to the Business or to
decrease materially or limit its services, supplies or materials to the Seller
relating to the Business or its purchases or usage of any of the Seller's
products.
4.17 Environmental Matters.
(a) Except as set forth on Schedule 4.17 attached hereto, (i) the
Transferred Assets and operations of the Business are, and have been, in
compliance with all Environmental Laws and with all requirements of applicable
Approvals issued pursuant to Environmental Laws, except where failure to be in
compliance could not, individually or in the aggregate, have a Seller Material
Adverse Effect, (ii) there has been no unauthorized release, as such term is
defined in CERCLA, of Hazardous Materials on, in, under, about or from any of
the Real Property, and no condition exists on, in, under or about the Real
Property that gives rise to any Liability or potential Liability under
Environmental Laws or common law, which could, individually or in the aggregate,
have a Seller Material Adverse Effect, (iii) during the last five years, the
Seller has not received any notice from any Governmental Authority or other
Person claiming any violation of or potential Liability under Environmental Laws
in respect of the Business or the Transferred Assets, which could,
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individually or in the aggregate, have a Seller Material Adverse Effect, (iv)
Hazardous Materials that were present or stored on the Real Property have not
been disposed of, or arranged to be disposed of, in a manner or at a location
that would reasonably be expected to result in Liability under any Environmental
Law which could, individually or in the aggregate, have a Seller Material
Adverse Effect, (v) in the event that Seller has undertaken any repair, removal,
remediation, clean-up, detoxification or any other action in respect of any
environmentally hazardous, toxic or dangerous substances present at or affecting
the Real Property, the same has in all respects been carried out and performed
in full compliance with any Environmental Laws applicable thereto, and the cost
thereof paid in full and (vi) in connection with the Business, the Seller has
not assumed, contractually or through a merger, any Liabilities or obligations
under any Environmental Law which could, individually or in the aggregate, have
a Seller Material Adverse Effect.
(b) Schedule 4.17 attached hereto sets forth a complete and accurate
list of all Approvals required under Environmental Laws relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
discharge, emission, transport, release, recycling or handling of Hazardous
Materials in connection with the operation of the Business, copies of which have
been delivered to or made available to the Purchaser. Each such Approval is
valid and in full force and effect. There are no pending or, to the best
knowledge of the Seller, threatened administrative or judicial proceedings to
revoke, cancel or declare such Approvals invalid in any material respect. The
Seller agrees to cooperate with the Purchaser to take all steps required for the
Transfer and/or assignment to the Purchaser of all such Approvals.
(c) Notwithstanding any other representation and warranty to the
contrary in this Article IV, the representations and warranties in this Section
4.17 shall be the sole and exclusive representations and warranties of the
Seller with respect to environmental matters.
4.18 Labor Matters.
(a) Except as set forth on Schedule 4.18 attached hereto, (i) there is
no unfair labor practice charge or complaint against the Seller pending before
the National Labor Relations Board or any other Governmental Authority and, to
the best of the Seller's knowledge, none is threatened or has been threatened
within the last five years; (ii) there is no labor strike, dispute, request for
representation, slowdown or stoppage actually pending against or affecting the
Seller relating to the Business and, to the best of the Seller's knowledge, none
is threatened or has been threatened within the last five years; and (iii) no
employees employed by the Seller in connection with the Business at any time
during the last five years have been represented by a labor union or governed by
a collective bargaining agreement in respect of such employment.
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(b) Except as set forth on Schedule 4.18, the Seller is in compliance
with Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act, the National Labor Relations Act, the Labor
Management Relations Act, the Fair Labor Standards Act, as amended, the
Immigration Reform and Control Act of 1986, the Americans with Disabilities Act,
the Family Medical Leave Act, and all other Laws governing illegal
discrimination, equal employment opportunity, civil rights, occupational safety
and health requirements, payment of minimum wages and overtime rates and the
withholding and payment of Taxes from compensation of employees, the
noncompliance with which would have a Seller Material Adverse Effect. There are
no current claims, nor have there been any written threats of claims within the
last five years, against the Seller arising out of, or relating to, or alleging
any violation of any of the foregoing.
(c) The Seller has received no notification that, nor has any reason
to believe that, any of its current employees presently plan to terminate their
employment, whether by reason of the transactions contemplated hereby or
otherwise. Except as set forth on Schedule 4.18 attached hereto, the employment
of all persons presently employed or retained by the Seller is terminable at
will, and the Purchaser will not be, pursuant to any Contract of the Seller,
applicable Law, judgment or otherwise, obligated to pay or be liable for the
payment of any severance pay or other benefit by reason of the voluntary or
involuntary termination of the employment of any present or former officer,
employee, consultant, agent or manager, prior to, on or after the Closing Date.
4.19 Personal Property. Schedule 4.19 attached hereto sets forth a
true and complete list of all Equipment and Other Personalty (other than items
or categories of items having a book value of less than $10,000 individually).
Except as set forth on Schedule 4.19 attached hereto, all such assets are in
good condition and repair, normal wear and tear excepted, and are adequate for
the uses to which they are being put in the ordinary course of the Business.
4.20 Real Property.
(a) Set forth on Schedule 4.20(a) attached hereto is a brief
description of all the Owned Real Property.
(b) There are no leases, subleases, tenancies or rights of occupancy
affecting the Real Property or any parties in possession of any portion of the
Real Property other than the Seller. Except for the Real Property, the Seller
does not own, lease, sublease or occupy, in whole or in part, or have any other
interest in any land, buildings or other improvements which has been, is now or
is intended to be used or occupied by the Seller in connection with the Business
or the Transferred Assets.
(c) Except as provided on Schedule 4.20(c) attached hereto:
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(i) The Seller is the sole owner of the Real Property and has
good, marketable and insurable title to the Real Property, free and
clear of any Lien.
(ii) The Seller has not received notice of, nor has there
occurred, any of the following: (A) pending or threatened litigation
or administrative actions; (B) any mechanics or materialmen's liens;
or (C) any other matter materially and adversely affecting the value
of the Real Property.
(iii) The Seller does not own or hold, and is not obligated under
or a party to, any option, right of first refusal or other contractual
right to sell, dispose of, lease or sublease any of the Real Property
or any portion thereof or interest therein.
(iv) The Seller does not own or hold, and is not obligated under
or a party to, any option, right of first refusal or other contractual
right to purchase or lease any other real property or any portion
thereof or interest therein which would be binding on the Purchaser or
could create a Lien upon any of the Transferred Assets.
(v) There are no encroachments, matters of survey or other facts
or conditions affecting the Real Property which would (A) interfere in
any respect with the use, occupancy or operation thereof as currently
used, occupied and operated, or (B) reduce the fair market value
thereof below the fair market value which it would have had but for
such encroachment or other fact or condition. No portion of the Real
Property encroaches upon any property not included within the
Transferred Assets.
(d) Except as provided on Schedule 4.20(d) attached hereto, to the
best knowledge of the Seller, all buildings, structures and other improvements
(the "IMPROVEMENTS") located upon or included within the Real Property,
including but not limited to the roofs and structural elements thereof and the
heating, ventilation, air conditioning, plumbing, electrical, mechanical, sewer,
waste water, storm water, paving and parking equipment, systems and facilities
included therein (other than items and categories of items having a book value
of less than $10,000 individually), in the aggregate, are in substantially good
condition and repair, except for normal wear and tear, free of latent,
structural and other defects and are adequate for the purposes for which they
are being put in the ordinary course of the Business. All water, gas,
electrical, steam, compressed air, telecommunication, sanitary and storm sewage
lines and systems and other similar systems serving the Real Property are
installed and operating and are sufficient to enable the Real Property to
continue to be used and operated in the manner currently being used and
operated, and any so-called hookup fees or other associated charges payable by
the Seller have been fully paid. Each such utility or other service is provided
by a public or private utility or
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service company. No Improvement or portion thereof is dependent for its access,
operation or utility on any land, building or improvement not included in the
Real Property.
(e) Schedule 4.20(e) attached hereto sets forth each certificate of
occupancy, underwriter's certificate, permit, license, franchise, approval,
authorization and variance with respect to the Real Property and all
Improvements thereat (collectively, "REAL PROPERTY PERMITS") from all
Governmental Authorities having jurisdiction over the Real Property, required to
have been issued to the Seller to enable the Real Property to be lawfully
occupied and used by the Seller for all of the purposes for which it is
currently occupied and used (or, to the Seller's knowledge after due and
diligent inquiry, required to have been issued to the predecessors of the Seller
if sufficient for the Seller to lawfully occupy and use the Real Property) have
been lawfully issued and are, as of the date hereof, in full force and effect
and are assignable and transferable to the Purchaser without the consent or
approval of any Governmental Authority or other Person or the payment of any fee
or charge. None of the Real Property Permits is in the nature of a conditional
use permit or other special approval. The Seller has not received or been
informed by a third party of the receipt by it of any notice from any from any
insurance organization threatening a suspension, revocation, modification or
cancellation of any Real Property Permit and, to the best knowledge of Seller,
there is no basis for the issuance of any such notice or the taking of any such
action. No action under the terms of such Real Property Permits by Seller,
Purchaser or any other party is required in order that all Real Property Permits
will continue in full force and effect following the consummation of the
transactions provided for herein. The Improvements and their continued use,
occupancy and operation as currently used, occupied and operated conforms and is
in compliance with all applicable Laws including, but not limited to, building,
subdivision, land use and zoning Laws and all other Laws restricting or
regulating or prohibiting to occupancy, use or enjoyment of the Real Property,
or regulating the character, dimensions or location of the Improvements
(collectively, the "REAL PROPERTY LAWS").
(f) The Real Property is in full compliance in all material respects
with all Real Property Laws. Except as set forth on Schedule 4.20(f) attached
hereto, the Real Property and its continued use, occupancy and operation as
currently used, occupied and operated does not constitute a nonconforming use
under any Real Property Law. Except as set forth on Schedule 4.20(f), the
continued existence, and occupancy of each Improvement, and rights to repair
and/or rebuild the same to the condition existing on the date hereof following
damage or destruction by fire or other casualty is not dependent on the granting
of any special permit, exception, approval or variance from any Governmental
Authority other than customary building permits and approvals. The Seller has
no knowledge of any pending or anticipated change in any Law which would have a
material adverse effect upon the ownership, use, occupancy or operation of the
Real Property or any portion thereof, or upon the making of reasonable additions
or alterations to the Improvements thereat or upon construction of any
Improvements thereat or upon reconstruction of any Improvements in the event of
a casualty. No dispute currently exists with any governmental authority having
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jurisdiction over the Real Property with respect to any Real Property Law or the
application thereof to the Real Property. Each special permit, exception,
approval or variance set forth on Schedule 4.20(f) is in full force and effect
and is assignable and transferable to Purchaser without the consent or approval
of any Governmental Authority or other Person or the payment of any fee or
charge.
(g) Each of the parcels included in the Real Property is assessed for
real estate Tax purposes as a wholly independent tax lot, separate from any
adjoining land or Improvements not included in the Transferred Assets. Schedule
4.20(g) attached hereto sets forth all current Tax bills for each and every such
parcel and sets forth with respect to each such parcel in such year whether
certiorari proceedings were instituted and, if so, whether the same are pending
or have been adjudicated or settled (and if adjudicated or settled, the terms of
such judgment or settlement). Except as otherwise set forth herein, the
assessment of each Improvement set forth on Schedule 4.20(g) attached hereto
reflects the current state of completion and condition of such Improvement. The
Seller has no knowledge of any pending or contemplated reassessment of any
parcel included in the Real Property.
(h) The Seller has not received any notice and has no knowledge of any
pending, threatened or contemplated condemnation proceeding affecting the Real
Property or any part thereof or of any sale or other disposition of the Real
Property or any part thereof in lieu of condemnation.
(i) No portion of the Real Property has suffered any material damage
by fire or other casualty in the three years immediately preceding the date
hereof which has not heretofore been completely repaired and restored to the
condition necessary for the Seller properly to own and operate the Business as
such portion of the Real Property is currently used and in accordance with good
industry standards.
(j) Except as provided on Schedule 4.20(j) attached hereto, the Seller
has taken no action, nor has omitted to take any action, which has resulted in
the creation of any Lien, easement, right-of-way, building or use restriction,
exception, variance, reservation or limitation as might interfere with or impair
the present and continued use of the Real Property or the usual and normal
conduct of the business and operations of the Seller.
(k) Except as provided on Schedule 4.20(k) attached hereto, there are
no outstanding (i) mortgages, deeds of trust or other financing liens
encumbering or in any other way affecting any section of the Real Property or
any rents or other income arising therefrom and (ii) agreements, covenants or
restrictions affecting the Real Property or the current use of the Real Property
by the Seller.
(l) Except as otherwise provided in this Agreement, there is no
pending, threatened or proposed Action to modify the zoning classification of,
or to take by the power
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of eminent domain (or to purchase in lieu thereof), or to classify as a landmark
or as part of a historic district, or to impose special assessments on, or
otherwise to take or restrict in any way the right to use, develop or alter, all
or any part of the Real Property.
(m) No portion of the Real Property is located in a special flood
hazard area designated by any State or Federal governmental authority.
(n) No portion of the Real Property is a "Section 404 wetland" as
defined by the U.S. Army Corps of Engineers or a wetland area designated by any
Governmental Authority.
(o) The deeds, maps and surveys provided to the Purchaser at the
Closing are complete copies of such documents.
(p) The Seller owes no money to any architects, contractors,
subcontractors or materialmen for labor or materials performed, rendered or
supplied to or in connection with any Real Property within the past nine months.
(q) Except as disclosed on Schedule 4.20, all of the Improvements are
located within the boundary lines of the Real Property, have access to public
roads, highways or streets and Seller has no knowledge of any pending or
threatened restrictions to such access. All curb cut and street opening
licenses or permits required for vehicular access to and from any portion of the
Real Property to any adjoining public street, highway or road have been obtained
and, where required, paid for in full by Seller and are in full force and effect
and are assignable and transferable to Purchaser without the consent or approval
of any person or entity or the payment of any fee or charge.
(r) The plots, pieces and parcels of land constituting the Real
Property are contiguous and there are no strips or gores. The Seller neither
owns, leases nor has any other interest in any real property adjoining or
adjacent to the Real Property or otherwise connected with the Business and the
operations of the Real Property, including, without limitation, off-site
parking, which is not being conveyed to Purchaser pursuant to the terms of this
Agreement. No zoning or other rights have been transferred to or are used by
another parcel of land. Except as set forth in Schedule 4.20(r) attached
hereto, the Seller has not made nor shall the Seller make any application before
any zoning board or commission seeking to modify or change the present zoning of
the Real Property.
(s) The Seller has not received from any Governmental Authority any
written notice, and the Seller has no knowledge, that the Real Property does not
comply with, or of any violation of, any Laws applicable to the Premises
including, without limitation, those relating to access for the handicapped or
any Real Property Laws, and neither the Seller nor to the Seller's knowledge,
any predecessor in title of the Seller, has received any notice
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alleging any such violation which alleged violation has not been withdrawn or
fully and completely satisfied.
(t) The Seller has not received from any Person any written notice,
and Seller has no knowledge, that the Real Property, the Improvements or the use
and occupancy thereof does not comply with, or of any violation of, any
covenants, restrictions, easements, encumbrances and agreements affecting the
Real Property.
(u) There are no outstanding requirements or recommendations by any
insurance organization requiring or recommending any repair or ameliorative work
to be done in, at or about the Real Property or the Improvements.
4.21 Broker's or Finder's Fees. The Seller or Stockholder has not
authorized any Person to act as broker, finder, banker, consultant, intermediary
or in any other similar capacity which would entitle such person to any
investment banking, brokerage, finder's or similar fee in connection with the
transactions contemplated by this Agreement or any of the other Acquisition
Documents.
4.22 WARN. None of the actions taken or omitted or to be taken or
omitted by the Seller will give rise to any liability of Seller or the Purchaser
under WARN.
4.23 Sufficiency of Inventory. The Inventory Transferred at Closing
will be sufficient and adequate in kind and amount to permit the Purchaser to
operate the Business after the Closing in the ordinary course having regard and
making allowances for delivery lead times and Contracts assumed by the Purchaser
hereunder.
4.24 Inventory and Accounts Receivable. Except as reflected on the
disclosed in Schedule 4.24 hereto, the Inventory included among the Transferred
Assets is fairly valued and is salable or useable in the ordinary course of the
Business, and the accounts receivable included among the Transferred Assets are
reflected property on the books and records of the Seller, are valid receivables
subject, to the knowledge of the Seller, to no setoffs or counterclaims, and are
collectible at their recorded amounts.
4.25 Sufficiency of Assets. Except as set forth on Schedule 4.25
attached hereto, the Transferred Assets constitute substantially all of the
assets and properties held for use or used primarily in connection with the
Business and are sufficient to operate the Business in the manner currently
operated by the Seller.
4.26 Transactions with Affiliates. Schedule 4.26 attached hereto lists
all Contracts and arrangements relating to the sale of goods or services between
the Seller on the one hand and any Affiliate of the Seller on the other hand
involving annual payments in excess of $10,000 or a remaining term after the
Closing Date in excess of one year.
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4.27 Ownership of the Seller's Capital Stock. All of the issued and
outstanding shares of the Seller's capital stock are owned beneficially and of
record by the Stockholder.
4.28 Stockholder's Authority. The Stockholder has, and as of the
Effective Time will have, full legal capacity to enter into this Agreement in
the manner provided herein and to perform all of his obligations hereunder.
This Agreement has been duly executed and delivered by the Stockholder and is a
legal, valid and binding agreement of the Stockholder enforceable against the
Stockholder in accordance with its terms subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity,
whether asserted in a proceeding in equity or at law.
4.29 No Violation By Stockholder. Except as set forth on Schedule 4.29
hereto, neither the execution and delivery of this Agreement or any other
Acquisition Document to which the Stockholder is a party by the Stockholder, the
performance by the Stockholder of his obligations hereunder or thereunder, nor
the consummation by the Stockholder of the transactions contemplated hereby or
thereby, with or without the giving of notice or the lapse of time or both (i)
violate, be in conflict with, constitute a default under, permit the termination
of, cause the acceleration of the maturity of any debt or obligation of the
Seller; (ii) require the consent of any other party to, constitute a breach of,
create a Liability or loss of a benefit under, or result in the creation or
imposition of any Lien upon any of the Transferred Assets under, any Contract,
other than such violations, conflicts, defaults, terminations, accelerations,
breaches, Liabilities or loss of benefits which will be cured prior to or
concurrently with the Effective Time; (iii) violate or conflict with, any Law or
any judgment, decree or order of any Governmental Authority to which the Seller
is subject or by which the Seller or any of its assets or properties is bound;
or (iv) result in the loss of any Approval necessary to or benefitting the
Business.
4.30 No Misstatements or Omissions. No representation or warranty made
by the Seller or the Stockholder in this Agreement or in any Schedule hereto is
false or misleading as to any material fact, or omits to state a material fact
required to make any of the statements made herein or therein not misleading in
any material respect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as of the
date hereof and as of the Closing Date as follows:
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5.1 Organization and Good Standing. The Purchaser is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to own, operate and lease its properties and assets and to conduct its
business as they are now being owned, operated, leased and conducted. The
Purchaser is qualified to do business as a foreign corporation in the State of
North Carolina.
5.2 Power and Authority. The Purchaser has the requisite corporate
power and authority to execute and deliver this Agreement and the other
Acquisition Documents, perform its obligations hereunder and thereunder and
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the other Acquisition Documents by the Purchaser,
the performance by it of its obligations hereunder and thereunder and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate actions on the part of the Purchaser.
