UNITED STATES
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
March 16, 1999
(Date of earliest event reported)
HUFFY CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 1-5325 31-0326270
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification Number)
of incorporation)
225 Byers Road
Miamisburg, Ohio
(Address of principal executive offices)
45342-3657
(Zip Code)
(937) 866-6251
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Disposition of Assets
On March 16, 1999, Huffy Corporation closed the
sale of its True Temper Hardware business to TTHA
Corp., a subsidiary of U.S. Industries, Inc., pursuant
to a previously-announced Asset Purchase Agreement
dated February 11, 1999. The transaction was
structured as a sale of substantially all of the assets
of Huffy Corporation's subsidiary, True Temper Hardware
Company, and included the sale of 100% of the stock of
Huffy Corporation's Irish subsidiary, True Temper
Limited. The purchase price was $100,000,000 cash and
is subject to certain post-closing adjustments based on
closing date financial statements to be prepared by the
parties. The purchase price was the result of arms'
length negotiations between the parties. Neither Huffy
Corporation nor any of its subsidiaries or affiliates
has any material relationship or affiliation with U. S.
Industries, Inc., TTHA Corp., or any of their
subsidiaries or affiliates.
Item 7. Financial Statements and Exhibits
(a) Not applicable.
(b) Financial Information
The restated consolidated balance sheet and
consolidated statement of earnings for the fiscal year
ended December 31, 1998 giving effect to the sale of
substantially all of the assets and certain liabilities
of True Temper Hardware Company, a wholly-owned
subsidiary of Huffy Corporation, as if the transaction
were consummated on January 1, 1998, are as follows:<PAGE>
HUFFY CORPORATION
RESTATED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
(Dollar Amounts in Thousands, Except Per Share Data)
Year Ended
December 31,
1998 as
Restated
------------
Net sales $ 584,201
Cost of sales 484,269
------------
Gross profit 99,932
Selling, general and administrative
expenses 76,884
Plant closure and manufacturing
reconfiguration 21,320
----------
Operating income 1,728
Other expense (income)
Interest expense 6,647
Interest income (123)
Other (390)
----------
Loss before income taxes (4,406)
Income tax benefit (1,759)
----------
Loss from continuing operations (2,647)
Discontinued operations:
Earnings from discontinued
operations, net of income
tax expense of $1,317 1,982
-----------
Net loss $ (665)
-----------
-----------
Earnings (Loss) Per Common Share:
Basic:
Weighted average number of
common shares 12,122,278
EPS from continuing operations $ (0.21)
EPS from discontinued operations 0.16
------------
Net loss per common share $ (0.05)
------------
Diluted:
Weighted average number of
common shares 12,279,833
EPS from continuing operations $ (0.21)
EPS from discontinued operations 0.16
Net loss per common share $ (0.05)
<PAGE>
HUFFY CORPORATION
RESTATED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Dollar Amounts in Thousands)
December 31,
1998 as
ASSETS Restated
- ------ -----------
Current assets:
Cash and Cash equivalents $ 17,834
Accounts and notes receivable, net 71,150
Inventories 46,442
Prepaid expenses and federal
income taxes 20,425
Net assets of discontinued operations 70,338
--------
Total current assets 226,189
--------
Property, plant and equipment, at cost 177,992
Less: accumulated depreciation and
amortization 114,260
--------
Net property, plant and equipment 63,732
Excess of cost over net assets
acquired, net 31,985
Deferred federal income taxes 3,565
Other assets 4,388
-------
$ 329,859
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Notes payable $ 99,240
Current installments of
long-term obligations 6,411
Accounts payable 33,604
Accrued expenses and other
current liabilities 36,641
----------
Total current liabilities 175,896
Long-term obligations, less
current installments 29,784
Other long-term liabilities 31,028
----------
Total liabilities 236,708
----------
----------
Shareholders' equity
Preferred stock ---
Common stock 16,633
Additional paid-in capital 65,892
Retained earnings 78,967
Less: cost of treasury shares 68,341
---------
Total shareholders' equity 93,151
---------
$ 329,859
---------
---------
<PAGE>
NOTES TO RESTATED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts in Thousands)
Note 1: In March 1999, Huffy Corporation reached an
agreement with U.S. Industries, Inc. to sell the assets
of its Harrisburg, Pennsylvania based lawn and garden
tools and wheel barrows business, True Temper Hardware
Company for $100 million. The results for True Temper
Hardware Company have been classified as discontinued
operations in the Consolidated Statement of Earnings.