This Agreement and each other Acquisition Document constitutes (or will
constitute upon the execution thereof) the legal, valid and binding obligation
of the Purchaser, enforceable against it in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar Laws now or hereafter in effect relating to creditors' rights generally
and general principles of equity.
5.3 No Violation. Neither the execution and delivery of this Agreement
or any of the other Acquisition Documents by the Purchaser, the performance by
it of its obligations hereunder or thereunder, nor the consummation by it of the
transactions contemplated hereby or thereby, will (i) contravene any provision
of the memorandum and articles of association or certificate of incorporation
and by-laws of the Purchaser; (ii) with or without the giving of notice or the
lapse of time or both, violate, be in conflict with, constitute a default under,
permit the termination of, cause the acceleration of the maturity of any debt or
obligation of the Purchaser under, require the consent of any other party to,
constitute a breach of, create a Liability or loss of a benefit under, or result
in the creation or imposition of any Lien upon any of the properties or assets
of the Purchaser under, any Contract to which it is a party or by which it or
any of its assets or properties are bound, other than such violations,
conflicts, defaults, terminations, accelerations, breaches, Liabilities or loss
of benefits which will be cured prior to or concurrently with the Closing; or
(iii) violate, conflict with or require any Approval under, any Law or any
judgment, decree or order of any Governmental Authority to which the Purchaser
is subject or by which it or any of its assets or properties are bound.
5.4 Approvals. Except as set forth on Schedule 5.5 attached hereto, no
Approval of any Governmental Authority is required to be made, obtained or given
by or with respect to the Purchaser in connection with the execution or delivery
by it of this Agreement and the other Acquisition Documents, the performance by
it of its obligations hereunder or thereunder or the consummation by it of the
transactions contemplated hereby or thereby.
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The Approvals listed on schedule 5.5 attached hereto will be obtained, made or
given, as appropriate, on or prior to the closing date.
5.5 Broker's or Finder's Fees. Except for First Commercial Group of
Greensboro, North Carolina, neither the Purchaser nor any of its Affiliates has
authorized any person to act as broker, finder, banker, consultant, intermediary
or in any other similar capacity which would entitle such person to any
investment banking, brokerage, finder's or similar fee in connection with the
transactions contemplated by this Agreement or any of the other Acquisition
Documents.
5.6 No Misstatements or Omission. No representation or warranty made
by the Purchaser in this Agreement or in any Schedule hereto is false or
misleading as to any material fact, or omits to state a material fact required
to make any of the statements made herein or therein not misleading in any
material respect.
ARTICLE VI
CERTAIN OBLIGATIONS OF THE SELLER
AND THE STOCKHOLDER PRIOR TO THE CLOSING
The Seller and the Stockholder hereby covenant that, except as
otherwise consented to in writing by the Purchaser or as otherwise contemplated
by this Agreement, from and after the date hereof until the Closing:
6.1 Conduct of Business. The Seller shall conduct its business and
operations only in the ordinary course and in a manner that is consistent with
past practice, including, without limitation: (a) performing in all material
respects all of its obligations under the Contracts and the Personal Property
Leases; (b) using its best efforts to maintain (i) its business organization
intact, (ii) all of its properties, equipment and other assets in good repair,
working order and condition, ordinary wear and tear excepted, (iii) its present
workforce substantially intact, (iv) its material Approvals in good standing and
(v) its current relationships with its material suppliers and customers; and (c)
keeping in full force and effect insurance comparable in the aggregate to that
currently maintained by it. The Seller shall consult with the Purchaser from
time to time, upon the reasonable request of the Purchaser, with respect to the
conduct of the Business.
6.2 Restricted Activities and Transactions. The Seller shall not
engage, or agree to engage, in any one or more of the following activities or
transactions without the prior written permission of the Purchaser: (i) enter
into or consummate any "ACQUISITION PROPOSAL" (as defined in Section 6.4 below);
(ii) amend or otherwise change its certificate of incorporation or by-laws;
(iii) sell or dispose of any assets, except for sales in the ordinary
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course of business in a manner consistent with past practice; (iv) cause to
arise or permit to exist any Lien (other than a Permitted Lien) upon any of the
Transferred Assets; (v) enter into or amend in any material respect any Contract
that will be binding on the Purchaser with respect to the Transferred Assets or
the Business; (vi) increase the compensation payable or to become payable to the
employees of the Seller relating to the Business except for increases granted in
the ordinary course of the Business in a manner consistent with past practice in
accordance with the terms of the Contracts included on Schedule 2.1(g) attached
hereto, or establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement relating to the
Business for the benefit of any employee of the Seller employed therein; (vii)
destroy or remove from the Facilities any Books or Records maintained in
connection with the Business; (viii) enter into any lease, sublease, license,
occupancy or other agreement relating to use, occupancy and/or possession of
real property including the Real Property; (ix) terminate any policies of title,
liability, fire, workers' compensation, property and any other form of insurance
covering the Transferred Assets or operations of the Business; (x) settle any
lawsuit or claim if such settlement imposes any continuing liability or non-
monetary obligation on the Business or any of the Transferred Assets; (xi) waive
any claims or rights relating to the Transferred Assets or the Business (xii) at
any time within sixty (60) days prior to the Closing Date, effectuate a "plant
closing" or "mass layoff" as those terms are defined in WARN or any state law,
affecting any site of employment, facility, operating unit, or employee, of the
Business; (xiii) remove any item of Equipment or Other Personalty (other than
Inventory sold in the ordinary course and Excluded Assets) from the Real
Property; or (xiv) take any action or omit to take any action that would cause
the representations and warranties of the Seller contained in Article IV hereof
to be untrue or inaccurate.
6.3 Cooperation. The Seller shall use its reasonable efforts (but
without the need to incur any unreasonable or unusual fees, costs or expenses)
to cause the transactions contemplated by this Agreement to be consummated,
including, without limitation, (i) obtaining, making and causing to become
effective all Approvals of such Governmental Authorities and other Persons as
may be necessary or reasonably requested by the Purchaser in order to consummate
the transactions contemplated by this Agreement and (ii) giving prompt notice to
the Purchaser of (A) any notice of, or other communication relating to, any
default, or any event which, with the giving of notice or the lapse of time or
both, would become a default, under any Contract relating to the Transferred
Assets or the Business, and (B) any notice or other communication from any
Person alleging that the consent of such Person is or may be required in
connection with the execution and delivery of this Agreement or the other
Acquisition Documents or the consummation of the transactions contemplated
hereby or thereby.
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6.4 No Solicitation of Transaction. The Seller shall not, nor shall
the Seller permit any of its Representatives to, initiate, solicit or encourage
(including by way of furnishing information), any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
acquisition proposal (as defined below), or agree to or endorse any acquisition
proposal, or participate in any such discussions or negotiations (other than to
express the Seller's lack of interest in such discussions or negotiations), or
provide third parties with any information, relating to any such inquiry or
acquisition proposal. The Seller shall promptly advise the Purchaser of any such
inquiry or acquisition proposal and shall immediately terminate any existing
discussions or negotiations with respect thereto. As used herein, "ACQUISITION
PROPOSAL" shall mean any proposal or offer (i) to acquire from the Seller in any
manner all or any portion of the Transferred Assets (other than sales of
Inventory in the ordinary course of business) or the Business, or any equity or
other interest in all or any portion of the Transferred Assets or the Business,
or (ii) for an acquisition of all or any portion of the equity interests of, or
debt interests in, the Seller or any other extraordinary transaction involving
the Seller to the extent such transaction could impede, hinder or delay the
transactions contemplated hereunder.
6.5 Access to the Seller. The Seller shall afford the Purchaser and
its Representatives reasonable access, upon reasonable prior notice during
normal business hours (but without any substantial interference with the
business operations of the Seller), to the books, records, properties,
facilities and employees of the Seller relating to the Business.
6.6 Confidentiality. The Seller shall, and shall cause each of its
Representatives (collectively, the "SELLER RECIPIENTS") to, keep confidential,
and not use or disclose to others, any proprietary information of or obtained
from, the Purchaser or its Representatives, to the extent that such proprietary
information is not or does not become readily available to the public other than
as a result of disclosure by Purchaser or its Representatives or is not required
to be disclosed by applicable Law or court order. Promptly after the Closing or
in the event of the termination of this Agreement without a Closing, the Seller
shall, and shall cause each of the other Seller Recipients to, promptly return
to the Purchaser all, and not retain any copies of, such written, recorded or
encoded proprietary information. Seller shall be responsible for any breach of
this Section 6.6 by any of the Seller Recipients and agrees, at its sole
expense, to take all reasonable measures (including, without limitation, court
proceedings) to restrain the Seller Recipients from prohibited or unauthorized
disclosure or use of such proprietary information.
6.7 Notification of Certain Events. The Seller shall give the
Purchaser immediate notice of the occurrence of any event or events which are
outside of the ordinary course of the Business.
6.8 Zoning. The Seller shall, at its sole cost and expense, promptly
institute and thereafter diligently prosecute to completion appropriate
proceedings and take all other
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actions necessary to cause all of the Real Property to be classified as a light
industrial zone according to the applicable zoning ordinances and amendments
thereto; it being the intent that the use, occupation and operation of the Real
Property and all Improvements thereon as currently used, occupied and operated
shall be allowed "as of right". Any rezoning application which the Seller
proposes to submit shall be subject to the Purchaser's prior review and approval
thereof. In addition, any conditions sought to be imposed by any Governmental
Authority, and any concessions proposed to be made by the Seller in connection
with such rezoning shall be subject to the Purchaser's prior written approval.
ARTICLE VII
CERTAIN OBLIGATIONS OF THE PURCHASER PRIOR TO THE CLOSING
The Purchaser hereby covenants that, except as otherwise consented to
in writing by the Seller, from and after the date hereof until the Closing:
7.1 Cooperation. The Purchaser shall use its reasonable efforts (but
without the need to incur any unreasonable or unusual fees, costs or expenses)
to cause the transactions contemplated by this Agreement to be consummated,
including, without limitation, (i) obtaining, making and causing to become
effective all Approvals of such Governmental Authorities and other Persons as
may be necessary or reasonably requested by the Seller in order to consummate
the transactions contemplated by this Agreement, and (ii) giving prompt notice
to the Seller of any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
execution and delivery of this Agreement or the other Acquisition Documents or
the consummation of the transactions contemplated hereby.
7.2 Confidentiality. The Purchaser shall, and shall cause each of its
Representatives (collectively, the "PURCHASER RECIPIENTS") to, keep
confidential, and not use or disclose to others, any proprietary information of
or obtained from the Seller or any of its Representatives to the extent that
such proprietary information is not or does not become readily available to the
public other than as a result of disclosure by Purchaser or its Representatives
or is not required to be disclosed by applicable Law or court order. Promptly
after the Closing or in the event of the termination of this Agreement without a
Closing, the Purchaser shall, and shall cause each of the other Purchaser
Recipients to, promptly return to the Seller all, and not retain any copies of,
such written, recorded or encoded proprietary information (other than such
information which is a part of the Transferred Assets). Purchaser shall be
responsible for any breach of this Section 7.2 by any of the Purchaser
Recipients and agrees, at its sole expense, to take all reasonable measures
(including, without limitation, court proceedings) to restrain the Purchaser
Recipients from prohibited or unauthorized disclosure or use of such proprietary
information.
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7.3 Delivery of Title Commitment and Survey.
(a) The Purchaser has ordered and delivered to the Seller commitment
for title insurance number 9652024 (the "TITLE REPORT") for a 1990 ALTA Standard
Form title insurance policy insuring the Purchaser's interest in the Real
Property from Chicago Title Guarantee Company ("TITLE COMPANY"). The Purchaser
shall order and deliver to the Seller a survey of the Real Property (the
"SURVEY"), prepared by a surveyor licensed by the State of North Carolina and
acceptable to the Purchaser.
(b) Purchaser shall have a period of 10 days after receipt by
Purchaser of the last of (i) the Title Report, (ii) copies of all documents
referred to therein as exceptions to title in legible form and (iii) the Survey
to review and deliver to Seller any objections Purchaser may have to anything
contained or set forth in the Title Report. The Purchaser agrees that it will
not object to (i) Permitted Liens and (ii) the standard printed title exceptions
to be disposed of in accordance with Section 8.8 below. The Seller shall, on or
prior to the Closing Date (i) comply with requirements 1, 3, 4 and 5 as set
forth in Schedule B - Section 1 of the Title Report, and (ii) remove, remedy or
satisfy, as the case may be, exception 3 in Schedule B - Section 2 of the Title
Report. If additional exceptions to the title of the Real Property have been
raised or identified in any continuation of the Title Report other than the
Permitted Liens and if the Purchaser delivers objections to such exceptions to
the Seller within 30 days after receipt thereof by the Purchaser, then the
Seller shall, prior to the Closing Date, remove, remedy or satisfy, as the case
may be, such objections at the Seller's sole cost and expense. If the Seller
gives written notice to the Purchaser within ten days after receipt from the
Purchaser of such objections that the Seller will not cure any such exception,
then the Purchaser may elect either to (i) reduce the Purchase Price in an
amount equal to the costs and expenses reasonably estimated by the Purchaser to
cure any such exception, or (ii) terminate this Agreement. Notwithstanding
anything to the contrary contained in this Agreement, all indebtedness (other
than Assumed Liabilities) secured by an interest in any of the Transferred
Assets and any other matter created by the Seller after the date hereof which
affects the Transferred Assets shall in no event be a Permitted Lien and the
Seller shall cause the same to be released, discharged or otherwise removed at
or prior to Closing. If a search of the title to the Real Property discloses
judgments, bankruptcies or other returns against other persons having names the
same as or similar to that of Seller, then Seller shall upon request deliver to
Purchaser an affidavit in form acceptable to the Title Company showing that such
judgments, bankruptcies or other returns are not against Seller.
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ARTICLE VIII
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE PURCHASER
Each and every obligation of the Purchaser under this Agreement to be
performed at or before the Closing shall be subject to the satisfaction, at the
Closing, of each of the following conditions, unless waived by the Purchaser, in
its sole and absolute discretion, at or prior to the Closing:
8.1 Representations and Warranties True. The representations and
warranties of the Seller and the Stockholder contained in this Agreement or in
any of the other Acquisition Documents shall have been true and correct in all
material respects when made and in addition shall be true and correct in all
respects at and as of the Closing and with the same effect as though made at and
as of the Closing (except as otherwise contemplated by this Agreement).
8.2 Performance. The Seller and the Stockholder shall have performed
and complied in all material respects with all agreements, covenants,
obligations and conditions required by this Agreement or any of the other
Acquisition Documents to be performed or complied with by the Seller or the
Stockholder at or prior to the Closing.
8.3 No Adverse Change. No change or event that has had or could
reasonably be expected to have, individually or in the aggregate with other
changes or events, an adverse effect on the Business or the Transferred Assets
shall have occurred since the date of this Agreement.
8.4 Approvals. All Approvals from all Governmental Authorities and
other Persons required by applicable Law or pursuant to any of the Contracts set
forth on Schedule 8.4 hereto for the consummation of the transactions
contemplated by this Agreement and the other Acquisition Documents or in order
for Purchaser to be permitted to legally conduct the Business shall have been
given, made or obtained, as appropriate, and shall be in full force and effect.
8.5 Deliveries. The Seller shall have tendered to the Purchaser, at or
prior to the Closing, and against the deliveries referred to in Section 9.4, the
following:
(a) the executed Bill of Sale;
(b) the executed Assignment and Assumption Agreement;
(c) the executed Escrow Agreement;
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(d) the Consulting and Noncompetition Agreement duly executed by the
Stockholder;
(e) the executed and acknowledged Deed;
(f) the certificate of incorporation of the Seller, as amended to the
Closing Date, certified by the appropriate Governmental Authority of its
jurisdiction of incorporation;
(g) the by-laws of the Seller, as amended to the Closing Date,
certified as of the Closing Date by its Secretary or Assistant Secretary;
(h) a certificate of existence, dated not earlier than five days prior
to the Closing Date, of the appropriate governmental Authority of the Seller's
jurisdiction of incorporation and each jurisdiction listed on Schedule 4.1
attached hereto with respect to the Seller, as to the good standing of the
Seller in such jurisdiction;
(i) resolutions, certified as of the Closing Date by the Secretary or
Assistant Secretary of the Seller, adopted by its Board of Directors and
approved by the Stockholder as the sole owner of the Seller's outstanding shares
of capital stock, authorizing the execution and delivery by the Seller of this
Agreement and the other Acquisition Documents, the performance by it of its
obligations hereunder and thereunder and the consummation by it of the
transactions contemplated hereby and thereby;
(j) such certificates of the President of the Seller to evidence
compliance with the conditions set forth in Sections 8.1 through 8.4, and
Section 8.7 hereof, and any other certificates to evidence compliance with the
conditions set forth in this Article VIII as may be reasonably requested by the
Purchaser or its counsel;
(k) the opinion of Tuggle, Duggins & Meschan, counsel to the Seller,
dated the Closing Date and addressed to the Purchaser, substantially in the form
of EXHIBIT F hereto;
(l) executed and completed assignment instruments, transfer Tax
returns, if any, and other transfer documents including, without limitation,
title insurance lien waivers and/or mechanic's and materialman lien affidavit
(stating that there are no such lien or rights to lien), an affidavit as to
parties in possession (stating that no party other than the Seller is in
possession of all or any portion of the Real Property) and a certification that
there are no special assessments with respect to the Real Property;
(m) the original counterparts of the Real Property Permits listed on
Schedule 4.20(e) attached hereto;
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(n) a certificate that meets the requirements of Section 1445(b)(2) of
the Code and Treas. Reg. (S) 1.1445-2(b)(2);
(o) a letter from Homelite in form and substance satisfactory to the
Purchaser regarding certain purchases to be made by Homelite from the Business;
(p) an amendment to the Seller's certificate of incorporation,
amending the name of the Seller, duly executed and ready for filing with the
North Carolina Secretary of State; and
(q) such bills of sale, assignments and instruments of transfer,
conveyance and assignment in form and substance satisfactory to the Purchaser,
as shall be sufficient to convey, transfer, and assign to Purchaser and to vest
in the Purchaser all the Seller's rights, title and interests in, to and under
the Transferred Assets and such other documents or certificates as shall be
reasonably requested by the Purchaser or its counsel including, without
limitation, releases, satisfactions, statements or other documents reasonably
necessary to effect the release of any mortgage, deed of trust, or other Liens
affecting the Transferred Assets, and such affidavits or other documents as may
be necessary or appropriate for the issuance of title insurance policies
relating thereto.
8.6 Proceedings. All of the Seller's proceedings in connection with
the transactions contemplated by this Agreement and the other Acquisition
Documents, and all documents incident thereto, shall be in form and substance
reasonably satisfactory to the Purchaser and its counsel.
8.7 Absence of Litigation. There shall be no Action pending or
threatened before any court or other Governmental Authority which seeks to (i)
invalidate or set aside, in whole or in part, this Agreement or any of the other
Acquisition Documents, (ii) restrain, prohibit, invalidate or set aside, in
whole or in part, the consummation of the transactions contemplated hereby and
thereby or (iii) obtain substantial Damages in connection therewith or the
Business.
8.8 Title Company.
(a) The Title Company shall be prepared to issue, in the amounts
agreed upon between the Purchaser and the Title Company, 1990 ALTA Standard Form
owner's insurance policy or marked up specimen policy dated the Closing Date,
insuring the Purchaser's fee simple title to the Real Property, subject only to
Permitted Liens.
(b) Notwithstanding anything to the contrary contained in this Article
VIII, such policies shall omit exception 1 from Schedule B - Section 2 of the
Title Report and shall also omit standard exceptions for owner's policy numbers
1, 2, 3, 4 and 5 and any exceptions
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for (i) facts an accurate survey would show, (ii) mechanics' liens, (iii) real
estate taxes currently due and payable and (iv) rights of tenants, and shall
provide, to the extent available in the relevant jurisdiction, full extended
coverage over all general or standard exceptions (or the equivalent), an ALTA
3.1 zoning endorsement (or the equivalent), access, location, survey, single tax
lot and contiguity endorsements, an endorsement that the real estate tax bills
for the Real Property do not include taxes pertaining to other real estate, a
restrictions endorsement, affirmative insurance over violations, if any, of any
covenants, conditions, easements or restrictions and against forfeiture of the
insured estate or collection of any amount out of the insured estate by virtue
of violations of any covenants, conditions, easements or restrictions and such
other endorsements and reinsurance agreements as may be reasonably requested by
the Purchaser, provided if any endorsement is not issued, the failure to obtain
such endorsement will not be a condition to Closing if it will not affect (i)
the value of the Real Property or (ii) the current use of or access to and from
the Real Property by the Business.
(c) Notwithstanding anything to the contrary contained herein, the
Real Property shall not be encumbered by (i) Liens that are matters of public
record, such as easements, quasieasements and rights of way, that interfere with
the continued use of such property in the manner currently used by the Business,
and (ii) encumbrances due to easements, quasieasements, and rights of way that
are not matters of public record but revealed in a survey of such property and
that interfere with the continued use of such property in the manner currently
used by the Business.
(d) If required for the issuance of a title insurance policy, the
Seller shall tender, or cause to be tendered, to the Title Company at the
Closing an opinion of counsel to the Seller (such counsel to be subject to the
Title Company's reasonable approval), dated the Closing Date and addressed to
the Title Company, in form and substance satisfactory to the Title Company.
8.9 Environmental Report. The Purchaser shall have received an
environmental audit report in form and substance reasonably satisfactory to the
Purchaser with respect to any environmental hazards, conditions, liabilities or
potential liabilities at the Facilities or to which the Transferred Assets or
the Business may be subject.
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ARTICLE IX
CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF THE SELLER
Each and every obligation of the Seller under this Agreement to be
performed at the Closing shall be subject to the satisfaction, at the Closing,
of each of the following conditions, unless waived by the Seller, in its sole
and absolute discretion, at or prior to the Closing:
9.1 Representations and Warranties True. The representations and
warranties of the Purchaser contained in this Agreement or in any of the other
Acquisition Documents shall be true and correct in all material respects when
made and in addition shall be true and correct in all respects at and as of the
Closing and with the same effect as though made at and as of the Closing (except
as otherwise contemplated by this Agreement).
9.2 Performance. The Purchaser shall have performed and complied in
all material respects with all agreements, covenants, obligations and conditions
required by this Agreement and the other Acquisition Documents to be performed
or complied with by it at or prior to the Closing.
9.3 Approvals. All Approvals from all Governmental Authorities
required by applicable Law for the consummation of the transactions contemplated
by this Agreement and the other Acquisition Documents shall have been made or
obtained and shall be in full force and effect.
9.4 Deliveries. The Purchaser shall have tendered to the Seller, at or
prior to the Closing, and against the deliveries referred to in Section 8.5, the
following:
(a) in accordance with Sections 2.5 and 2.6 hereof, the Purchase
Price;
(b) the executed Assignment and Assumption Agreement;
(c) the executed Escrow Agreement;
(d) the executed Consulting and Noncompetition Agreement;
(e) the certificate of incorporation of the Purchaser, as amended to
the Closing Date, certified by the Secretary of State of its jurisdiction of
incorporation;
(f) the by-laws of the Purchaser, as amended to the Closing Date,
certified as of the Closing Date by its Secretary or Assistant Secretary;
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(g) a good standing certificate, dated not earlier than five days
prior to the Closing Date, of the appropriate Governmental Authority of the
Purchaser's jurisdiction of incorporation or organization, as to the good
standing of the Purchaser in such jurisdiction;
(h) resolutions, certified as of the Closing Date by the Secretary or
Assistant Secretary of the Purchaser, adopted by its Board of Directors,
authorizing the execution and delivery by such Purchaser of this Agreement and
the other Acquisition Documents, the performance by it of its obligations
hereunder and thereunder and the consummation by it of the transactions
contemplated hereby and thereby;
(i) such certificates of the President or Vice President of the
Purchaser to evidence compliance with the conditions set forth in Sections 9.1
through 9.3 and 9.6 hereof and any other certificates to evidence compliance
with the conditions set forth in this Article IX as may be reasonably requested
by the Seller or its counsel;
(j) such other agreements, undertakings and instruments of assumption,
in form and substance reasonably satisfactory to the Seller, as shall be
effective to cause the Assumed Liabilities to be binding on the Purchaser and
such other documents or certificates as shall be reasonably requested by the
Seller or its counsel; and
(k) the opinion of Richards & O'Neil, LLP, counsel to the Purchaser,
dated the Closing Date, and addressed to the Seller, substantially in the form
of Exhibit G hereto.
9.5 Proceedings. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and the other Acquisition
Documents, and all documents incident thereto, shall be in form and substance
reasonably satisfactory to the Seller and its counsel.
9.6 Absence of Litigation. There shall be no Action pending or
threatened before any court or other Governmental Authority which seeks to (i)
invalidate or set aside, in whole or in part, this Agreement or any of the other
Acquisition Documents, (ii) restrain, prohibit, invalidate or set aside, in
whole or in part, the consummation of the transactions contemplated hereby or
thereby or (iii) obtain substantial Damages in connection therewith.
9.7 Environmental Report. The environmental audit report received by
the Purchaser with respect to any environmental hazards, conditions, liabilities
or potential liabilities at the Facilities or to which the Transferred Assets or
the Business may be subject shall be satisfactory to the Seller.
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ARTICLE X
CERTAIN COVENANTS AND AGREEMENTS
SUBSEQUENT TO THE CLOSING
10.1 Employees.
(a) The Purchaser shall extend offers, effective as of the Closing, of
the same or similar jobs to substantially all of the Seller's employees (other
than those who will remain employees of the Seller and are identified in
Schedule 10.1 hereto), such that no loss of employment would occur if such
employees accepted such offers; provided, however, nothing contained herein
shall prohibit the Purchaser from employing the employees on terms and
conditions acceptable solely to the Purchaser including, without limitation,
employing such employees on an employment at will basis. Employees who accept
employment with the Purchaser shall be and become employees of the Purchaser
effective as of the Effective Time.
(b) The Seller and the Purchaser shall cooperate and use their best
efforts to cause each of the Assumed Plans to be assigned to and assumed by the
Purchaser as of the Effective Time. Notwithstanding the foregoing, the
Purchaser is not assuming the Seller's liabilities for the payment of the
Seller's share of the premiums due or any other amounts due from the Seller
under any such contracts for periods prior to the Closing that are not fully
reserved for on the Closing Date Balance Sheet and the Seller remains fully
obligated to make such payments to the extent not so reserved for.
(c) As of the Effective Time, the employees of the Seller who are
offered and accept employment with the Purchaser and who have account balances
under the Seller's 401(k) Plan will cease to be eligible to defer a portion of
their salary or wages under such Plan. The Seller will continue as the sponsor
of its 401(k) Plan after the Closing and shall promptly thereafter take all
necessary action to terminate said Plan and to obtain a favorable determination
letter from the IRS with respect to the termination of said Plan. The Seller
agrees that it will not cause any distributions to be made from its 401(k) Plan
to any of its former employees while they are employed by the Purchaser in the
absence of a favorable determination letter with respect to the 401(k) Plan's
tax qualified status.
10.2 Books and Records; Access.
(a) Unless otherwise consented to in writing by the Seller, the
Purchaser shall not destroy or otherwise dispose of any original Books and
Records in its possession as of the Closing Date relating to the Business prior
to the Closing or to the Transferred Assets or the Assumed Liabilities for a
period of seven years commencing on the date such Books and Records were created
by the Seller or came into the Seller's possession, without first offering
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to surrender such Books and Records to the Seller, and shall maintain such Books
and Records in good condition in a reasonably accessible location. Upon
reasonable prior notice, the Purchaser shall afford the Representatives of the
Seller reasonable access during normal business hours to examine and copy such
Books and Records for any commercially reasonable purpose.
(b) Unless otherwise consented to in writing by the Purchaser, the
Seller and the Stockholder shall not destroy or otherwise dispose of any
original Books and Records in their possession after the Closing relating to the
Business prior to the Closing or to the Transferred Assets or the Assumed
Liabilities for a period of seven years commencing on the date such Books and
Records were created or came into the Seller's possession, without first
offering to surrender such Books and Records to the Purchaser, and shall
maintain such Books and Records in good condition in a reasonably accessible
location. Upon reasonable prior notice, the Seller shall afford the
Representatives of the Purchaser reasonable access during normal business hours
to examine and copy such Books and Records for any commercially reasonable
purpose.
10.3 Confidentiality. From and after the Closing, the provisions of
Sections 6.7 and 7.2 shall continue in effect, provided that the Purchaser shall
not be restricted with respect to any proprietary information relating to the
Transferred Assets or the Business and the Seller shall be restricted with
respect to such proprietary information as if it had originally been the
property of, and been acquired by the Seller from, the Purchaser.
10.4 Specific Performance; Injunctive Relief. Each of the parties
hereto acknowledges, understands and agrees that any breach or threatened breach
by it or any of its Representatives of Sections 6.7, 6.8, 7.2, 10.2 or 10.3
hereof will cause irreparable injury to the other party and that money damages
will not provide an adequate remedy therefor. Accordingly, in the event of any
such breach or threatened breach, the non-breaching party shall have the right
and remedy (in addition to any other rights or remedies available at law or in
equity) to have the provisions of such Sections specifically enforced by, and to
seek injunctive relief and other equitable remedies in, any court having
competent jurisdiction.
10.5 Further Assurances. In addition to the actions, documents and
instruments specifically required to be taken or delivered by this Agreement, or
from time to time after the Closing, and without further consideration, each
party hereto shall take such other actions, and execute and deliver such other
documents and instruments, as the other party hereto or its counsel may
reasonably request in order to effectuate and perfect the transactions
contemplated by this Agreement and the other Acquisition Documents, including
without limitation such actions as may be necessary to Transfer to the Purchaser
and to place the Purchaser in possession or control of, all of the rights,
properties, assets and businesses intended to be sold, transferred, conveyed,
assigned and delivered hereunder, or to assist in
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the collection of any and all such rights, properties and assets or to enable
the Purchaser to exercise and enjoy all rights and benefits of the Seller with
respect thereto.
10.6 Name Change. Immediately after the Closing, the Seller shall file
with the North Carolina Secretary of State an amendment to its certificate of
incorporation, changing the Seller's name to a name which bears no similarity to
"Quality Molded Products, Inc."
10.7 General Liability Endorsement. Until December 31, 2001, the
Purchaser shall cause the carrier of its general liability insurance covering
the Business to include the Seller as an additional insured and to include a
provision in such endorsement giving the Seller 30 days' prior notice of the
proposed cancellation of any such insurance.
10.8 Certain Payroll Matters. The Seller shall prepare Forms W-2 and
1099 for its employees for the periods ending prior to the Closing Date and the
Purchaser shall prepare such forms for the Seller's employees whom it employs on
or after the Closing Date. The Seller and Purchaser agree to give each other,
upon reasonable request, access to or copies of such books and records as may be
required to complete such forms in a timely manner.
10.9 Final 401(k) Payment. The Purchaser agrees that it shall pay to
the Seller's 401(k) Plan the amount specifically recorded on the Closing Date
Balance Sheet for the payment to such Plan.
10.10 Certain Practices. The Purchaser agrees to maintain in its
possession the molds used by the Business to manufacture products for Trion as
security for Trion's payment of its accounts receivable as of the Closing Date
in accordance with the past practices of the Business, subject to the Seller's
prudent commercial judgment and its past practices.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.1 Survival. The representations, warranties, covenants and
agreements of the parties hereto contained in this Agreement shall survive the
execution and delivery of this Agreement, any due diligence investigation made
by any party hereto in respect of the transactions contemplated hereby and the
Closing as follows: (i) the representations and warranties shall survive for a
period of three years following the Closing Date and (ii) the covenants and
agreements herein shall survive until fully performed or fulfilled (unless non-
compliance with such covenants or agreements is waived in writing by the party
or parties hereto entitled to such performance). No Action for indemnification
pursuant to this Article
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XI may be brought with respect thereto after the expiration date; provided,
however, that if prior to such date a party hereto has notified the other party
hereto in writing of a claim for indemnification hereunder (whether or not
formal legal action shall have been commenced based upon such claim), such claim
shall continue to be subject to indemnification in accordance with this Article
XI.
11.2 Indemnification by the Seller and the Stockholder. From and after
the Closing, the Seller, the Stockholder and their respective successors and
assigns shall jointly and severally indemnify and hold harmless and defend the
Purchaser, its successors and assigns, and the Representatives of each of them,
from and against any and all Damages incurred thereby or caused thereto based
on, arising out of, resulting from, or relating to:
(a) any Excluded Liability including the Seller's failure to pay or
satisfy any such Liability;
(b) the breach of a representation and warranty of the Seller or
Stockholder contained herein or in any other Acquisition Document;
(c) the breach of any covenant or agreement of the Seller or
Stockholder contained herein or in any other Acquisition Document;
(d) any Liability to pay to vendors, contractors and other providers
of goods or services any amounts due after the Effective Time with respect to
Liabilities incurred at or before the Effective Time under Contracts assumed by
the Purchaser from the Seller which amounts payable are in the nature of the
payment of a retention that had been held by the Seller to assure adequate
completion of such Contracts;
(e) the Seller's failure to pay or discharge in full any Permitted
Lien of the type described in clauses (i) or (ii) of the definition of Permitted
Liens attaching to the Transferred Assets as a result of acts or omissions by
the Seller prior to the Effective Time;
(f) the failure of the Seller to comply with WARN, if required, prior
to the Effective Time; and
(g) any Liability for any investment banking, brokerage, or similar
charge or commission payable or incurred by the Seller or Stockholder in
connection with this Agreement or the transactions contemplated hereby.
11.3 Indemnification by the Purchaser. From and after the Closing,
the Purchaser and its successors and assigns shall indemnify, hold harmless and
defend the Seller and the Stockholder, their respective successors and assigns,
and the Representatives of each
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of them, from and against any and all Damages incurred thereby or caused thereto
based on, arising out of, resulting from, or relating to:
(a) any Assumed Liability including the Purchaser's failure to pay or
satisfy any such Liability;
(b) the breach of a representation and warranty of the Purchaser
contained herein or in any other Acquisition Document;
(c) the breach of any covenant or agreement of the Purchaser contained
herein or in any other Acquisition Document;
(d) any Liability for any investment banking, brokerage, or similar
charge or commission payable or incurred by the Purchaser in connection with
this Agreement or the transactions contemplated hereby; and
(e) the failure of the Purchaser to comply with WARN, if required,
prior to the Effective Time.
11.4 Notice and Payment of Claims; Limitations on Indemnification.
(a) The Indemnified Party shall notify the Indemnifying Party within a
reasonable period of time after becoming aware of, and shall provide to the
Indemnifying Party as soon as practicable thereafter all information and
documentation necessary to support and verify, any Damages that the Indemnified
Party shall have determined have given rise to, or could reasonably be expected
to give rise to, a claim for indemnification hereunder, provided, however, that
the right of the Indemnified Party to indemnification shall be reduced in the
event of its failure to give timely notice only to the extent the Indemnifying
Party is prejudiced thereby. The Indemnifying Party shall be given access to all
Books and Records in the possession or under the control of the Indemnified
Party which the Indemnifying Party reasonably determines to be related to such
claim.
(b) Any Liability for indemnification by the Purchaser under this
Article XI shall be paid by the Purchaser on demand in U.S. dollars after such
Liability shall have been finally determined. The Liability for Damages
hereunder shall be deemed to be "FINALLY DETERMINED" for purposes of this
Article XI when the parties to such Action have so determined by mutual
agreement or, if disputed, when a final non-appealable order of a Governmental
Authority having competent jurisdiction shall have been entered.
(c) If any event shall occur which would otherwise entitle a party to
assert a claim for indemnification under Section 11.2 or Section 11.3, no
Damages shall be deemed to have been sustained by such Indemnified Party to the
extent of (i) any tax savings realized by
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the Indemnified Party as a result thereof or (ii) any net proceeds received by
such Indemnified Party or its Affiliates from any insurance policy with respect
thereto.
(d) The Indemnifying Party shall not be obligated to indemnify the
Indemnified Party for Damages arising from the inaccuracy of any representation
or warranty made by the Indemnifying Party herein or in any certificate or other
document delivered pursuant hereto unless and until the aggregate amount of
Damages from all such inaccuracies of representations and warranties exceeds
$25,000, in which case the Indemnifying Party shall be obligated to indemnify
the Indemnified Party for the amount of such Damages in excess of $25,000.
(e) The Indemnifying Party's aggregate liability for indemnification
for Damages arising from the inaccuracy of any representation or warranty made
by the Indemnifying Party herein or in any certificate or other document
delivered pursuant hereto shall under no circumstances exceed the Purchase
Price.
11.5 Matters Involving Third Parties.
(a) If any third party shall commence an Action against any
Indemnified Party with respect to any matter (a "THIRD PARTY CLAIM") which may
give rise to a claim for indemnification against any Indemnifying Party under
this Article XI, the Indemnified Party shall notify the Indemnifying Party
thereof in writing as soon as practicable, but in no event more than ten days
after the Indemnified Party shall have been served, provided, however, that the
right of the Indemnified Party to indemnification shall be reduced in the event
of its failure to give timely notice only to the extent the Indemnifying Party
is prejudiced thereby.
(b) The Indemnifying Party shall have the right to defend the
Indemnified Party against the Third Party Claim with counsel and other
Representatives of its choice so long as (i) the Indemnifying Party shall notify
the Indemnified Party in writing (within the five day period after its receipt
of notice of the Third Party Claim) that it will indemnify the Indemnified Party
from and against any Damages the Indemnified Party may suffer arising out of the
Third Party Claim and (ii) the Indemnifying Party diligently conducts the
defense of the Third Party Claim. Otherwise, the Indemnified Party may defend
against the Third Party Claim preserving its rights to indemnification hereunder
including without limitation for the cost of such defense.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 11.5(b) above, (i) the Indemnified
Party may retain separate co-counsel, at its sole cost and expense, and
participate in the defense of the Third Party Claim, (ii) the Indemnified Party
shall not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party, (iii) the Indemnified Party shall cooperate within reason
with the
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Indemnifying Party's defense of such Third Party Claim including, without
limitation, providing required information and documents and access to all
employees of the Indemnified Party with knowledge of issues relevant to the
claim or litigation (any such activities required to discharge this obligation
to cooperate shall be incurred at the sole expense of the Indemnified Party) and
(iv) the Indemnifying Party shall not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed. Notwithstanding any other provision of this
Section 11.5, if an Indemnified Party withholds its consent to a settlement or
elects to continue the defense of any claim, where but for such action the
Indemnifying Party could have settled such claim solely for the payment of money
by the Indemnifying Party as specified in the written request for consent to the
settlement delivered to the Indemnified Party, the Indemnifying Party shall be
required to indemnify the Indemnified Party only up to a maximum of the bona
fide settlement offer for which the Indemnifying Party could have settled such
claim.