The assets and liabilities of discontinued operations
have been classified in the Consolidated Balance Sheet
as "Net assets of discontinued operations."
Summarized balance sheet data for
discontinued operations is as follows:
(Dollar Amounts in Thousands) December 31,
1998 as Restated
----------------
Current assets $ 61,313
Property, plant & equipment, net 20,639
Other assets 2,271
----------------
Total assets 84,223
Current liabilities 13,885
----------------
Net assets $ 70,338
----------------
----------------
Item 7: FINANCIAL STATEMENTS AND EXHIBITS
(c): Exhibits
The Exhibits, as shown in the "Index of
Exhibits" attached hereto, are filed as a part of this
Report.
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 thereunto
duly authorized.
HUFFY CORPORATION
Registrant
Date: March 30, 1999 By:/s/ Timothy G. Howard
---------------------
Timothy G. Howard
Vice President and
Corporate Controller
(Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit 2 Asset Purchase Agreement, dated March 16,
1999, by and among True Temper Hardware Company, Huffy
Corporation, and U.S. Industries, Inc. (the
"Agreement"). Pursuant to Section 229.601(b)(2) of
Regulation S-K of the Securities Act of 1933, the
Registrant has omitted the exhibits and schedules to
the Agreement. A description of the exhibits and
schedules is included at the end of the Agreement. The
Registrant hereby agrees to furnish supplementary a
copy of any omitted exhibit or schedule to the
Commission upon request.
Exhibit 27 Financial Data Schedule.
<PAGE>
Exhibit 2 to
Form 8-K
_______________________________________________________
_______________________________________________________
ASSET PURCHASE AGREEMENT
BY AND AMONG
TRUE TEMPER HARDWARE COMPANY
HUFCO COMPANY,
HUFFY CORPORATION
AND
TTHA CORP.
DATED FEBRUARY 11, 1999
_______________________________________________________
_______________________________________________________<PAGE>
ASSET PURCHASE AGREEMENT
Table of Contents
Page #
Terms of Sale and Payment 1
Sale of Assets 1
Sale of TTL Stock 4
Excluded Assets 4
Liabilities 4
Employer Liabilities 5
Passage of Title to TTL Stock 5
Seller's Liabilities 5
Purchaser's Liabilities 5
Assumed Contracts, Purchase Orders,
Leases, etc. 5
Purchase Price 6
Closing Date Purchase Price Adjustment 6
Post Closing Purchase Price Adjustment 7
Receivables Adjustment 8
Allocation of Purchase Price 9
Representations , Warranties and Certain
Agreements of Seller,
Hufco And Huffy 10
Organization 10
Authority and Enforceability 11
Financial Statements 11
Pending Claims 12
Legal Compliance 12
Title to Assets 12
Condition of Assets 13
Leases 13
Inventory 13
Other Property 13
Customers 13
No Breach or Violation 14
Interest in Customers,
Suppliers and Competitors 14
Corporate Documents 14
Year 2000 Compliance 15
Zoning 15
OSHA and Similar Statutes 16
Intellectual Property 16
Environmental Matters 16
Leases and Contracts 18
Employees and Independent Contractors 20
Labor Matters 20
WARN Act 21
Employee Benefit Plans 21
Broker's Fee 24
Receivables 24
Insurance 24
Governmental Licenses, Permits and
Related Approvals 24
Absence of Certain Changes or Events 24
Product Liability Claims; Product
Warranties 25
Tax Matters 25
Real Property 26
Assets of TTL 30
Entire Business 30
Full Disclosure; Assumptions 30
Purchaser's Representations and Warranties 31
Organization 31
Authority 31
Enforceability 31
Broker's Fee 31
Covenants and Agreements 31
Bulk Sales Compliance 31
Preservation of Business and Assets 31
Conduct of Business 33
Access to Books and Records 36
Confidentiality 37
Hart-Scott-Rodino and Foreign Filings 37
Expenses 38
Shareholder Communication 38
Additional Agreements 38
Customer Service 39
Closing Conditions 39
Notification 39
No Shopping 39
Affiliated Transactions 39
Assignment of Confidentiality Agreements 40
Insurance Matters 40
Employee Matters 40
Certain Employee Non-Competes 40
Grant of License 40
Union Agreements 41
Severance 41
Satisfaction of TTL Funded Debt 41
Assignment of Camp Hill Lease 42
Lantz Snow Saucers and Snow Boards 42
The Closing 42
Seller's Conditions to Close 42
Representations and Warranties True at Closing;
Compliance with Agreement 42
Regulatory Approvals 43
No Action/Proceeding 43
Compliance with Article IX 43
Other Prohibiting Transaction 43
Approvals Concerning True Temper Limited 43
Purchaser's Conditions to Close 44
Representations and Warranties True at Closing;
Compliance with Agreement 44
No Loss, Damage of Destruction 44
No Adverse Material Change 44
Regulatory Approvals 44
No Action/Proceeding 44
Compliance with Article VIII 44
Other Prohibiting Transaction 45
Environmental Due Diligence 45
Lien Search 45
Title and Survey 45
Approvals Concerning True Temper Limited 46
Obligations of Seller at Closing 46
Documents Relating to Title of Assets 47
Possession 47
Opinion of Seller's Counsel 47
Corporate Good Standing and Corporate Resolution 48
Closing Certificate 48
Third Party Consents 48
Additionally Requested Documents; Post Closing
Assistance 48
Obligations of Purchaser at Closing 48
Purchase Price 48
Corporate Good Standing and Certified Board
Resolutions 49
Assumption of Liabilities 49
Assumption of Benefit Plans 49
Closing Certificate 49
Group Health Continuation 49
Indemnification and Survival of Provisions 50
Survival 50
Seller's Indemnification Obligations 50
Purchaser's Indemnification Obligation 53
Procedure for Indemnification 54
Non-Competition and Non-Solicitation Covenant 57
Basic Covenant 57
Enforcement 58
Savings Clause 58
Covenant 58
Termination 58
General 58
No Liabilities in Event of Termination 59
Miscellaneous 59
Headings 59
Entire Agreement, Modification and Waiver 59
Counterparts 59
Rights of Parties 59
Assignment 59
Remedies 60
Effect of Certain Actions 60
Schedules and Exhibits 60
Notices 60
Knowledge of Seller 61
Severability 61
Meanings of Certain Terms 61
Transfer Taxes and Recording Expenses 61
Governing Law; Venue 62
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (hereinafter
referred to as the "Agreement"), dated February 11,
1999, is made and entered into by and among True Temper
Hardware Company, an Ohio corporation (hereafter
referred to herein as "Seller"), Hufco Company, a
Colorado corporation and the sole shareholder of Seller
(hereinafter referred to herein as "Hufco"), Huffy
Corporation, an Ohio corporation and the sole
shareholder of Hufco and ultimate parent of Seller
(hereinafter referred to as "Huffy") and TTHA Corp., a
Delaware corporation (hereinafter referred to as
"Purchaser").
W I T N E S S E T H:
Whereas, Seller, together with its affiliate, True
Temper Limited, a limited corporation organized under
the laws of the Republic of Ireland ("TTL") is engaged
in the business of manufacturing and selling lawn and
garden tools and equipment (such business, as
collectively engaged in by Seller and TTL, hereinafter
"Seller's Business"); and
Whereas, Seller desires to sell to Purchaser, and
Purchaser desires to purchase from Seller,
substantially all of Seller's assets as such exist on
the Closing Date, and Huffy desires to sell and
Purchaser desires to purchase from Huffy all of the
shares of TTL capital stock owned by Huffy, upon the
terms and conditions hereinafter set forth.