11.6 Specific Obligations of the Seller for Accounts Receivable.
Notwithstanding any other provision of this ARTICLE XI to the contrary, the
Seller shall have the following specific obligations with respect to certain
accounts receivable:
(a) With respect to the Seller's accounts receivable reflected on the
Closing Date Balance Sheet that have not been collected in full on or prior to
the 180th day immediately following the Closing Date (the "UNCOLLECTED ACCOUNTS
RECEIVABLE"), the Seller shall, on or before the seventh business day following
notice from the Purchaser of the Uncollected Accounts Receivables, and without
regard to the notification requirements in Section 11.4, pay to the Purchaser an
amount equal to the recorded amounts of the Uncollected Accounts Receivable on
the Closing Date Balance Sheet that the Seller does not dispute, as provided in
the Escrow Agreement, and the Purchaser shall sell the Uncollected Accounts
Receivable for which it receives payment from the Seller (the "SOLD ACCOUNTS
RECEIVABLE") to the Seller. The Purchaser shall thereafter promptly remit to
the Seller any amounts received by the Purchaser with respect to Sold Accounts
Receivable. In the event the Purchaser receives any unallocated payment from a
customer after the Closing, it shall require the customer to identify the
invoice to which such unallocated payment relates and shall apply the payment to
the account receivable so identified.
(b) The Seller's obligations under this Section 11.6 shall be paid by
the Seller out of the Escrowed Amount in accordance with the Escrow Agreement.
In the event that the Escrowed Amount is not sufficient to satisfy the Seller's
liability under this Section 11.6, the balance shall be paid by the Seller on
demand by certified or cashier's check or wire transfer of immediately available
funds.
(c) In the event the Seller seeks to collect any Sold Account
Receivable from the related account debtor, it agrees to, and to cause its
agents to, use only prudent, commercially reasonable efforts to collect such
accounts receivable.
(d) Within seven days of the close of each calendar month, Purchaser
will supply Seller monthly aged account receivable reports listing the
collection status of the
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Accounts Receivable shown on the Closing Date Balance Sheet and acquired by the
Purchaser. In addition, within seven days of receipt of notice thereof, the
Purchaser will notify the Seller of any returns or quality issues related to
Inventory manufactured by the Seller but sold by the Purchaser. The Purchaser
shall consult with the Seller regarding the resolution of any such returns or
quality disputes.
11.7 Bulk Sales Law. The Purchaser hereby waives compliance by the
Seller with the provisions of the bulk sales law of any jurisdiction.
Nevertheless, in addition to any other indemnities herein provided, the Seller
and the Stockholder shall indemnify and hold the Purchaser harmless against and
from any and all Damages to Purchaser resulting from such non-compliance
including any Liens claimed against the Transferred Assets by any creditor
arising from any credit extended to Seller prior to the Closing Date.
ARTICLE XII
TERMINATION
12.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by the mutual written consent of the Purchaser and the Seller;
(b) by either the Purchaser or the Seller, upon at least 10 days prior
written notice, if there shall have been a material breach by the other party of
any of the representations, warranties, covenants or other obligations under
this Agreement which shall not have been waived by the non-breaching party and
which breach cannot be cured by the date set forth in Section 12.1(c) below;
(c) by either the Purchaser or the Seller, upon written notice, if the
Closing shall not have occurred on or before December 15, 1996 any reason other
than the failure or refusal of the party seeking to terminate to perform any of
its obligations hereunder; or
(d) by either the Purchaser or the Seller if any Governmental
Authority having competent jurisdiction shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement or the other Acquisition
Documents, and such order, decree, ruling or other action shall have become
final and non-appealable.
12.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 12.1 hereof, such termination shall be the sole
remedy, and, except with respect to Section 6.6, Section 7.2, Section 11.2(g),
Section 11.3(d), Section 13.1 and Section 13.3 hereof, (i) this Agreement shall
forthwith become void and (ii) there shall be no liability on the part of the
Seller, the Purchaser or any of its Representatives; provided, however, that
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if such termination shall occur pursuant to Section 12.1(b) of this Agreement,
the breaching party shall be fully liable for any and all Damages sustained or
incurred by the other party hereto or any of its Representatives as a result of
or arising from such breach and such other party shall be entitled to seek any
remedies available to it at law or in equity.
ARTICLE XIII
MISCELLANEOUS
13.1 Public Announcements. Except as required by applicable Law or any
Governmental Authority with competent jurisdiction, prior to the Closing, none
of the parties hereto, nor their Representatives, shall issue any press release
or make any public announcement or disclosure with respect to this Agreement or
the transactions contemplated hereby without the prior written consent of the
other party hereto, which consent shall not be unreasonably withheld or delayed.
13.2 Amendment; Waiver. Neither this Agreement, nor any of the terms
or provisions hereof, may be amended, modified, supplemented or waived except by
a written instrument signed by all of the parties hereto (or, in the case of a
waiver, by the party granting such waiver). No waiver of any of the terms or
provisions of this Agreement shall be deemed to be or shall constitute a waiver
of any other term or provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver. No failure of a party hereto to insist
upon strict compliance by another party hereto with any obligation, covenant,
agreement or condition contained in this Agreement shall operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of a party hereto, such
consent shall be given in a manner consistent with the requirements for a waiver
of compliance as set forth in this SECTION 13.2.
13.3 Fees and Expenses. Except as otherwise expressly provided in this
Agreement, each of the parties hereto shall bear and pay all fees, costs and
expenses incurred by it or any of its Affiliates in connection with the origin,
preparation, negotiation, execution and delivery of this Agreement and the other
Acquisition Documents and the transactions contemplated hereby or thereby
(whether or not such transactions are consummated), including, without
limitation, any fees, expenses or commissions of any of its Representatives.
13.4 Charges, Fees and Taxes. At the Closing, the Seller shall pay the
full amount of all Liabilities for sales Taxes and transfer and excise Taxes in
connection with the sale of assets herein provided and all recording charges and
filing fees in connection with the cancellation, satisfaction or release of the
documents referred to in paragraph number 5 of Schedule B - Section 1 of the
Title Report. The Purchaser shall pay all recording charges and
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filing fees imposed in connection with recording the Deed and taxes imposed in
connection with the transfer of vehicles included in the Transferred Assets.
13.5 Notices.
(a) All notices, requests, demands and other communications required
or permitted under this Agreement shall be in writing and mailed or facsimiled
or delivered by hand or courier service:
(i) If to the Seller or the Stockholder, to:
Owen Ventures
700 North East Second Avenue, Suite 101
Siler City, NC 27344
Attention: Mr. Don A. Owen
Facsimile No.: (919) 742-4923
With a copy to:
Tuggle, Duggins & Meschan
228 West Market Street
Greensboro, NC 27401
Attention: Vaughn Ramsey, Esq.
Facsimile No.: (910) 274-1148
(ii) If to the Purchaser, to:
Oneida Rostone Corp.
104 South Warner Street
Oneida, New York 13421
Attention: Robert P. Wiehl
Facsimile No.: (315) 363-8519
With a copy to:
Ann F. Chamberlain, Esq.
Richards & O'Neil, LLP
885 Third Avenue
New York, New York 10022-4873
Facsimile No.: (212) 750-9022
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(b) All notices and other communications required or permitted under
this Agreement which are addressed as provided in this Section 13.5 (i) if
delivered personally against proper receipt or by confirmed facsimile
transmission shall be effective upon delivery and (ii) if delivered (A) by
certified or registered mail with postage prepaid shall be effective five (5)
business days or (B) by Federal Express or similar courier service with courier
fees paid by the sender, shall be effective two (2) business days following the
date when mailed or couriered, as the case may be. Any party hereto may from
time to time change its address for the purpose of notices to such party by a
similar notice specifying a new address, but no such change shall be deemed to
have been given until it is actually received by the party sought to be charged
with its contents.
13.6 Assignment. This Agreement and all of the terms and provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder of the parties hereto
may be assigned by any of the parties hereto without the prior written consent
of the other parties, which consent shall not be unreasonably withheld or
delayed.
13.7 Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the
internal laws of the State of North Carolina, without giving effect to the
conflicts of laws principles thereof.
13.8 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not constitute a part hereof or define,
limit or otherwise affect the meaning of any of the terms or provisions hereof.
13.9 Entire Agreement. This Agreement and the other Acquisition
Documents embody the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements, commitments, arrangements, negotiations or understandings, whether
oral or written, between the parties hereto, their respective Affiliates or any
of the Representatives of any of them with respect thereto. There are no
agreements, covenants or undertakings with respect to the subject matter of this
Agreement and the Acquisition Documents other than those expressly set forth or
referred to herein or therein and no representations or warranties of any kind
or nature whatsoever, express or implied, are made or shall be deemed to be made
herein by the parties hereto except those expressly made in this Agreement and
the other Acquisition Documents.
13.10 Severability. Each term and provision of this Agreement
constitutes a separate and distinct undertaking, covenant, term and/or provision
hereof. In the event that any term or provision of this Agreement shall be
determined to be unenforceable, invalid or illegal in any respect, such
unenforceability, invalidity or illegality shall not affect any other term or
provision hereof, but this Agreement shall be construed as if such
unenforceable,
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invalid or illegal term or provision had never been contained herein. Moreover,
if any term or provision of this Agreement shall for any reason be held to be
excessively broad as to time, duration, activity, scope or subject, the parties
request that it be construed, by limiting and reducing it, so as to be
enforceable to the fullest extent permitted under applicable Law.
13.11 No Third Party Beneficiaries. Except as and to the extent
otherwise provided herein, nothing in this Agreement is intended, nor shall
anything herein be construed, to confer any rights, legal or equitable, in any
Person other than the parties hereto and their respective successors and
permitted assigns.
13.12 References to Articles, Etc. All references herein to Articles,
Sections, Exhibits and Schedules shall be to Articles and Sections of and
Exhibits and Schedules to this Agreement.
13.13 References to "Herein," Etc. As used in this Agreement, the
words "herein", "hereof", "hereby" and "hereunder" shall refer to this Agreement
as a whole, and not to any particular section, provision or subdivision of this
Agreement.
13.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the day and year first above written.
ONEIDA ROSTONE CORP.
By /s/ Richard L. Evans
----------------------------------
Richard L. Evans, Vice President
QUALITY MOLDED PRODUCTS, INC.
By /s/ Don A. Owen
----------------------------------
Don A. Owen, President
/s/ Don A. Owen
----------------------------------
DON A. OWEN
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EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT made this ____ day of November,
1996 between Oneida Rostone Corp., a New York corporation (the "PURCHASER"), and
Quality Molded Products, Inc., a North Carolina corporation (the "SELLER").
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Asset Purchase Agreement, dated November
_____, 1996 (the "PURCHASE AGREEMENT"), among the Purchaser, the Seller and Don
A. Owen, the sole stockholder of the Seller, the Seller agreed to sell,
transfer, convey, assign and deliver to the Purchaser, and the Purchaser agreed
to purchase and accept as of the Closing Date, the Transferred Assets; and
WHEREAS, the Purchase Agreement provides for the Seller's assignment
of certain contracts, agreements and commitments to the Purchaser; and
WHEREAS, the Purchase Agreement provides for the Purchaser's
assumption of the Assumed Liabilities.
NOW THEREFORE, in consideration of the premises and in accordance with
the provisions of the Purchase Agreement, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Definitions
1.1. Unless otherwise herein defined all terms used herein shall have
the respective meanings ascribed to them in the Purchase Agreement.
1.2. Words importing singular number shall include the plural number
and vice versa. The words "herein," "herewith," "hereby," "hereof" and words of
similar import shall refer to this Agreement.
Section 2. Assignment and Assumption of Contracts and Commitments
2.1. The Seller hereby sells, transfers, conveys, assigns and delivers
to the Purchaser, all of the Seller's right, title and interest in and to all
contracts, agreements, commitments, grants, sales orders, arrangements and
undertakings, whether oral or written,
<PAGE>
included in the Transferred Assets (the "ASSIGNED CONTRACTS"). Such sale,
transfer, conveyance, assignment and delivery shall be effective as of the date
hereof.
2.2. The Purchaser hereby absolutely and irrevocably accepts and
assumes to be solely liable and responsible for and to perform all rights,
liabilities and obligations of the Seller under or pursuant to the Assigned
Contracts, all subject to the terms and conditions of the Purchase Agreement.
Such acceptance, assumption and covenant shall be effective as of the date
hereof.
2.3. Notwithstanding the foregoing, to the extent that any of the
Assigned Contracts are not assignable without the consent of another party, the
assignment of the Seller's right, title and interest in such Assigned Contracts,
and the assumption by the Purchaser of any liability or obligation of the Seller
relating to any such Assigned Contracts, is subject to obtaining any such
consents to assignment.
2.4. It is understood and agreed that the Purchaser is not, by this
instrument, assuming any obligation or liability of Seller that is not an
Assumed Liability and that Seller continues to be liable for any and all
obligations and liabilities that are not Assumed Liabilities including, without
limitation, the Excluded Liabilities.
Section 3. Separate Agreement
Notwithstanding any other provisions of this agreement to the
contrary, nothing contained herein shall in any way supersede, modify, replace,
amend, change, rescind, waive, exceed, expand, enlarge or in any way affect the
provisions, including the warranties, covenants, agreements, conditions,
representations or, in general any of the rights and remedies, and any of the
obligations and indemnifications of the Seller or the Purchaser set forth in the
Purchase Agreement nor shall this agreement expand or enlarge any remedies under
the Purchase Agreement including without limitation any limits on
indemnification specified therein. This agreement is intended only to effect
the assignment of certain contracts and commitments and the assumption of
certain liabilities pursuant to the Purchase Agreement and shall be governed
entirely in accordance with the terms and conditions of the Purchase Agreement.
Section 4. Non-Merger; Miscellaneous
4.1. The agreements, obligations, assumptions and covenants of the
Purchaser under the Purchase Agreement are not merged into this agreement and
shall, to the extent provided in the Purchase Agreement, survive the execution
and delivery of this agreement, and the performance of the consummation of all
transactions provided for in the Purchase Agreement.
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4.2. This Assignment and Assumption Agreement shall be binding upon
and enforceable against the Purchaser, its assigns and successors.
4.3. This Assignment and Assumption Agreement shall be construed in
accordance with and governed under the laws of the State of North Carolina.
4.4. This Assignment and Assumption Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which shall constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this __ day of November, 1996.
QUALITY MOLDED PRODUCTS, INC.
By__________________________________________
Don A. Owen, President
ONEIDA ROSTONE CORP.
By__________________________________________
Richard L. Evans, Vice President
04012.0012
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EXHIBIT B
BILL OF SALE
KNOW ALL PEOPLE BY THESE PRESENTS, Quality Molded Products, a North
Carolina corporation ("SELLER"), in consideration of the Purchase Price set
forth in Section 2.5 of the Asset Purchase Agreement, dated November ____, 1996,
among Oneida Rostone Corp., a New York corporation ("PURCHASER"), Seller and Don
A. Owen, the sole stockholder of the Seller (the "PURCHASE AGREEMENT"), the
receipt of which is hereby acknowledged by Seller, hereby grants, bargains,
sells, transfers, assigns, sets over, conveys, and delivers to Purchaser, its
successors and assigns, all of Seller's right, title and interest in and to all
of the Transferred Assets as defined and more specifically described in the
Asset Purchase Agreement. All capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed to them in the Purchase
Agreement.
Seller covenants and agrees that Seller shall, whenever and as often
as reasonably requested to do so by Purchaser or its successor and assigns,
promptly execute, acknowledge and deliver such other documents and instruments
of conveyance and transfer and take such other action as may reasonably be
required to more effectively convey, transfer and to vest in Purchaser, its
successor and assigns, and to put Purchaser and its successors and assigns in
possession of, all and each of the Transferred Assets conveyed, transferred and
delivered under this Bill of Sale.
Notwithstanding any other provisions of this Bill of Sale to the
contrary, nothing contained in this Bill of Sale shall in any way supersede,
modify, replace, amend, change, rescind, waive, exceed, expand, enlarge or in
any way affect the provisions, including the warranties, covenants, agreements,
conditions, representations or, in general, any of the rights and remedies, and
any of the obligations and indemnifications of Seller or Purchaser set forth in
the Purchase Agreement nor shall this Bill of Sale expand or enlarge any
remedies under the Purchase Agreement including without limitation any limits on
indemnification specified therein. This Bill of Sale is intended only to effect
the transfer of certain property to be transferred pursuant to the Purchase
Agreement and shall be governed entirely in accordance with the terms and
conditions of the Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Bill of Sale on
this ____ day of November, 1996.
QUALITY MOLDED PRODUCTS, INC.
By__________________________________________
Don A. Owen, President
04012.0012
<PAGE>
EXHIBIT C
ESCROW AGREEMENT
This ESCROW AGREEMENT, dated as of November __, 1996, between Oneida
Rostone Corp., a New York corporation ("ONEIDA"), Quality Molded Products, Inc.,
a North Carolina corporation ("QMP") and Branch Banking and Trust Company, as
escrow agent (the "ESCROW AGENT").
W I T N E S S E T H:
-------------------
WHEREAS, Oneida and QMP are parties to that certain Asset Purchase
Agreement dated November 18, 1996 (the "PURCHASE AGREEMENT"), pursuant to which
Oneida has agreed to purchase certain assets and assume certain liabilities of
QMP (capitalized terms used herein not otherwise defined herein shall have the
meanings ascribed to them in the Purchase Agreement);
WHEREAS, pursuant to the terms of the Purchase Agreement, Oneida is
required to deliver to the Escrow Agent $200,000, to be held by the Escrow Agent
in accordance with the terms hereof to secure QMP's obligations under Section
11.6 of the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Appointment of Escrow Agent. Oneida and QMP hereby appoint Branch
Banking and Trust Company to be the Escrow Agent to hold the Escrowed Funds (as
defined below) and all interest and other earnings paid in respect thereof
("INTEREST") in trust in accordance with the terms of this Agreement, and the
Escrow Agent agrees to act as such.
2. Delivery of the Escrowed Funds. Oneida hereby delivers to the
Escrow Agent, and the Escrow Agent hereby acknowledges receipt of, cash in the
amount of $200,000 (the "ESCROWED FUNDS").
3. Holding and Investment of Escrowed Funds. So long as any of the
Escrowed Funds are held by the Escrow Agent hereunder, the Escrow Agent shall
cause such Escrowed Funds to be invested in an interest-bearing account at
Branch Banking and Trust Company (the "BANK") or will invest and reinvest the
Escrowed Funds in government securities, certificates of deposit, or repurchase
agreements, as Oneida may, from time to time upon reasonable advance notice to
the Escrow Agent request, all interest and accretions thereto to accrue for the
benefit of and to be released upon and as a part of the release of the Escrowed
Funds pursuant to Section 4(b) hereof. The Escrow Agent shall have no
responsibility for any loss or diminution of value of the Escrowed Funds or any
portion thereof except arising out of the Escrow Agent's negligence or willful
misconduct.
<PAGE>
4. Release of the Escrowed Funds.
(a) In the event QMP does not pay to Oneida the full amount of its
obligations under Section 11.6 of the Purchase Agreement on or prior to the
185th day immediately following the Closing Date, Oneida shall promptly provide
written notice (the "Oneida Notice") to the Escrow Agent and QMP signed by
Oneida specifying the amount of QMP's outstanding liability under such Section
11.6 (the "Outstanding Section 11.6 Liability").
(b) On the eighth business day after receipt by the Escrow Agent of
the Oneida Notice, the Escrow Agent shall release the Escrowed Funds as follows,
unless it shall have received prior thereto a notice of QMP signed by QMP (the
"QMP Notice") (a copy of which shall be sent by QMP to Oneida) setting forth the
amount it disputes as owing to Oneida (the "Disputed Amounts"), and the basis on
which it disputes such amounts.
(i) If the Outstanding Section 11.6 Liability is greater than the
Escrowed Funds, then the Escrow Agent shall release the entire Escrowed Funds to
Oneida.
(ii) If the Outstanding Section 11.6 Liability is less than the
Escrowed Funds, then the Escrow Agent shall release an amount of the Escrowed
Funds equal to the Outstanding Section 11.6 Liability to Oneida and the balance
of the Escrowed Funds to QMP.