Now, Therefore, and in consideration of the mutual
promises and covenants set forth herein, and intending
to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
Terms of Sale and Payment
Section 1.1 (a) Sale of Assets. Seller, upon the
terms and conditions hereinafter set forth, shall sell,
assign, convey, transfer and deliver to Purchaser, and
Purchaser shall purchase and pay for at the Closing on
the Closing Date (as both terms are defined in Article
V hereof), free and clear of all Liens except Permitted
Liens (as such terms are defined in Section 2.6
hereof), all of the assets, rights, properties, claims,
contracts and business of Seller at the Closing Date of
every kind, nature, character and description, tangible
and intangible, real, personal or mixed, wherever
located (the "Seller Assets"), including but not
limited to the following:
(i) Inventory. Seller's entire inventory
consisting of finished products, operating supplies,
raw materials, purchased parts, work-in-progress,
including products or supplies on hand or in transit,
whether located in public or off-site warehouses, the
Owned Real Property (as defined below), the Leased Real
Property (as defined below), or otherwise
("Inventory"). All of the Inventory is listed and
described on Schedule 1.1(a)(i);
(ii) Equipment and Other Tangible Property. All
vehicles, equipment, tooling, machinery, furniture,
supplies, tools, dies, jigs, molds, patterns, drawings
and all other tangible personal property (including all
spare parts therefor) used in or intended for use in
the operation of the Seller's Business and owned by
Seller (collectively, the "Equipment"), and all
warranties and guarantees, if any, express or implied,
existing for the benefit of Seller with respect to the
Equipment. All of the Equipment is listed and
described on Schedule 1.1(a)(ii);
(iii) Records. All records, financial and non-
financial, relating to present and past operating
history of Seller's Business in the possession of
Huffy, Hufco and/or Seller;
(iv) Contracts. All outstanding employment
agreements, customer orders, lists, contracts for
goods, supplies, materials, equipment, tooling,
machinery, prepayments or other items used in the
operation of Seller's Business, to which Seller is a
party or a beneficiary thereof and which have benefit
to Seller's Business after the Closing. All of such
items are listed and described on Schedule 1.1(a)(iv);
(v) Real Property. Subject to the provisions of
Exhibit 1.1(a)(v) with respect to the Harrisburg,
Pennsylvania property described therein, the fee simple
interests in the real property, including all
buildings, structures, fixtures and improvements
located therein owned by Seller, all of which are
described on Schedule 1.1(a)(v) (the "Owned Real
Property"), and the leasehold interests in the real
property leased by Seller in the operation of Seller's
Business, including all buildings, structures, fixtures
and improvements located therein (the "Leased Real
Property"). The Owned Real Property (which for
purposes of this Agreement includes the real property
owned by TTL) and the Leased Real Property are
hereinafter collectively referred to as the "Real
Property". All of the Real Property is listed and
described on Schedule 1.1(a)(v);
(vi) Intangible Assets. All intangible assets of
Huffy and Hufco relating to Seller's Business (which
assets will be contributed to the capital of Seller on
or prior to the Closing Date), and of Seller relating
to its past, current and presently contemplated future
products for its business and all of Seller's right,
title and interest in and to the patents, patent
registrations, patent applications, trademarks,
trademark registrations, trademark applications, trade
names, copyrights, copyright registrations, copyright
applications, franchises, permits, licenses, processes,
formulas, inventions, trade secrets and royalties
(including any rights to sue for breach or past
infringement) relating to Seller's Business, including,
but not limited to, all rights possessed by Seller in
the names "True Temper" and "True Temper Hardware
Company." All of such intangible assets are listed and
described on Schedule 1.1(a)(vi);
(vii) Governmental Permits and Licenses. All
permits, licenses, consents and any other forms of
governmental approval possessed by Seller, to the
extent assignable, as have been or are required or are
appropriate for the operation of Seller's Business as
it is and during the year prior to the date hereof has
been operated. All of such governmental permits and
licenses are listed and described on Schedule
1.1(a)(vii);
(viii) Goodwill. All goodwill related to the
operation of Seller's Business;
(ix) Accounts Receivable. All accounts
receivable of Seller in existence on the Closing Date,
including all notes, bonds and other evidences of such
accounts receivable (collectively, the "Accounts
Receivable");
(x) Cash/Prepaid Expenses. The cash held in the
cash accounts of Seller listed and described on
Schedule 1.1(a)(x), and all prepaid expenses of Seller
in existence as of the Closing Date, which have benefit
to Seller's Business after the Closing. Such Schedule
1.1(a)(x) also includes the cash accounts of TTL;
(xi) MIS and Materials. To the extent
assignable, all management information systems and
software, and customer, subscriber and vendor lists,
catalogs, research material, technical information,
technology, specifications, designs, drawings,
processes, and quality control data;
(xii) Bank Accounts. All bank accounts of Seller
listed on Schedule 1.1(a)(xii), including the bank
accounts receiving payments of all Accounts Receivable;
(xiii) Stock of Subsidiary. All of the
outstanding capital stock of Seller's Affiliate, True
Temper Limited, a limited corporation organized and
existing under the laws of the Republic of Ireland
("TTL"), owned by Seller;
(xiv) Warranties. To the extent assignable by
Seller, all warranties (express or implied) related to
the operation of Seller's Business; and
(xv) Other Assets. All other assets of Seller
used or useful in the operation of Seller's Business,
including but not limited to the assets associated with
the Assumed Plans (as such term is defined in Section
2.24 below).