(c) Within seven days after receipt by the Escrow Agent of the Oneida
Notice, the Escrow Agent shall release the Escrowed Fund as follows, if it shall
have received a QMP Notice:
(i) It shall release the Outstanding Section 11.6 Liability,
less the Disputed Amounts to Oneida.
(ii) It shall retain the Disputed Amounts to be held in accordance
with this Agreement until resolution of such Disputed Amounts in accordance with
Section 6 of this Agreement.
(iii) It shall release the balance, if any, of the Escrowed Funds
remaining after payment and retention of the amounts described in this
subsection (c)(i) and (ii) to QMP.
(d) If the Escrow Agent shall not on or prior to the 195th day
immediately following the Closing Date have received a written notice from
Oneida claiming a right to the Escrowed Funds and Interest thereon, the Escrow
Agent shall as soon as reasonably practicable thereafter release from the
Escrowed Funds to QMP.
(e) Whenever all or any portion of the Escrowed Funds are to be
released in accordance with this Section 4, they will be accompanied by Interest
earned on and attributable to the portion of such Escrowed Funds so released;
provided that the parties hereto agree that all Escrowed Funds shall be deemed
fungible with the amount of Interest earned thereon being determined on an
aggregate basis and allocated among the Escrowed Funds pro rata for the
-2-
<PAGE>
period held hereunder with no portion of the Escrowed Funds being deemed to have
earned Interest at a rate different from any other portion.
5. Indemnification, Duties, Compensation, Etc.
(a) The Escrow Agent's duties are only such as are specifically
provided herein, and the Escrow Agent shall incur no liability whatsoever to any
party hereto except as shall result from the negligence or willful misconduct of
the Escrow Agent. The Escrow Agent shall have no responsibility hereunder other
than to follow faithfully the instructions herein contained. The Escrow Agent
may consult with counsel and shall be fully protected in any action taken in
good faith in accordance with such advice. The Escrow Agent shall be fully
protected in acting in accordance with any written instructions given to it
hereunder and believed by it to have been executed by the proper parties.
(b) Oneida and QMP agree jointly and severally to hold the Escrow
Agent harmless and to indemnify the Escrow Agent against any loss, liability,
expense (including reasonable attorney's fees and expenses), claim, or demand
arising out of or in connection with the performance of its obligations in
accordance with the provisions of this Agreement, except as shall result from
the negligence or willful misconduct of the Escrow Agent (the "AGENT INDEMNIFIED
AMOUNTS"). The foregoing indemnities in this Section 5(c) shall survive the
resignation of the Escrow Agent and the termination of this Agreement.
(c) Without limiting the rights of the Escrow Agent pursuant to
Section 5(c) above, Oneida and QMP agree that as between themselves their
liability for Agent Indemnified Amounts shall be split 50:50 unless the Escrow
Agent's claim for Agent Indemnified Amounts shall be based upon any act or
omission of either of them in which event the respective proportionate liability
of Oneida and QMP shall be determined as agreed between such parties or by a
court of competent jurisdiction before whom the proceeding giving rise to the
Escrow Agent's claim for indemnity shall have been brought, or if no such
proceeding shall have been brought, then by another court of competent
jurisdiction in a proceeding initiated by the party seeking an allocation
different from 50:50.
(d) The Escrow Agent may resign at any time by giving written notice
thereof to the other parties hereto, but such resignation shall not become
effective until a successor escrow agent shall have been appointed unanimously
by the parties hereto and shall have accepted such appointment in writing. If
an instrument of acceptance by a successor escrow agent shall not have been
delivered to the Escrow Agent within 30 days after the giving of such notice of
resignation, the resigning Escrow Agent may petition any court of competent
jurisdiction for the appointment of a successor escrow agent.
6. Disputed Delivery. The Escrow Agent is acting as a stakeholder
only with respect to the Escrowed Funds and Interest. If any dispute arises as
to whether the Escrow Agent is obligated to deliver the Escrowed Funds or
Interest or as to whom the Escrowed Funds or Interest are to be delivered or the
amount thereof, the Escrow Agent shall not be required to make any delivery, but
in such an event the Escrow Agent shall hold the Escrowed Funds or
-3-
<PAGE>
Interest until receipt by the Escrow Agent of instructions in writing, signed by
Oneida and QMP directing the disposition of the Escrowed Funds or Interest, or
in the absence of such authorization, the Escrow Agent shall hold the Escrowed
Funds or Interest until receipt of a certified copy of a final judgment of a
court of competent jurisdiction providing for the disposition of the Escrowed
Funds or Interest. The Escrow Agent may require, as a condition to the
disposition of the Escrowed Funds or Interest pursuant to written instructions,
indemnification and/or opinions of counsel, in form and substance satisfactory
to the Escrow Agent, from each party providing such instructions. If such
written instructions, indemnification and opinions are not received, or
proceedings for such determination are not commenced, within 30 days after
receipt by the Escrow Agent of notice of any such dispute and diligently
continued, or if the Escrow Agent is uncertain as to which party or parties are
entitled to the Escrowed Funds or Interest, the Escrow Agent may either:
(a) continue to hold the Escrowed Funds or Interest until receipt of
such written instructions, indemnification and opinions or a certified copy of a
final judgment of a court of competent jurisdiction providing for the
disposition of the Escrowed Funds or Interest; or
(b) deposit the Escrowed Funds or Interest with a court of competent
jurisdiction;
provided, however, that notwithstanding the foregoing, the Escrow Agent may, but
shall not be required to, institute legal proceedings of any kind.
7. Termination. This Agreement shall terminate and all obligations
of the Escrow Agent hereunder shall cease when, in accordance with the terms of
Section 4 or Section 6 hereof, all of the Escrowed Funds and Interest, shall
have been released or delivered by the Escrow Agent.
8. Notices. All notices and communications hereunder shall be in
writing and shall be deemed to be duly given if sent by registered mail, postage
prepaid, return receipt requested, as follows:
To the Escrow Agent:
Branch Banking and Trust Company
P.O. Box 749
Siler City, NC 27344
Attention: Michael Brower
Facsimile No.: 919-775-5809
-4-
<PAGE>
To Oneida:
Oneida Rostone Corp.
104 South Warner Street
Oneida, New York 13421
Attention: Robert P. Wiehl
Facsimile No.: (315) 363-8519
With a copy to:
Ann F. Chamberlain, Esq.
Richards & O'Neil, LLP
885 Third Avenue
New York, New York 10022-4873
Facsimile: 212-750-9022
To QMP:
Quality Molded Products, Inc.
c/o Owen Ventures
P.O. Box 700 North East Second Avenue, Suite 101
Siler City, NC
Attention: Mr. Don A. Owen
Facsimile No.: (919) 742-4923
or to such other address of a party that such party may have furnished to the
other parties in the manner required by this section.
9. Successors and Assigns; No Third Party Beneficiaries. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
herein to the contrary, neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assignable by any party hereto without the
consent of the other parties hereto. Nothing in this Agreement, expressed or
implied, shall or is intended to confer upon any person other than the parties
hereto or their respective successors or assigns, any rights or remedies of any
nature or kind whatsoever under or by reason of this Agreement.
10. Amendments, Etc. This Agreement may not be released, discharged,
abandoned, changed or modified in any manner, except by an instrument in writing
signed by or on behalf of each of the parties hereto by their duly authorized
officers or representatives. The failure of any party hereto to enforce at any
time any provision hereof shall not in any way 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 a waiver of any other or subsequent breach.
-5-
<PAGE>
11. Miscellaneous. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina without regard to the
application of principles of conflicts of laws. 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 be
unaffected and shall remain in full force and effect.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
ONEIDA ROSTONE CORP.
By:____________________________________
Name:
Title:
QUALITY MOLDED PRODUCTS, INC.
By:____________________________________
Name:
Title:
BRANCH BANKING AND TRUST COMPANY
By:____________________________________
Name:
Title:
04012.0012
-7-
<PAGE>
EXHIBIT D
ONEIDA ROSTONE CORP.
104 South Warner Street
Oneida, NY 13421
November __, 1996
Mr. Don A. Owen
Quality Molded Products, Inc.
920 East Raleigh Street
Siler City, NC
Re: Consulting and Noncompetition Agreement
Dear Don:
Oneida Rostone Corp. (the "COMPANY") and you (the "CONSULTANT") hereby
agree, in connection with the Asset Purchase Agreement, dated as of November
___, 1996, among the Company, the Consultant and Quality Molded Products, Inc.
("QMP") (the "ASSET PURCHASE AGREEMENT"), and in consideration of, among other
things, the sale of the business of QMP, of which the Consultant is the sole
stockholder, and in consideration of the payments to be made to the Consultant
hereunder, as follows:
1. Consulting Services. The Company hereby retains the Consultant
to serve as a consultant to the Company for a three year period commencing the
date hereof and ending November 15, 1999 (the "CONSULTING PERIOD"). During the
Consulting Period, the Consultant will make himself available to the Company
upon reasonable notice for the purpose of consulting with and advising the
Company to the best of his abilities on all subject matters pertinent to the
past, present and/or future business of the Company within the Consultant's
expertise and competence, at such reasonable times and places as may be
requested by the Company, it being understood that Consultant will not be
required to perform services hereunder at the offices of the Company or to
maintain a regular schedule for performance of his duties hereunder. The
Consultant's services shall not be exclusive to the Company and he may have
other part time or full time employment in other businesses.
2. Confidentiality. The Consultant agrees that during the
Consulting Period and at all times thereafter, he shall hold and keep
confidential all "Confidential Information" (as defined below). The Consultant
agrees that he shall not, directly or
<PAGE>
Mr. Don A. Owen
November __, 1996
Page 2
indirectly, disclose any Confidential Information to any person, firm, or
corporation, or use the same, or permit the same to be disclosed or used, except
in connection with the business and affairs of the Company.
"CONFIDENTIAL INFORMATION" shall include, but not be limited to the
following types of information, both existing and contemplated regarding the
Company (including the business of the Company purchased from QMP pursuant to
the Asset Purchase Agreement): corporate information, including contractual and
licensing arrangements, plans, strategies, tactics, policies, resolutions and
patent applications; any litigation or negotiations; marketing information,
including sales and product plans, strategies, tactics, methods, customers,
prospects and market research data; financial information, including cost and
performance data and debt arrangements; operational information, including trade
secrets, secret formulae, control and inspection practices; manufacturing
processes and methods; suppliers; and personnel information, including personnel
lists, resumes, personal data and organizational information. Confidential
Information is limited to information that is not generally known to the public
or within the plastics molding and engineering industries.
3. Noncompetition and Nonsolicitation. During the Consulting
Period, the Consultant agrees not to directly or indirectly engage in any
business which competes with the Business, as defined in the Asset Purchase
Agreement, or the business of the Company as conducted during the Consulting
Period. For the purposes of this Agreement, a business will be deemed
competitive if it is conducted in whole or in part in the Noncompetition Region
(defined below) and it involves manufacturing, distributing or otherwise dealing
with or in any product that is the same as or similar to those produced,
manufactured, distributed or otherwise dealt in or that were the results of
research and development by QMP being acquired, as described in the Asset
Purchase Agreement or by the Company from time to time prior to and during the
Consulting Period. The Consultant will be deemed to engage in a business if he
participates in such business as a stockholder, director, member, manager,
officer, employee, manufacturer's representative, agent, independent contractor,
consultant, partner or individual proprietor, or as an investor (whether
directly or beneficially) who has advanced a loan, contributed to capital or
expended funds for the purchase of stock or other equity interest; provided,
however, that nothing herein contained shall prevent the Consultant from
purchasing and owning stock in a public corporation in any amount less than five
percent (5%) of the issued and outstanding stock of such corporation. Except as
provided in the Asset Purchase Agreement, during the Consulting Period, the
Consultant also agrees not to directly or indirectly, solicit any employees of
the Company who are employed by the Company during the Consulting Period or who
were employed by QMP as of the Closing Date, as defined in the Asset Purchase
Agreement, to leave the Company's employment or
<PAGE>
Mr. Don A. Owen
November __, 1996
Page 3
solicit business from any customers or suppliers of the Company who transact or
propose the transaction of business with the Company during the Consulting
Period. The Noncompetition Region means the states of Massachusetts, Washington,
Oregon, California, Colorado, Texas, Nebraska, Kansas, Oklahoma, Minnesota,
Wisconsin, Iowa, Illinois, Arkansas, Michigan, Indiana, Kentucky, Tennessee,
Alabama, Georgia, Florida, South Carolina, North Carolina, Virginia, West
Virginia, Ohio, Maryland, Pennsylvania, New Jersey, New York, Connecticut, Maine
and New Hampshire.
4. Payment. The Company shall pay the Consultant a fee at the rate
of $40,000 per annum, payable in equal monthly installments during the
Consulting Period commencing December 15, 1996, in consideration of the services
and agreements of the Consultant provided for in this Agreement.
Notwithstanding the foregoing, in the event of the death of the Consultant, the
Consulting Period shall terminate, and the Company shall stop payments under
this Agreement, at the end of the month in which the Consultant's death occurs.
Disability of the Consultant shall not terminate the Consulting Period or the
Company's obligations to make payments hereunder unless the Consultant (or a
judicially appointed personal representative) and the Company shall so agree.
5. Injunctive Relief. The Company and the Consultant acknowledge
and agree that the Consultant's agreements and covenants in this Agreement
relate to matters which are of a special, unique and extraordinary character and
are of vital concern to the Company; further, the Company and the Consultant
acknowledge and agree that the Company has entered into this Agreement and the
Asset Purchase Agreement in reliance upon the Consultant's agreements and
covenants contained in this Agreement. The Company and the Consultant further
acknowledge and agree that any violation, breach, or threatened breach of any of
the Consultant's agreements or covenants in this Agreement will result in
irreparable damage to the Company for which there is no adequate remedy at law.
Therefore, the Company and the Consultant agree that the Company shall have the
right in addition to any other rights it may have, to obtain injunctive and
other equitable relief for any violation, breach, or threatened breach of this
Agreement by the Consultant.
6. Severability. The Consultant and the Company agree that the
agreements, covenants, restrictions and remedies contained in this Agreement are
reasonable, recognizing the competitive nature of the business of the Company,
the scope of similar businesses, the specialized expertise and knowledge the
Consultant possesses, the unique and extraordinary nature of the Consultant's
services and the importance to the Company of the proprietary information which
the Consultant possesses. Therefore it is the Consultant's intention and the
intention of the Company that the agreements, covenants, restrictions and
<PAGE>
Mr. Don A. Owen
Novermber __, 1996
Page 4
remedies contained in this Agreement shall be enforceable to the fullest extent
permissible by law. If a court of competent jurisdiction finds that any such
restriction or remedy is unenforceable, void or invalid, but would be
enforceable, valid and legal if some part thereof were deleted or the period or
area of application reduced, then such restriction or remedy shall apply with
such modification as shall be necessary to make it enforceable, valid and legal.
7. Governing Law, Etc. This Agreement shall be governed by the laws
of the State of North Carolina applicable to contracts entered into and
performed entirely within the State of North Carolina without regard for choice
of law rules.
If you are in agreement with the foregoing, please execute this
Agreement in the space provided below and return one fully executed counterpart
to the Company, whereupon this Agreement shall be a binding agreement between
the Company and you.
Agreed to and accepted ONEIDA ROSTONE CORP.
_______________________________ By________________________________
DON A. OWEN Richard L. Evans, Vice President
04012.0012
<PAGE>
EXHIBIT E
Prepared by Phil S. Edwards, Attorney
P. O. Box 629, Siler City, NC 27344
Mail to: Oneida Rostone Corp.
104 South Warner St., Oneida, NY 13421
ATTN: Robert P. Wiehl
NORTH CAROLINA )
) WARRANTY DEED
CHATHAM COUNTY )
- --------------------------------------------------------------------------------
THIS DEED, made and entered into this 18th of November, 1996, by and
between QUALITY MOLDED PRODUCTS, INC., a North Carolina corporation with its
principal office and place of business in Chatham County, North Carolina,
Grantor,
AND
ONEIDA ROSTONE CORPORATION of 104 South Warner Street, Oneida, New York 13421,
Grantee,
WITNESSETH:
THAT the Grantor, for a valuable consideration paid by the Grantee, the
receipt of which is hereby acknowledged, have and by these presents do grant,
bargain, sell and convey unto the Grantee in fee simple, all that certain lot or
parcel of land situated in the Town of Siler City, Matthews Township, Chatham
County, North Carolina, and more particularly described as follows:
BEGINNING an iron stake in the southeastern corner of the intersection of East
Raleigh Street and South Tenth Avenue, said point being designated Point 3 on a
plat entitled "CORRECTED PLAT FOR ONEIDA ROSTONE CORP. AND CONGRESS FINANCIAL
CORPORATION AND CHICAGO TITLE INSURANCE COMPANY", dated November 15, 1996, by
Rufus L. Johnson, RLS, and recorded in Plat Slide 96 _______, Chatham County
Registry, and running thence with the southern margin of East Raleigh Street,
North 55 degrees 19' 00" East 388.25 feet to an iron stake, the northwest corner
of Gary L. Smith, and being designated Point 44 on the plat hereinbefore
referred to; thence with the western boundary of Gary Smith, South 35 degrees
57' 11'' East 558.03 feet to an iron stake designated Point 27 on said plat;
thence continuing with Smith's line, South 36 degrees 02' 48" East 231.84 feet
to an iron stake designated Point 33 on said plat; thence South 05 degrees 03'
56" West 219.74 feet to an iron state, Bob Petty's northeast corner and being
designated Point 36 on said plat; thence with Petty's line, South 57 degrees 01'
14" West 217.25 feet to an iron stake designated Point 42 on said plat; thence
continuing on South 57 degrees 01' 14" West 36.73 feet to an iron stake in the
eastern margin of South Tenth Avenue designated as Point 37 on said plat; thence
with the eastern margin of South Tenth Avenue, North 35 degrees 03' 46" West
393.40 feet to an iron stake designated Point 38 on said plat; thence continuing
with the eastern margin of South Tenth Avenue North 35 degrees 03' 46" West
224.40 feet to an iron stake designated Point 41 on said plat; thence continuing
with the eastern margin of South Tenth Avenue, North 36 degrees 00' 04" West
333.37 feet to an iron stake designated Point 3 on said plat, the point and
place of BEGINNING, and containing 8.309 acres more or less, and being all of
Lot 1 as shown on the plat hereinbefore referred to.
For chain of title see Deed Book 583, page 766; Deed Book 396, Page 512, Deed
Book 450, Page 414, and Deed Book 530, Page 232, Chatham County Registry.
1
<PAGE>
The above described property is subject to:
(1) Taxes for the year 1996, now due and payable but not yet
delinquent.
(2) Taxes for the year 1997, and subsequent years, not yet due and
payable.
(3) Easements, setback lines, and any other facts shown on the plat
recorded in Plat Slide 96-______, Chatham County Registry, and survey of Rufus
L. Johnson, R.S., entitled "Corrected Plat for Oneida Rostone Corp., and
Congress Financial Corporation and Chicago Title Insurance Company" dated
November 15, 1996, including but not limited to the following: a) sanitary sewer
manhole and sprinkler connection located on insured property; b) overhead power
line crossing property.
(4) Easement to CP&L recorded in Book 696, Page 195, Chatham County
Registry. (Tract 1)
TO HAVE AND TO HOLD the aforesaid lot or parcel of land and all
privileges and appurtenances thereto belonging to the Grantee, its
successors and assigns in fee simple forever.
AND the Grantor covenants with the Grantee, that Grantor is seized of
the premises in fee simple, and has the right to convey the same in fee simple,
that title is marketable and free and clear of all encumbrances, and that
Grantor will warrant and defend the title against the claims of all persons
whomsoever except for the exceptions hereinabove stated.