(b) Sale of TTL Stock. Huffy, upon the terms and
conditions set forth in this Agreement, hereby agrees
to sell, assign, convey, transfer and deliver to
Purchaser, and Purchaser shall purchase and accept, on
the Closing Date, all of Huffy's right, title and
interest in all shares of capital stock of TTL owned by
Huffy (the "Huffy TTL Shares") free of any Liens except
Permitted Liens. The Huffy TTL Shares and the Seller
Assets are collectively referred to herein as the
"Assets".
(c) Excluded Assets. Notwithstanding the
provisions of Section 1.1(a) hereof, Seller is not
selling and Purchaser is not purchasing or assuming
obligations with respect to the following (collectively
the "Excluded Assets"):
(i) any equity interest in Seller;
(ii) any assets listed on Schedule 1.1(c); and
(iii) all accounts receivable due to Seller from
any of its Affiliates other than TTL.
(d) Liabilities. Purchaser shall assume on the
Closing Date on behalf of Seller the following specific
liabilities:
(i) All accounts payable of Seller in existence
on the Closing Date, in each case only to the extent
such liabilities and obligations (1) have been incurred
in the ordinary course of Seller's Business, (2) have
been incurred in a manner and amount consistent with
past practice, and (3) are unpaid and due and owing as
of the opening of business on the Closing Date, except
for accounts payable by Seller to any of its Affiliates
other than TTL;
(ii) All other trade liabilities relating to the
operation of Seller's Business as may be agreed upon
between the parties hereto and which are described
specifically on Schedule 1.1(d)(ii); and
(iii) Those specific liabilities listed and
described on Schedule 1.1(d)(iii).
(e) Employer Liabilities. As further described
in Section 4.17, Purchaser will make an offer of
employment at substantially the same rate of base wage
or salary to those employees of Seller identified on
Schedule 1.1(e) (which Schedule shall be delivered on
or prior to Closing) to become employees of Purchaser
commencing on the Closing Date. Purchaser at such time
shall hire all such employees who accept such offer of
employment. Except for the limitation on Seller's
liability for certain "Permitted Termination Costs"
(pursuant to the terms of Section 4.21 and as defined
therein) Seller shall remain liable for all employee
wages, salaries, vacation, sick, holiday, disability or
severance pay, retirement and welfare benefits and all
other employee benefits and costs (including all
liabilities under the Benefit Plans (as defined below))
for: (i) each employee of Seller or TTL who does not
accept employment with Purchaser, (ii) each other
employee of Seller or TTL, to the extent that such
liability is attributable to service with Seller or
TTL; provided, however, that Purchaser will assume
certain Benefit Plans or portions of certain Benefit
Plans (the "Assumed Plans") as specifically identified
in Schedule 2.24(f).
(f) Passage of Title to TTL Stock. The time and
location of the filing of the necessary documents
required under Irish law and regulations to record the
transfer of the TTL capital stock sold hereunder shall
constitute the time and place of title transfer of the
TTL capital stock. The parties shall cause such filing
to occur on the Closing Date.
Section 1.2 (a) Seller's Liabilities. Except as
set forth specifically in this Agreement, Purchaser is
not (i) by reason of its purchase of the Assets, (ii)
by reason of any other act or failure to act on its
part in connection with the transactions contemplated
by this Agreement, or (iii) for any other reason
assuming any liabilities or obligations of Seller
whatsoever and shall not become liable in any manner
for any liabilities or obligations of Seller. Without
limiting the generality of the foregoing, and without
regard to whether any law, governmental authority, or
other third party may impose any liability of Seller,
in whole or in part, on Purchaser, Purchaser does not
assume, and Seller shall continue to be liable for, all
liabilities and obligations, fixed or contingent, known
or unknown, (including, without limitation, product
liability claims arising from any injury to person or
property (x) occurring or alleged to have occurred
prior to the date ten months after the Closing Date
and/or (y) occurring or alleged to have occurred at any
time if such injury is related to Snow Boards and
Saucers, as such term is defined in Section 4.24 below,
manufactured or sold by Seller) not otherwise assumed
by Purchaser under this Agreement.