IN WITNESS WHEREOF, the Grantor has caused this instrument to be signed
in its corporate name by its duly authorized officers and its seal to be
hereunto affixed by authority of its Board of Directors, the day and year first
above written.
QUALITY MOLDED PRODUCTS, INC.
By: /s/ DONALD A. OWEN
-----------------------------
Donald A. Owen, President
ATTEST:
/s/ DAVID ALLEN
- ------------------------
David Allen, Secretary
NORTH CAROLINA, CHATHAM COUNTY:
I, a notary public of the county and state aforesaid, certify that DAVID ALLEN,
personally came before me this day and acknowledged that she is the Secretary of
QUALITY MOLDED PRODUCTS, INC., a North Carolina, and that by authority duly
given and as the act of the corporation, the foregoing instrument was signed in
its name by its President, sealed with its corporate seal and attested by its
secretary.
WITNESS my hand and notarial seal this the 15th day of November, 1996.
/s/ MARY ALICE G. KENNEDY
--------------------------------
NOTARY PUBLIC
2
<PAGE>
EXHIBIT F
[RICHARDS & O'NEIL, LLP LETTERHEAD APPEARS HERE]
November 18, 1996
Mr. Don A. Owen
Owen Ventures
700 N.E. Second Avenue
Suite 101
Siler City, NC 27344
Quality Molded Products, Inc.
920 East Raleigh Street
Siler City, NC 27344
Re: Sale of Certain Assets of Quality Molded
Products, Inc. to Oneida Rostone Corp.
----------------------------------------
Dear Sir:
We have acted as counsel to Oneida Rostone Corp., a New York
corporation (the "PURCHASER"), in connection with the negotiation, execution and
delivery of the Asset Purchase Agreement, dated November 18, 1996 (the "Purchase
Agreement"), among the Purchaser, Quality Molded Products, Inc., a North
Carolina corporation (the "SELLER"), and Don A. Owen, the sole stockholder of
the Seller (the "STOCKHOLDER"), and related transactions.
<PAGE>
RICHARDS & O'NEIL, LLP
Mr. Don A. Owen
Quality Molded Products, Inc.
November 18, 1996
Page 2
This opinion is delivered to you pursuant to Section 9.4(k) of the
Purchase Agreement. All capitalized terms that are used but not defined herein
shall have the meanings assigned to them in the Purchase Agreement.
In rendering this opinion, we have examined executed originals,
counterparts or copies of each of the following:
(i) the Purchase Agreement;
(ii) the Assignment and Assumption Agreement, dated November 18,
1996, 1996, between the Purchaser and the Seller; and
(iii) the Escrow Agreement, dated November 18, 1996, between the
Purchaser, Branch Banking and Trust Company, as Escrow Agent,
and the Seller.
The agreements and documents identified in clauses (i) through (iii)
above are hereinafter referred to as the "AGREEMENTS".
In connection with the opinions expressed herein, we have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate records of the Purchaser, certificates of public officials and
officers and other representatives of the Purchaser and such other documents,
agreements and instruments, and have made such other investigations, as we have
deemed necessary or appropriate.
As to various questions of fact material to this opinion, we have
relied upon, without any independent investigation or verification of any kind,
the representations and warranties contained in the Agreements and upon
certificates and other documents of officers of the Purchaser and of public
officials and have made such other investigations as we have deemed necessary or
appropriate. In our examination of the documents referred to above, we have
assumed (i) the genuineness of all signatures; (ii) the incumbency, authority
and legal right and power under all applicable laws, statutes, rules and
regulations of, all persons executing the Agreements as or on behalf of the
parties thereto other than the Purchaser; (iii) the authenticity and
completeness of all documents submitted to us as original or certified
documents; (iv) the conformity to authentic original documents of all documents
submitted to us as certified, conformed, facsimiled or photostatic copies; and
(v) that the certificates of
<PAGE>
RICHARDS & O'NEIL, LLP
Mr. Don A. Owen
Quality Molded Products, Inc.
November 18, 1996
Page 3
public officials dated prior to the date of this opinion remain accurate from
such earlier date through and including the date of this opinion.
To the extent that the obligations of the Purchaser under the
Agreements may be dependent upon such matters, we have assumed for purposes of
this opinion that: (i) the Seller is duly organized and validly existing under
the laws of its jurisdiction of organization; (ii) the Seller has full corporate
or other organizational power and authority to execute and deliver, and to
perform its obligations under, the Agreements and each of the other documents
and agreements executed by it in connection therewith; (iii) each document
executed by the Seller has been duly authorized, executed and delivered by the
Seller, and constitutes the legal, valid and binding obligation of the Seller
enforceable against it in accordance with its terms; (iv) the Stockholder has
the legal capacity to execute and deliver the Agreements to which he is a party
and to perform his obligations thereunder; and (v) the Agreements to which the
Stockholder is a party each constitutes the legal, valid and binding obligation
of the Stockholder, enforceable against him in accordance with its terms.
We are attorneys admitted to practice only in the State of New York and
we opine herein only as to the effect of the laws, statutes, rules and
regulations of the State of New York and the United States of America on the
subject transactions. We do not opine on, and we assume no responsibility as
to, the applicability of, or the effect on any of the matters covered herein of,
the laws of any other jurisdiction.
The opinions set forth below that are rendered "to the best of our
knowledge" or with similar qualification have been rendered based upon the
present knowledge of the lawyers currently in our employ who have devoted
substantive attention to the legal affairs of the Purchaser in connection with
the Agreements, after having made such investigations of such lawyers as we have
deemed necessary to render such opinions.
Based upon and subject to the foregoing, after giving effect to the
consummation of the transactions contemplated by the Agreements, we are of the
opinion that:
1. The Purchaser is a corporation duly incorporated and validly
existing under the laws of the State of New York and has all requisite corporate
power and authority to own, operate and lease its properties and assets and to
conduct its business as
<PAGE>
RICHARDS & O'NEIL, LLP
Mr. Don A. Owen
Quality Molded Products, Inc.
November 18, 1996
Page 4
they are now being owned, operated, leased and conducted. The Purchaser is
qualified to do business as a foreign corporation in the State of North
Carolina.
2. The Purchaser has all requisite corporate power and authority to
execute and deliver each of the Agreements, to perform its obligations
thereunder and to consummate the transactions contemplated thereby. The
execution and delivery by the Purchaser of each of the Agreements and the
performance by it of its obligations thereunder have been duly and validly
authorized by all necessary corporate action.
3. To the best of our knowledge, no approval or consent of, or any
filing with or notice to, any foreign, federal, state, county, local or other
governmental or regulatory body, and no approval or consent of, or any filing
with or notice to, any other person (other than those contemplated by the
Agreements, all of which have been received or made) is required in connection
with the execution and delivery by the Purchaser of the Agreements.
4. Neither the execution and delivery of, the consummation of the
transactions contemplated by, or the performance by the Purchaser of the
Agreements in accordance with their respective terms and conditions will
conflict with, or result in a breach or violation of, or give rise to any
acceleration of the Purchaser's obligations or constitute (or with notice or
lapse of time or both would constitute) a default under (i) any provision of the
certificate of incorporation or by-laws, as amended, of the Purchaser; (ii) to
the best of our knowledge, any term of any instrument, contract or other
agreement by or to which the Purchaser is a party or by or to which any of its
properties or assets is bound or subject; or (iii) any statute, law or
regulation or, to the best of our knowledge, any order, writ, judgment,
injunction, award or decree of any court, arbitrator or governmental or
regulatory body against, or binding upon, the Purchaser or any of its properties
or assets.
The opinions set forth herein are as of the date of this letter and we
do not render any opinion as to the effect of any matter which may occur
subsequent to the date hereof.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions contemplated by the Agreements. This opinion
may not be relied upon by you for any other purpose, nor may it be quoted,
circulated, referred or
<PAGE>
RICHARDS & O'NEIL, LLP
Mr. Don A. Owen
Quality Molded Products, Inc.
November 18, 1996
Page 5
delivered to, or relied upon by any other person, firm or entity for any purpose
without our prior express written consent.
Very truly yours,
Richards & O'Neil, LLP
<PAGE>
EXHIBIT G
November 18, 1996
Quality Molded Products, Inc.
920 East Raleigh Street
Siler City, NC 27344
Attention: Mr. Don A. Owen
Re: Sale of Certain Assets of Quality Molded
Products, Inc. to Oneida Rostone Corp.
Dear Sir:
We have acted as counsel to Oneida Rostone Corp., a New York
corporation (the "PURCHASER"), in connection with the negotiation, execution and
delivery of the Asset Purchaser Agreement, dated November __, 1996 (the
"Purchase Agreement"), among the Purchaser, Quality Molded Products, Inc., a
North Carolina corporation (the "SELLER"), and Don A. Owen, the sole stockholder
of the Seller (the "STOCKHOLDER"), and related transactions.
This opinion is delivered to you pursuant to Section 9.4(k) of the
Purchase Agreement. All capitalized terms that are used but not defined herein
shall have the meanings assigned to them in the Purchase Agreement.
In rendering this opinion, we have examined executed originals,
counterparts or copies of each of the following:
(i) the Purchase Agreement;
<PAGE>
Mr. Don A. Owen
November 18, 1996
Page 2
(ii) the Assignment and Assumption Agreement, dated
November __, 1996, between the Purchaser and the Seller; and
(iii) the Escrow Agreement, dated November __, 1996, between the
Purchaser and the Seller.
The agreements and documents identified in clauses (i) through
(iii) above are hereinafter referred to as the "AGREEMENTS".
In connection with the opinions expressed herein, we have also
examined originals or copies, certified or otherwise identified to our
satisfaction, of such corporate records of the Purchaser, certificates of public
officials and officers and other representatives of the Purchaser and such other
documents, agreements and instruments, and have made such other investigations,
as we have deemed necessary or appropriate.
As to various questions of fact material to this opinion, we have
relied upon, without any independent investigation or verification of any kind,
the representations and warranties contained in the Agreements and upon
certificates and other documents of officers of the Purchaser and of public
officials and have made such other investigations as we have deemed necessary or
appropriate. In our examination of the documents referred to above, we have
assumed (i) the genuineness of all signatures; (ii) the incumbency, authority
and legal right and power under all applicable laws, statutes, rules and
regulations of, all persons executing the Agreements as or on behalf of the
parties thereto other than the Purchaser; (iii) the authenticity and
completeness of all documents submitted to us as original or certified
documents; (iv) the conformity to authentic original documents of all documents
submitted to us as certified, conformed, facsimiled or photostatic copies; and
(v) that the certificates of public officials dated prior to the date of this
opinion remain accurate from such earlier date through and including the date of
this opinion.
To the extent that the obligations of the Purchaser under the
Agreements may be dependent upon such matters, we have assumed for purposes of
this opinion that: (i) the Seller is duly organized and validly existing under
the laws of its jurisdiction of organization; (ii) the Seller has full corporate
or other organizational power and authority to execute and deliver, and to
perform its obligations under, the Agreements and each of the other documents
and agreements executed by it in connection therewith; (iii) each document
executed by the Seller has been duly authorized, executed and delivered by the
Seller, and constitutes the legal, valid and binding obligation of the Seller
enforceable against it in
<PAGE>
Mr. Don A. Owen
November 18, 1996
Page 3
accordance with its terms; (iv) the Stockholder has the legal capacity to
execute and deliver the Agreements to which he is a party and to perform his
obligations thereunder; and (v) the Agreements to which the Stockholder is a
party each constitutes the legal, valid and binding obligation of the
Stockholder, enforceable against him in accordance with its terms.
We are attorneys admitted to practice only in the State of New York
and we opine herein only as to the effect of the laws, statutes, rules and
regulations of the State of New York and the United States of America on the
subject transactions. We do not opine on, and we assume no responsibility as
to, the applicability of, or the effect on any of the matters covered herein of,
the laws of any other jurisdiction.
The opinions set forth below that are rendered "to the best of our
knowledge" or with similar qualification have been rendered based upon the
present knowledge of the lawyers currently in our employ who have devoted
substantive attention to the legal affairs of the Purchaser in connection with
the Agreements, after having made such investigations of such lawyers as we have
deemed necessary to render such opinions.
Based upon and subject to the foregoing, after giving effect to the
consummation of the transactions contemplated by the Agreements, we are of the
opinion that:
1. The Purchaser is a corporation duly incorporated and validly
existing under the laws of the State of New York and has all requisite corporate
power and authority to own, operate and lease its properties and assets and to
conduct its business as they are now being owned, operated, leased and
conducted. [THE PURCHASER IS QUALIFIED TO DO BUSINESS AS A FOREIGN CORPORATION
IN THE STATE OF NORTH CAROLINA.]
2. The Purchaser has all requisite corporate power and authority to
execute and deliver each of the Agreements [____________], to perform its
obligations thereunder and to consummate the transactions contemplate thereby.
The execution and delivery by the Purchaser of each of the Agreements
[_____________] and the performance by it of its obligations thereunder have
been duly and validly authorized by all necessary corporate action.
3. To the best of our knowledge, no approval or consent of, or any
filing with or notice to, any foreign, federal, state, county, local or other
governmental or regulatory body, and no approval or consent of, or any filing
with or notice to, any other
<PAGE>
Mr. Don A. Owen
November 18, 1996
Page 4
person (other than those contemplated by the Agreements, all of which have been
received or made) is required in connection with the execution and delivery by
the Purchaser of the Agreements.
4. Neither the execution and delivery of, the consummation of the
transactions contemplated by, or the performance by the Purchaser of the
Agreements in accordance with their respective terms and conditions will
conflict with, or result in a breach or violation of, or give rise to any
acceleration of the Purchaser's obligations or constitute (or with notice or
lapse of time or both would constitute) a default under (i) any provision of the
certificate of incorporation or by-laws, as amended, of the Purchaser; (ii) to
the best of our knowledge, any term of any instrument, contract or other
agreement by or to which the Purchaser is a party or by or which any of its
properties or assets is bound or subject; or (iii) any statute, law or
regulation or, to the best of our knowledge, any order, writ, judgment,
injunction, award or decree of any court, arbitrator or governmental or
regulatory body against, or binding upon, the Purchaser or any of its properties
or assets.
The opinions set forth herein are as of the date of this letter and
we do not render any opinion as to the effect of any matter which may occur
subsequent to the date hereof.
This opinion is rendered only to you and is solely for your benefit
in connection with the transactions contemplated by the Agreements. This
opinion may not be relied upon by you for any other purpose, nor may it be
quoted, circulated, referred or delivered to, or relied upon by any other
person, firm or entity for any purpose without our prior express written
consent.
Very truly yours,
04012.0012
<PAGE>
EXHIBIT 10.1
November 18, 1996
Oneida Rostone Corp.
104 South Warner Street
Oneida, New York 13421
Oneida Molded Plastics, Corp.
of North Carolina
Route 70, East
P.O. Box 568
Clayton, North Carolina 27520
Re: Amendment No. 2 to Loan and Security Agreement
----------------------------------------------
Gentlemen:
Reference is made to the Loan and Security Agreement, dated February 2,
1996 (the "Loan Agreement"), by and among Congress Financial Corporation
("Lender"), Oneida Rostone Corp. ("ORC") and Oneida Molded Plastics, Corp. of
North Carolina ("OMPC-NC"; together with ORC, each individually a "Borrower" and
collectively, "Borrowers"), as amended by Amendment No. 1 to Loan and Security
Agreement, dated October 21, 1996, together with all other agreements,
documents, supplements and instruments now or at any time hereafter executed
and/or delivered by Borrowers or any other person, with to or in favor of Lender
in connection therewith (all of the foregoing, together with this Amendment and
the agreements and instruments delivered hereunder, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, collectively, the "Financing Agreements"). All capitalized terms used
herein and not otherwise defined herein shall have the meanings given to them in
the Loan Agreement.
ORC and OMPC-NC have requested that Lender (a) increase permanently the
Maximum Credit from $16,000,000 to $20,000,000, (b) provide $1,000,000 in
temporary additional Revolving Loan availability, (c) permit ORC to incur
certain subordinated indebtedness to Reunion in connection with the repayment of
such temporary additional Revolving Loan availability, (d) enter into certain
amendments and grant certain consents in connection with the purchase by ORC of
substantially all of the assets, properties and business of, and the assumption
of certain liabilities of, Quality Molded Products, Inc., and permit ORC to
enter into a consulting and non-competition agreement with Don A. Owen in
connection therewith, and (e) enter into certain amendments and grant certain
consents in connection with the merger of OMPC-NC with and into ORC, with ORC as
the surviving corporation.
<PAGE>
Lender is willing to agree to the foregoing to the extent set forth herein
and subject to the terms and conditions set forth herein.
1. Definitions.
-----------
(a) Additional Definitions. As used herein or in any of the other
Financing Agreements, the following terms shall have the respective meanings set
forth below, and the Loan Agreement shall be deemed and is hereby amended to
include, in addition and not in limitation, each of the following definitions:
(i) "BBT" shall mean Branch Banking and Trust Company, a
North Carolina banking corporation, and its successors and assigns.
(ii) "OMPC-NC Merger" shall mean the merger of OMPC-NC with
and into ORC, with ORC as the surviving corporation.
(iii) "OMPC-NC Merger Agreements" shall mean the Certificates
of Merger, dated of even date herewith, of ORC and OMPC-NC and all related
agreements, documents, consents and instruments as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(iv) "Overformula Limit" shall mean the amount of $1,000,000,
subject to reduction pursuant to Section 5 hereof.
(v) "Overformula Loans" shall have the meaning set forth in
Section 5(a) hereof.
(vi) "Overformula Period" shall mean the period commencing
on the date hereof and ending on February 14, 1997.
(vii) "Owen" shall mean Don A. Owen, and his heirs,
executors, legal representatives, successors and assigns.
(viii) "Owen Noncompetition Agreement" shall mean the
Consulting and Noncompetition Agreement, dated of even date herewith, between
ORC and Owen, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(ix) "QMP" shall mean Quality Molded Products, Inc., a North
Carolina corporation, and its successors
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<PAGE>
and assigns, but not including ORC as assignee under any of the QMP Purchase
Agreements.
(x) "QMP Purchase Agreements" shall mean, individually and
collectively, the Asset Purchase Agreement, dated November __, 1996, among ORC,
Owen and QMP, together with bills of sale, deeds, assignment and assumption
agreements and such other instruments of transfer as are referred to therein and
all side letters with respect thereto, and all agreements, documents and
instruments executed and/or delivered in connection therewith, as all of the
foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(xi) "QMP Purchase Price" shall have the meaning set forth
in Section 2 hereof.
(xii) "QMP Purchased Assets" shall mean all of the assets
and properties acquired by ORC from QMP pursuant to the QMP Purchase Agreements.
(xiii) "Reunion Limited Guarantee" shall mean the Limited
Guarantee, dated of even date herewith, by Reunion in favor of Lender pursuant
to which Reunion has agreed to absolutely and unconditionally guarantee the
payment and performance of the Obligations of ORC to the extent provided
therein, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(xiv) "Reunion Indemnity Agreement" shall mean the Indemnity
Agreement, dated of even date herewith, by Reunion in favor of Lender pursuant
to which Reunion has, among other things, agreed to indemnify Lender and the
other Indemnified Parties referred to therein from and against all liabilities
arising in connection with non-compliance by ORC or QMP with the Bulk Sales Law
of Article 6 of the Uniform Commercial Code of the State of North Carolina, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(xv) "Reunion/ORC Letter" shall mean the letter, dated of even
date hereof, between Reunion and ORC providing for, among other things, the
agreement by Reunion to make the Reunion November 1996 Subordinated Loan in
connection with the payment by ORC of the QMP Purchase Price, and, if necessary,
the Reunion February 1997 Subordinated Loan in connection with the repayment of
the Overformula Loans and reduction of the Overformula Limit as provided herein,
as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
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<PAGE>
(xvi) "Reunion November 1996 Subordinated Loan" shall mean the
unsecured subordinated loan made on the date hereof by Reunion to ORC in the
original principal amount of $2,000,000 to fund a portion of the QMP Purchase
Price.
(xvii) "Reunion February 1997 Subordinated Loan" shall mean
the unsecured subordinated loan (when and if made) by Reunion to ORC in the
amount required to repay in full the unpaid balance of the Overformula Loans (if
any) outstanding on the last day of the Overformula Period.
(xviii) "Second Amended and Restated ORC Term Note" shall mean
the Second Amended and Restated Term Promissory Note, dated of even date
herewith, made by ORC payable to Lender in the original principal amount of
$9,271,025, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(xix) "Sunbeam" shall mean Sunbeam Outdoor Products, f/k/a
Rubbermaid Specialty Products, Inc., and its successors and assigns.
(b) Amendments to Definitions.
-------------------------
(i) Amended and Restated ORC Term Note. All references to the
term "Amended and Restated ORC Term Note" in the Loan Agreement and the other
Financing Agreements are hereby amended to mean the "Second Amended and Restated
ORC Term Note", as defined herein.
(ii) Borrowers. Effective upon consummation of the OMPC-NC
Merger, all references to "Borrower" or "Borrowers" and to "Debtor" or "Debtors"
or words of similar import contained in the Loan Agreement and the other
Financing Agreements are hereby amended to mean only ORC, as the surviving
corporation of the OMPC-NC Merger.
(iii) Maximum Credit. Section 1.37 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following, effective as of
the date hereof:
"1.37 "Maximum Credit" shall mean the amount of
$20,000,000."
(iv) Mortgages. All references to the term "Mortgages" in the
Loan Agreement and the other Financing Agreements are hereby amended to include,
without limitation, the Deed of Trust and Security Agreement, dated of even date
herewith, by ORC in favor of Kenneth M. Greene as trustee for the benefit of
Lender, and Lender with respect to the Real Property and related assets of ORC
acquired from QMP pursuant to the QMP Purchase Agreements and located in Chatham
County, North
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<PAGE>
Carolina, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(v) OMPC-NC. Effective upon consummation of the OMPC-NC
Merger, all references to the term "OMPC-NC" in the Loan Agreement and the other
Financing Agreements are hereby amended to mean ORC, as successor of the merger
of OMPC-NC with and into ORC, with ORC as the surviving corporation, pursuant to
the OMPC-NC Merger Agreements and applicable law; provided, however, that the
references to the Excess Availability of OMPC-NC contained in Sections 10.10(e),
(f), (g), (h), (i), (j) and (l) of the Loan Agreement and contained in the
various subordination agreements delivered in favor of Lender as contemplated by
such Sections shall be deemed amended and shall be construed in such manner as
to maintain at $1,000,000 the Excess Availability requirement contained in such
provisions as applied to ORC, as the surviving corporation of the OMPC-NC
Merger.
(vi) ORC. Effective upon consummation of the OMPC-NC Merger,
all references to the term "ORC" contained herein and in the Loan Agreement and
the other Financing Agreements are hereby amended to mean Oneida Rostone Corp.,
as successor of the merger of OMPC-NC with and into Oneida Rostone Corp., with
Oneida Rostone Corp. as the surviving corporation, pursuant to the OMPC-NC
Merger Agreements and applicable law.
(vii) ORC Term Loan. Effective upon consummation of the OMPC-
NC Merger, all references to the term "ORC Term Loan" herein and in the Loan
Agreement and the other Financing Agreements are hereby amended to mean the
outstanding Obligations owed to Lender by ORC consisting of the indebtedness
evidenced by the Second Amended and Restated ORC Term Note.
(viii) Revolving Loans. All references to the term "Revolving
Loans" herein and in the Loan Agreement and the other Financing Agreements are
hereby amended to include, without limitation, the Overformula Loans.
2. Consents. Subject to the terms and conditions contained herein
and in the Loan Agreement and the other Financing Agreements, Lender consents to
(a) the purchase by ORC of the QMP Purchased Assets pursuant to the QMP Purchase
Agreements (as in effect on the date hereof), including the fulfillment (not
merely the waiver, except as may be consented to in writing by Lender) of all
conditions precedent to the obligations of the parties to the QMP Purchase
Agreements to close the transactions contemplated thereunder, (b) ORC's use of
the proceeds received by ORC (i) from the Reunion November 1996 Subordinated
Loan in an amount not less than $2,000,000, and (ii) from the additional, single
advance by Lender to ORC in the amount of $3,695,000 constituting a portion of
the ORC Term Loan
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<PAGE>
as provided in Section 7 hereof, (iii) from Revolving Loans made by Lender to
ORC in accordance with Section 5 hereof (including the portion thereof, up to
$1,000,000 constituting an Overformula Loan hereunder), for the payment by ORC,
in consideration of the purchase by ORC of the QMP Purchased Assets pursuant to
the QMP Purchase Agreements (as in effect on the date hereof) of an amount,
subject to adjustment, but not greater than $8,000,000 (the "QMP Purchase
Price") consisting of cash payments, amounts delivered in escrow and the
assumption of certain indebtedness owed by QMP to BBT, which indebtedness to BBT
will be repaid contemporaneously herewith, (c) the payment by ORC of an amount,
not to exceed $240,000, in payment of the broker's fee payable to First
Commercial Group upon closing of the acquisition contemplated by the QMP
Purchase Agreements, (d) the Owen Noncompetition Agreement, (e) the incurrence
of the indebtedness of ORC to Reunion arising pursuant to the Reunion November
1996 Subordinated Loan and the Reunion February 1997 Subordinated Loan (when and
if made), and (f) the merger of OMPC-NC with and into ORC, with ORC as the
surviving corporation, pursuant to the OMPC-NC Merger Agreements (as in effect
on the date hereof) and applicable laws.
3. Collateral. ORC hereby acknowledges, confirms and agrees that
the Collateral does and shall include, without limitation, all of the QMP
Purchased Assets and the products and proceeds thereof. To secure payment and
performance of all obligations, ORC hereby grants to Lender, and hereby
confirms, reaffirms and restates the prior grant to Lender under the Loan
Agreement and the other Financing Agreements of, a continuing security interest
in, a lien upon, and a right of set off against, and hereby assigns to Lender as
security, all of the Collateral.
4. Location of QMP Purchased Assets. ORC represents and warrants to
Lender that the QMP Purchased Assets consisting of tangible property are located
only at 920 East Raleigh Street, Siler City, North Carolina.
5. Temporary Overformula Loans.
(a) In addition to the Revolving Loans that may otherwise be made
available by Lender to Borrower pursuant to the lending formulas and subject to
the sublimits and Availability Reserves set forth in and established pursuant to
the Loan Agreement, upon the request of Borrower, Lender agrees, subject to the
terms and conditions contained herein and all other terms and conditions of the
Loan Agreement, to make available to Borrower, during the Overformula Period,
additional Revolving Loans in excess of the amount of Revolving Loans otherwise
determined by Lender to be available to Borrower at such time pursuant to
Section 3.1 of the Loan Agreement as amended hereby (such excess, if any, from
time to time, the "Overformula
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<PAGE>
Loans"), by an amount not to exceed the Overformula Limit. The Overformula
Loans (i) shall be repaid, on or prior to the expiration of the Overformula
Period, without notice or demand by Lender, together with interest and all other
amounts due thereon, in accordance with the provisions of this Amendment, the
Loan Agreement as amended hereby and the other Financing Agreements and (ii)
shall be secured by all of the Collateral (except for the Real Property of ORC
located in the State of New York).
(b) On the last day of the Overformula Period, the Overformula
Limit shall be reduced permanently to zero ($0), and, in accordance with the
Reunion/ORC Letter, Reunion shall make the Reunion February 1997 Subordinated
Loan to ORC for application to the Obligations to the extent and in the amount
required to repay in full the then outstanding amount of Overformula Loans (if
any).
(c) During the Overformula Period, but only so long as no Event of
Default has occurred, (i) the Overformula Limit shall be included under Section
1.24(a)(i) of the Loan Agreement in determining Excess Availability of ORC and
(ii) all outstanding Overformula Loans shall be included as outstanding
Obligations under Section 1.24(b)(i) of the Loan Agreement in determining Excess
Availability of ORC at any time during such period.
6. Inventory Sublimit. Effective upon consummation of the OMPC-NC
Merger, Section 3.1(a) of the Loan Agreement is hereby amended by deleting the
amount "$2,200,000" appearing in clause (B)(1) of Section 3.1(a)(ii) and
substituting therefor the amount "$3,000,000", replacing the word "or" appearing
at the end of Section 3.1(a)(ii) with the word "less", deleting Section
3.1(a)(iii) in its entirety, and renumbering Section 3.1(a)(iv) to be Section
3.1(a)(iii).
7. ORC Term Loan.
-------------
(a) On the date hereof, upon consummation of the OMPC-NC Merger,
subject to the other terms and conditions contained herein and the other terms
and conditions of the Loan Agreement, Lender is making an additional, single
advance to ORC in the amount of $3,695,000, which advance, together with the
unpaid principal amount outstanding in respect of the ORC Term Loan as in effect
prior to this Amendment, plus the unpaid principal amount outstanding in respect
of the OMPC-NC Term Loan as in effect prior to this Amendment, shall all be
consolidated into a single loan, constituting the ORC Term Loan, which shall be
in the original principal amount of $9,271,025, which amount, together with
interest accrued and accruing thereon, is owed and shall be paid by ORC to
Lender, without offset, defense or counterclaim of any kind, nature and
description.
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<PAGE>
(b) The ORC Term Loan shall be (i) evidenced by the Second Amended
and Restated ORC Term Note, executed and delivered by ORC to Lender concurrently
with the consummation of the OMPC-NC Merger, (ii) repaid, together with interest
and other amounts due thereunder in accordance with the terms and provisions of
the Second Amended and Restated ORC Term Note, the Loan Agreement and the other
Financing Agreements, and (iii) secured by all of the Collateral.
(c) None of the provisions of Section 7(a) hereof or elsewhere
contained herein and none of the provisions of the Second Amended and Restated
ORC Term Note, shall, in any manner, be construed to constitute payment of, or
impair, limit, cancel or extinguish or constitute a novation in respect of, any
of the outstanding Obligations arising in respect of the Term Loans under the
Loan Agreement or any of the other Financing Agreements, and the liens and
security interests securing such Obligations shall not in any manner be
impaired, limited, terminated, waived or released.
8. Use of Proceeds. ORC shall use the initial proceeds of the
Overformula Loans and the additional, single advance constituting a portion of
the ORC Term Loan as provided in Section 7 hereof only for the payment of the
QMP Purchase Price and the costs, expenses and fees in connection with this
Amendment and the transactions contemplated hereunder.
9. Ratification. Without limiting the acknowledgments,
confirmations and agreements of ORC contained in Section 7 hereof, ORC hereby
acknowledges, confirms, and agrees that upon consummation of the OMPC-NC Merger,
by operation of law, the OMPC-NC Merger Agreements and this Amendment:
(a) ORC, as the surviving corporation pursuant to the OMPC-NC
Merger, is and shall continue to be directly and primarily liable in all
respects for the Obligations of OMPC-NC arising prior to the effective time of
the OMPC-NC Merger.
(b) Lender has and shall continue to have valid and perfected
security interests, liens and rights in and to all of the assets and properties
of OMPC-NC, which ORC shall own and hold as the surviving corporation pursuant
to the OMPC-NC Merger and applicable laws, and which assets and properties shall
be deemed included in the Collateral, and such security interests, liens and
rights and their perfection and priority shall continue in all respects in full
force and effect; and
(c) Without limiting the generality of the foregoing, (i) the
OMPC-NC Merger shall in no way, limit, impair or adversely affect the
Obligations now or hereafter owed to Lender or any security interests or liens
in the assets and properties of ORC securing the same and (ii) the security
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<PAGE>
interests, liens and rights of Lender in and to all of the assets and properties
of ORC, as the surviving corporation pursuant to the OMPC-NC Merger, shall
continue to secure all Obligations of OMPC-NC arising prior to the effective
time of the OMPC-NC Merger, in addition to all other existing and future
Obligations of ORC to Lender.
10. Indebtedness.
------------
(a) Effective upon the consummation of the OMPC-NC Merger, Section
10.10(d) of the Loan Agreement is hereby deleted in its entirety and replaced
with the following:
"(d) unsecured indebtedness of ORC, as the surviving corporation
of the OMPC-NC Merger, consisting of (x) a monthly credit support
fee owed to Charles Bradley pursuant to the Credit Support Fee
Agreement, dated the date hereof, by and among ORC, OMPC-NC and
Charles Bradley in a monthly amount not to exceed one twelfth of
one (1/12 of 1%) percent of the Principal Liability (as defined in
the Limited Guarantee) then in effect as provided in the Limited
Guarantee, and (y) a monthly credit support fee owed to Charles
Bradley pursuant to the Supplemental Credit Support Fee Agreement,
dated November __, 1996, by and between ORC and Charles Bradley in
a monthly amount not to exceed $833.33, all of which indebtedness
is subject to, and subordinate in right of payment to, the right
of Lender to receive the prior indefeasible payment in full of all
of the Obligations in accordance with a written subordination
agreement between Lender and Charles Bradley in form and substance
satisfactory to Lender; provided, that: (i) ORC shall not,
directly or indirectly, make any payments in respect of such
indebtedness, including, but not limited to, any prepayments,
other than regularly scheduled monthly payments by ORC in
accordance with such Credit Support Fee Agreement as in effect on
the date hereof and such Supplemental Credit Support Fee Agreement
as in effect on the date of execution and delivery thereof and so
long as, in each case (A) no Event of Default or condition or
event which with notice or passage of time or both would
constitute an Event of Default has occurred or exists or would
occur or exist after giving effect to such payment and (B) ORC
shall have Excess Availability of not less than $1,000,000 for the
period of thirty (30) consecutive days immediately prior to making
and immediately after giving effect to and such
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<PAGE>
payments, (ii) ORC shall not, directly or indirectly, (A) amend,
modify, alter or change any terms of such indebtedness or any
agreement, document or instrument related thereto, or (B) redeem,
retire, defease, purchase or otherwise acquire such indebtedness,
or set aside or otherwise deposit or invest any sums for such
purpose, and (iii) ORC shall furnish to Lender all notices,
demands or other materials concerning such indebtedness either
received by ORC or on irs behalf, promptly after receipt thereof,
or sent by ORC or on its behalf, concurrently with the sending
thereof, as the case may be;"
(b) Section 10.10 of the Loan Agreement is hereby amended by
deleting the word "and" at the end of Section 10.10(k), replacing the period
with a semicolon and adding the word "and" at the end of Section 10.10(l) and
adding new Sections 10.10(m) and 10.10(n) thereto as follows:
"(m) unsecured obligations of ORC to Owen evidenced by the Owen
Noncompetition Agreement; provided, that: (i) ORC shall not, directly
or indirectly, make any payments in respect of such obligations,
including, but not limited to, any payments or prepayments, of
principal, interest or other sums, other than regularly scheduled
payments when due in accordance with the Owen Noncompetition
Agreement, as in effect on the execution date thereof, (ii) ORC shall
not, directly or indirectly, (A) amend, modify, alter or change any
terms of such obligations or any agreement, document or instrument
related thereto, or (B) redeem, retire, defease, purchase or otherwise
acquire such obligations, or set aside or otherwise deposit or invest
any sums for such purpose, and (iii) ORC shall furnish to Lender all
notices, demands or other materials concerning such obligations either
received by Borrower or on its behalf, promptly after receipt thereof,
or sent by ORC or on its behalf, concurrently with the sending
thereof, as the case may be; and
"(n) unsecured indebtedness of ORC to Reunion consisting of (x)
the Reunion November 1996 Subordinated Loan evidenced by a
subordinated promissory note, dated November __, 1996, by ORC payable
to Reunion so long as all of the proceeds of such loan are used by ORC
to fund a portion of the QMP Purchase Price and (y) the Reunion
February 1997 Subordinated Loan (when and if made) to be evidenced by
a subordinated promissory note to be executed and delivered by ORC
payable to Reunion so long as the
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<PAGE>
proceeds of such loan, when made, are used by or for the account of
ORC to repay the then outstanding amount of Overformula Loans (if any)
on the last day of the Overformula Period as provided in Section 5 of
Amendment No. 2 to Loan and Security, dated November __, 1996, between
Borrowers and Lender, and provided, that, in the case of the
indebtedness referred to in clauses (x) and (y), all of such
indebtedness is subject to, and subordinate in right of payment to,
the right of Lender to receive the prior indefeasible payment in full
of all of the Obligations in accordance with a written subordination
agreement between Lender and Reunion in form and substance
satisfactory to Lender; provided, further, that: (i) ORC shall not,
directly or indirectly, make any payments in respect of such
indebtedness, including, but not limited to, any payments or
prepayments, of principal, interest or other sums, other than
regularly scheduled monthly payments of interest accruing after the
date of the making of such loans in accordance with such subordinated
promissory notes to be executed and delivered to evidence such
indebtedness, each as in effect on the execution date thereof, so long
as (A) no Event of Default or condition or event which with notice or
passage of time or both would constitute an Event of Default has
occurred or exists or would occur or exist after giving effect to such
payment and (B) ORC shall have Excess Availability of not less than
$1,000,000 for the period of thirty (30) consecutive days immediately
prior to making and immediately after giving effect to such payment,
(ii) ORC shall not, directly or indirectly, (A) amend, modify, alter
or change any terms of such indebtedness or any agreement, document or
instrument related thereto, or (B) redeem, retire, defease, purchase
or otherwise acquire such indebtedness, or set aside or otherwise
deposit or invest any sums for such purpose, and (iii) ORC shall
furnish to Lender all notices, demands or other materials concerning
such indebtedness either received by ORC or on its behalf, promptly
after receipt thereof, or sent by ORC or on its behalf, concurrently
with the sending thereof, as the case may be."
11. Working Capital. Section 10.15 of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"10.15 Working Capital". Borrowers shall, at all times,
maintain Working Capital, determined for ORC and its subsidiaries on a
consolidated basis, of not less than $1,450,000."
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<PAGE>
12. Information Certificates and Schedules.
--------------------------------------
(a) Upon the consummation of the OMPC-NC Merger, the Information
Certificate, dated February 2, 1996, of ORC and the Information Certificate,
dated February 2, 1996, of OMPC-NC, collectively attached as Exhibit A to the
Loan Agreement, are deleted in their entireties and replaced with the Amended
and Restated Information Certificate, dated the date hereof, of ORC attached
hereto as Exhibit A.
(b) Schedule 9.4 to the Loan Agreement is hereby amended by
including the additional information set forth on Exhibit B attached hereto and
Schedule 9.8 to the Loan Agreement is hereby amended by including the additional
information set forth on Exhibit C attached hereto.
13. Amendment Fee. In addition to all other fees, charges, interest
and expenses payable by Borrowers to Lender under the Financing Agreements,
Borrowers shall pay to Lender a fee for entering into this Amendment in the
amount of $50,000, which amount is fully earned and payable as of the date
hereof and may, at Lender's option, be charged directly to ORC's Revolving Loan
account maintained by Lender.
14. Additional Representations, Warranties and Covenants. Borrowers,
jointly and severally, represent, warrant and covenant with and to Lender as
follows, which representations, warranties and covenants are continuing and
shall survive the execution and delivery hereof, and the truth and accuracy of,
or compliance with each, together with the representations, warranties and
covenants in the other Financing Agreements, being a continuing condition of the
making of any and all Loans by Lender to Borrowers and/or to ORC, as the
surviving corporation of the OMPC-NC Merger:
(a) No Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default exists or
has occurred as of the date of this Amendment (after giving effect to the
amendments made and consents granted by Lender pursuant to this Amendment).
(b) This Amendment and each other agreement or instrument to be
executed and delivered by Borrowers hereunder has been duly executed and
delivered by Borrowers and is in full force and effect as of the date hereof,
and the agreements and obligations of Borrowers contained herein and therein
constitute legal, valid and binding obligations of Borrowers enforceable against
Borrowers in accordance with their terms.
(c) Neither the execution and delivery of the QMP Purchase
Agreements or the OMPC-NC Merger Agreements, nor the consummation of the
transactions contemplated by the QMP Purchase
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<PAGE>
Agreements or the OMPC-NC Merger Agreements, nor compliance with the provisions
of the QMP Purchase Agreements or the OMPC-NC Merger Agreements or instruments
thereunder, as the case may be, shall result in the creation or imposition of
any lien, claim, charge or encumbrance upon any of the Collateral, other than
the lien of Lender pursuant hereto and the Loan Agreement and the other
Financing Agreements.
(d) The QMP Purchase Agreements and the transactions contemplated
thereunder have been duly executed, delivered and, contemporaneously herewith,
have been performed in accordance with their terms by the respective parties
thereto in all respects, including the fulfillment (not merely the waiver,
except as may be consented to in writing by Lender) of all conditions precedent
to the obligations of the parties to close the transactions contemplated
thereunder, and ORC has acquired and presently has good and marketable title to
the QMP Purchased Assets, free and clear of all claims, liens, pledges and
encumbrances of any kind, except as permitted under the Loan Agreement as
amended hereby.
(e) On or before the close of business on the date hereof, the
OMPC-NC Merger shall become effective in accordance with the terms of the OMPC-
NC Merger Agreements and the provisions of corporation statutes of the states of
New York and North Carolina, and ORC shall be the surviving corporation pursuant
to the OMPC-NC Merger Agreements and applicable law.
(f) All actions and proceedings required by the QMP Purchase
Agreements and the OMPC-NC Merger Agreements, applicable law or regulation
(including, but not limited to, if applicable, compliance with the Hart-Scott-
Rodino Anti-Trust Improvements Act of 1976, as amended) have been duly and
validly taken and have occurred, excluding, however, compliance with Article 6
of the North Carolina Uniform Commercial Code, if applicable, compliance with
which by QMP has been waived by ORC upon QMP's and Owen's indemnification of ORC
for claims relating thereto as provided in the QMP Purchase Agreements (as in
effect on the date hereof).
(g) No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions described in the QMP Purchase Agreements or the OMPC-NC Merger
Agreements and no governmental or other action or proceeding has been threatened
or commenced, seeking any injunction, restraining order or other order which
seeks to void or otherwise modify the transactions described in or contemplated
by the QMP Purchase Agreements or the OMPC-NC Merger Agreements.
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<PAGE>
(h) ORC has delivered, or caused to be delivered, to Lender, true,
correct and complete copies of the QMP Purchase Agreements and the OMPC-NC
Merger Agreements.
(i) Neither the execution and delivery of the QMP Purchase
Agreements or the OMPC-NC Merger Agreements nor the consummation of the
transactions therein contemplated, nor compliance with the provisions thereof,
has violated or shall violate any federal or state securities laws or any other
law or regulation or any order or decree of any court or governmental
instrumentality in any respect (except for any non-compliance by QMP with
Article 6 of the North Carolina Uniform Commercial Code, if applicable, upon the
waiver by ORC of such compliance as described in Section 14(f) hereof) or does
or shall conflict with or result in the breach of, or constitute a default in
any respect under, any indenture, mortgage, deed of trust, security agreement,
lease, agreement or instrument to which ORC or OMPC-NC or, to ORC's knowledge,
QMP is a party or may be bound, or violate any provision of the Certificate of
Incorporation or By-Laws of ORC or, to ORC's knowledge, QMP, or, in the case of
the OMPC-NC Merger, violate any provision of the Certificate of Incorporation or
By-Laws of OMPC-NC.
(j) Within ninety (90) days from the date hereof, ORC agrees to
deliver to Lender, in form and substance satisfactory to Lender, evidence that
the Real Property of ORC located in Siler City, North Carolina acquired pursuant
to the QMP Purchase Agreements is classified as an industrial zone under
applicable state and local laws of the State of North Carolina.
15. Conditions to Effectiveness of Amendment. The effectiveness of
the amendments and consents pursuant to this Amendment shall be subject to the
satisfaction of each of the following conditions precedent:
(a) Lender shall have received an executed original or executed
original counterparts of this Amendment (as the case may be), duly authorized,
executed and delivered by the respective party or parties hereto;
(b) Lender shall have received, in form and substance satisfactory
to Lender, evidence that the QMP Purchase Agreements and the OMPC-NC Merger
Agreements have been duly authorized, executed and delivered by and to the
appropriate parties thereto, that the transactions contemplated under the terms
and conditions of the QMP Purchase Agreements have been consummated prior to or
contemporaneously with the execution of this Amendment;
(c) Lender shall have received, in form and substance satisfactory
to Lender, all releases, terminations and such other documents as Lender may
request to evidence and
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<PAGE>
effectuate the termination by BBT of its financing arrangements with ORC, as
assumed by ORC pursuant to the QMP Purchase Agreements, and the termination and
release by BBT of any interest in and to any assets and properties of QMP
constituting any of the QMP Purchased Assets, and of any interest in the assets
and properties of ORC, duly authorized, executed and delivered by BBT,
including, but not limited to, (i) UCC-3 Termination Statements for all UCC
Financing Statements previously filed by it, as secured party, and QMP, as
debtor, and (ii) satisfactions and discharges of any mortgages, deeds or trusts
or deeds to secured debt by QMP in favor of it covering any of the Real Property
located in Chatham County, North Carolina, in form acceptable for recording in
the appropriate governmental office located in Chatham County, North Carolina;
(d) Lender shall have received evidence, in form and substance
satisfactory to Lender, that the OMPC-NC Merger will be consummated by the close
of business on the date hereof.
(e) Lender shall have received, in form and substance satisfactory
to Lender, the Second Amended and Restated ORC Term Note, duly authorized,
executed and delivered by ORC;
(f) Lender shall have received, in form and substance satisfactory
to Lender, each duly authorized, executed and delivered (i) a Deed of Trust and
Security Agreement by ORC in favor of Kenneth M. Greene, as trustee, for the
benefit of Lender with respect to the Real Property and related assets of ORC
acquired from QMP located in Chatham County, North Carolina, (ii) a Mortgage
Modification Agreement with respect to the Mortgage and Security Agreement,
dated February 2, 1996, by ORC in favor of Lender for filing in Tippecanoe
County, Indiana, and (iii) a Mortgage Modification Agreement with respect to the
Amended and Restated Mortgage and Security Agreement, dated February 2, 1996, by
ORC in favor of Lender for filing in Madison County, New York and Oswego County,
New York;
(g) Lender shall have received an environmental Phase I and Phase
II site report with respect to ORC's Real Property to be acquired from QMP and
located in Chatham County, North Carolina, conducted by an independent
environmental engineering firm acceptable to Lender, and in form, scope and
methodology satisfactory to Lender, confirming (i) that the past and present
operation, use and condition of such Real Property has been in compliance with
all material applicable Environmental Laws and (ii) the absence of any material
environmental problems;
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<PAGE>
(h) Lender shall have received, in form and substance satisfactory
to Lender, a valid and effective title insurance policy and/or updating
endorsements issued by a company and agent acceptable to Lender (i) insuring the
priority, amount and sufficiency of the Mortgages, (ii) insuring against matters
that would be disclosed by surveys and (iii) containing any legally available
endorsements, assurances or affirmative coverage requested by Lender for
protection of its interests;
(i) Lender shall have received, in form and substance,
satisfactory to Lender, originals of the following, each duly authorized,
executed and delivered:
(i) a Supplemental Limited Guarantee by Charles Bradley
with respect to the Obligations of ORC;
(ii) the Reunion Limited Guarantee;
(iii) the Reunion Indemnity Agreement; and
(iv) the Reunion/ORC Letter; and
(v) a Subordinated Promissory Note, dated of even date
herewith, by ORC payable to Reunion in the original principal amount of
$2,000,000 evidencing the indebtedness consisting of the Reunion November 1996
Subordinated Loan.
(j) Lender shall have received, in form and substance satisfactory
to Lender, (i) a letter agreement from Reunion in favor of Lender acknowledging
that each of the Reunion November 1996 Subordinated Loan and the Reunion
February 1997 Subordinated Loan (when and if made) shall be subordinated in
right of payment to the right of Lender to receive the prior indefeasible
payment in full of all of the Obligations pursuant to the Subordination
Agreement, dated February 2, 1996, between Lender and Reunion, as acknowledged
by Borrowers, duly authorized, executed and delivered by Reunion and Borrowers
and (ii) a letter agreement from Charles Bradley in favor of Lender
acknowledging that the indebtedness consisting of the Supplemental Credit
Support Fee Agreement, dated of even date herewith, between ORC and Charles
Bradley shall be subordinated in right of payment to the right of Lender to
receive the prior indefensible payment in full of all of the Obligations
pursuant to the Subordination Agreement, dated February 2, 1996, between Lender
and Charles Bradley, as acknowledged by ORC, duly authorized, executed and
delivered by Charles Bradley and ORC;
(k) Lender shall have received, in form and substance satisfactory
to Lender, (i) a favorable opinion of counsel for ORC addressed to Lender with
respect to the transactions contemplated by this Amendment, the QMP Purchase
Agreements and the OMPC-NC Merger Agreements, (ii) a favorable
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<PAGE>
opinion of special North Carolina counsel for ORC addressed to Lender with
respect to the transactions contemplated by this Amendment, the QMP Purchase
Agreements and the OMPC-NC Merger Agreements, and (iii) a favorable opinion of
counsel for QMP and Owen addressed to ORC, upon which Lender is expressly
permitted to rely, with respect to the transactions contemplated by the QMP
Purchase Agreements;
(l) Lender shall have received, in form and substance satisfactory
to Lender, (i) a Collateral Assignment of Acquisition Agreements by ORC in favor
of Lender, duly authorized, executed and delivered by ORC providing for the
assignment of all of ORC's rights and remedies and claims for damages or other
relief under the QMP Purchase Agreements and granting Lender such other rights
with respect thereto, as Lender may require, and (ii) the agreement of QMP, Owen
and the Escrow Agent (as defined in the Purchase Agreements) consenting to the
Collateral Assignment of Acquisition Agreements by ORC to Lender duly
authorized, executed and delivered by QMP, Owen and the Escrow Agent;
(m) Lender shall have received, in form and substance satisfactory
to Lender, evidence that Lender has valid, perfected and first priority security
interests in and liens upon the QMP Purchased Assets;
(n) Lender shall have received, in form and substance satisfactory
to Lender, updates or amendments to the insurance certificates previously issued
by the insurance agent and/or insurance company in favor of Lender certifying to
Lender that the QMP Purchased Assets, including the Real Property located in
Chatham County, North Carolina, are covered by ORC's existing insurance policies
and loss payable and additional insured endorsements in favor of Lender;
(o) Lender shall have received, in form and substance satisfactory
to Lender, UCC-3 Termination Statement by Sunbeam with respect to UCC-1
Financing Statements previously filed against QMP and new UCC-1 Financing
Statements between ORC, as debtor, and Sunbeam, as secured party, filed with the
North Carolina Secretary of State and the Recorder of Deeds of Chatham County,
North Carolina;
(p) Lender shall have received evidence that ORC has qualified to
do business as a foreign corporation in the State of North Carolina;
(q) Lender shall have received evidence that QMP has filed an
amendment to its Certificate of Incorporation changing its name to a name
bearing no resemblance to Quality Molded Products, Inc.;
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<PAGE>
(r) Lender shall have received, in form and substance satisfactory
to Lender, all consents, waivers, acknowledgments and other agreements from
third persons which Lender may deem necessary or desirable in order to permit,
protect and perfect its security interests and liens upon the Collateral or to
affect the provisions or purposes of this Amendment and the other Financing
Agreements;
(s) no material adverse change shall have occurred in the QMP
Purchased Assets or the business of QMP conducted with the QMP Purchased Assets
by QMP since the date of Lender's latest field examination of the QMP Purchased
Assets.
(t) all requisite corporate action and proceedings in connection
with this Amendment and the documents and instruments to be delivered hereunder
shall be in form and substance satisfactory to Lender, and Lender shall have
received all information and copies of all documents, including, without
limitation, records of requisite corporate action and proceedings which Lender
may have reasonably requested in connection therewith, such documents where
requested by Lender or its counsel to be certified by appropriate corporate
officers or governmental authorities;
(u) no Event of Default shall exist or have occurred and no event
or condition shall have occurred or exist which with notice or passage of time
or both would constitute an Event of Default;
(v) Lender shall have received, in form and substance satisfactory
to Lender, an agreement from Melea Limited and Gain Technologies providing for,
among other things, the rights of ORC and Lender with respect to intellectual
property licensed to ORC by Gain Technologies and/or Melea Limited and
Collateral consisting of or affected by such rights; and
(w) Lender shall have received, in form and substance satisfactory
to Lender, evidence of the payment by ORC of the QMP Purchase Price (subject to
adjustment as provided in the QMP Purchase Agreements) in consideration of the
purchase by ORC of the QMP Purchase Assets pursuant to the QMP Purchase
Agreements and the payment by ORC of an amount not to exceed $240,000 in payment
of the broker's fee payable to First Commercial Group upon closing of the
acquisition contemplated by the QMP Purchase Agreements, in each case as in
effect on the date hereof.
16. Indemnification. In addition to the indemnification by Borrowers
pursuant to Section 12.15 of the Loan Agreement, and, in addition to the rights
of Lender under the Reunion Indemnity Agreement and under the QMP Purchase
Agreements assigned as Collateral and without limiting Borrowers
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<PAGE>
other Obligations in any manner, Borrowers hereby agree to indemnify and hold
Lender, and each of its present and future directors, officers, shareholders,
employees, agents, and their respective heirs, legal representatives, successors
and assigns, harmless from and against any and all losses, claims, damages,
costs or expenses, imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or
threatened in connection with or arising out of any actual or claimed failure by
ORC or QMP to comply with the provisions of Article 6 of the Uniform Commercial
Code of the State of North Carolina applicable to or claimed applicable to the
consummation of the transaction under the QMP Purchase Agreements.
17. Effect of this Amendment. This Amendment and the instruments and
agreements delivered pursuant hereto constitute the entire agreement of the
parties with respect to the subject matter hereof and thereof, and supersede all
prior oral or written communications, memoranda, proposals, negotiations,
discussions, term sheets and commitments with respect to the subject matter
hereof and thereof. Except as expressly amended pursuant hereto, and except for
the consents expressly set forth herein, no other changes or modifications to
the Financing Agreements or consents under any provisions thereof are intended
or implied, and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Amendment and the other Financing Agreements, the terms of this Amendment shall
control.
18. Further Assurances. Borrowers and ORC, as the surviving
corporation of the OMPC-NC Merger, shall execute and deliver such additional
documents and take such additional action as may be reasonably requested by
Lender to effectuate the provisions and purposes of this Amendment.
19. Governing Law. The rights and obligations hereunder of each of
the parties hereto shall be governed by and interpreted and determined in
accordance with the internal laws of the State of New York (without giving
effect to principles of conflicts of laws).
20. Binding Effect. This Amendment shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors and
assigns.
21. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto.
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<PAGE>
Please sign in the space provided below and return a counterpart of this
Amendment, whereupon this Amendment, as so agreed to and accepted, shall become
a binding agreement between Borrowers and Lender.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
[NAME APPEARS HERE]
By: ___________________________
Asst. Vice President
Title: ________________________
AGREED TO AND ACCEPTED:
ONEIDA ROSTONE CORP.
[NAME APPEARS HERE]
By: _________________________
Vice President
Title: ______________________
ONEIDA MOLDED PLASTICS, CORP.
OF NORTH CAROLINA
[NAME APPEARS HERE]
By: _________________________
Vice President
Title: ______________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
CONSENTED TO AND ACKNOWLEDGED:
/s/ Charles E. Bradley, Sr.,
______________________________
CHARLES E. BRADLEY, SR.,
limited personal guarantor
REUNION INDUSTRIES, INC.,
limited corporate guarantor
By: /s/ Richard L. Evans
_________________________
RICHARD L. EVANS
Title: Executive Vice President
________________________
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<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
Reunion Industries, Inc. on Form S-3 (File No. 33-77566) and on Form S-8 (File
No. 33-77232) of our report dated February 6, 1996 on our audit of the financial
statements of Quality Molded Products, Inc. for the years ended December 31,
1995 and 1994, which report is included in this Form 8-K of Reunion Industries,
Inc. dated December 3, 1996.
Dixon, Odom & Co., L.L.P.
Greensboro, North Carolina
December 3, 1996
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
Reunion Industries, Inc. on Form S-3 (File No. 33-77566) and on Form S-8 (File
No. 33-77232) of our report dated August 15, 1996 on our audit of the
consolidated financial statements of Data Packaging, Ltd. for the years ended
April 28, 1996 and April 30, 1995, which report is included in this Form 8-K of
Reunion Industries, Inc. dated December 3, 1996.
DELOITTE & TOUCHE
Hamilton, Bermuda
December 3, 1996
<PAGE>
EXHIBIT 99.1
REUNION INDUSTRIES, INC.
FOR INFORMATION CONTACT: FOR IMMEDIATE RELEASE
Richard L. Evans
Chief Financial Officer
203 324-8858
Stamford, Connecticut, November 19, 1996 - Reunion Industries, Inc.
(NASDAQ-RUNI; Pacific-RUN) announced today that its subsidiary, Oneida Rostone
Corp. ("ORC"), headquartered in Oneida, New York, has acquired substantially all
of the assets and business of Quality Molded Products, Inc. ("QMP") for a cash
payment of approximately $3.0 million and the assumption of approximately $5.8
million of debt and other liabilities.
QMP, located in Siler City, North Carolina, is a custom injection molder serving
customers in the housewares, office equipment, consumer products, transportation
and construction industries in the southeastern United States. QMP's revenues
and operating profit were $16.5 million and $0.7 million, respectively, for the
year ended December 31, 1995. For the nine months ended September 30, 1996, QMP
had an operating loss of $0.1 million on revenues of $9.4 million.
In addition, Reunion announced that ORC has completed the acquisition of an
additional 68% interest in Data Packaging Limited ("DPL") for approximately $2.8
million, including a cash payment of $1.05 million and an unsecured 10% three
year note for the remainder. As previously announced, ORC acquired a 27.5%
interest in DPL in October 1996 for a cash payment of $0.7 million.
DPL, located in Mullingar, Ireland, is a custom injection molder serving
customers in the computer and business equipment industries. DPL's revenues and
operating profit were $14.7 million and $1.1 million, respectively, for its
fiscal year ended April 30, 1996. For the nine months ended September 30, 1996,
DPL had an operating profit of $0.4 million on revenues of $9.5 million.
"The QMP acquisition increases ORC's manufacturing capacity and customer base in
the growing southeastern region of the U.S." commented Reunion officials. "The
completion of the DPL acquisition adds a profitable operation in Europe. These
acquisitions further Reunion's strategy of increasing its customer base and
expanding its product offerings and service capabilities in the plastic products
industry through acquisitions."
Reunion Industries, Inc. is a Stamford, Connecticut based corporation primarily
engaged in manufacturing high volume precision plastic products and providing
engineered plastic services. The Company is also engaged in real estate
development and wine grape agricultural operations in Napa County, California.
###