(b) Purchaser's Liabilities. Other than the
indemnity obligations of Huffy, Hufco and Seller
contained in Article X of this Agreement or as may
arise from the exercise by Purchaser of rights or
remedies pursuant to this Agreement, or which may be
available to Purchaser in law or in equity, Seller is
not by reason of its sale of the Assets assuming any
liabilities of Purchaser whatsoever and shall not
become liable in any manner for any liabilities of
Purchaser except as specifically contemplated in this
Agreement. Without limiting the generality of the
foregoing with respect to product liabilities, Seller
does not assume, and Purchaser shall be liable for, any
product liability claims with respect to which the
alleged injury to person or property giving rise to a
particular product liability claim took place on or
after the date ten months after the Closing Date,
except for liabilities described in Section 1.2(a)(y)
above which Seller specifically retains.
(c) Assumed Contracts, Purchase Orders, Leases,
etc. On the Closing Date, Purchaser shall assume and
agree to pay or perform, as the case may be, all
obligations accruing after the Closing Date with
respect to those contracts, purchase orders, leases of
real and personal property and other obligations which
are set forth on Schedule 1.2(c) hereto only to the
extent that such contracts, purchase orders, leases and
other obligations are properly assigned to Purchaser
and Purchaser receives the benefits under such
contracts, purchase orders, leases and obligations
(collectively with the other liabilities assumed by
Purchaser pursuant to Sections 1.1(d) and 1.1(e), and
liabilities assumed pursuant to the acquisition of the
outstanding capital stock of TTL, the "Assumed
Liabilities"). Notwithstanding any provision herein or
elsewhere to the contrary, Purchaser is not assuming,
nor shall it be deemed to have assumed, any liability
or obligation of Seller, Hufco or Huffy of any kind or
nature, except for the Assumed Liabilities.
Notwithstanding the foregoing, all executory contracts
with third parties set forth on Schedule 1.2(c) shall
be assigned by Seller and assumed by Purchaser, but
only with respect to the executory portions thereof
such that Purchaser shall be obligated to render any
performance required by such contracts arising after
the Closing Date, but any obligations or liabilities
accruing under such contracts arising prior to the
Closing Date shall remain solely the responsibility of
Seller.
Section 1.3 Purchase Price. As full payment for
the Assets, and Huffy's, Hufco's and Seller's non-
competition covenants as set forth in Article XI
hereof, Purchaser shall (i) pay a purchase price of
$100,000,000 (the "Initial Purchase Price") subject to
adjustment as provided in Sections 1.4 and 1.5 hereof
(the Initial Purchase Price, as so adjusted, the
"Purchase Price") and (ii) assume the Assumed
Liabilities. The Purchase Price shall be payable to
Seller as follows:
(a) At the Closing, on the Closing Date,
Purchaser shall pay to Seller an amount equal to the
Initial Purchase Price, as adjusted pursuant to Section
1.4 of this Agreement, less the $2,500,000 referred to
in Section (b) of this Section 1.3, in immediately
available funds to an account designated in writing by
Seller to Purchaser at least two business days prior to
the Closing Date.
(b) At the Closing, on the Closing Date,
Purchaser shall pay from the Purchase Price, in
immediately available funds, an amount equal to
$2,500,000 (the "Escrowed Funds") to the escrow agent
(the "Escrow Agent") named in the Escrow Agreement
between Purchaser and Seller, substantially in the form
attached hereto as Exhibit A (the "Escrow Agreement").
The Escrowed Funds shall be held by the Escrow Agent
pursuant to the terms of the Escrow Agreement which
will provide, inter alia, that the Escrowed Funds shall
be available to Purchaser in order to satisfy the
indemnification obligations of Huffy, Hufco or Seller
to Purchaser pursuant to the provisions of Article X
hereof.
(c) The balance of the Purchase Price shall be
payable to Seller as set forth in Section 1.5 hereof.
Section 1.4 Closing Date Purchase Price
Adjustment. At least two business days prior to the
Closing Date, Huffy and Seller shall provide Purchaser
with a consolidated balance sheet of Seller and TTL
("Seller's Preliminary Consolidated Balance Sheet")
together with a schedule of Seller's Preliminary Net
Assets (as defined in this Section 1.4) as of the close
of business on the last day of Seller's most recent
fiscal month for which financial statements are
available (provided that such month ends on a date not
more than 45 days prior to the Closing Date), which
schedule shall be prepared in accordance with generally
accepted accounting principles applied on a basis
consistent with those used in the preparation of prior
interim financial statements of Seller's Business,
except as otherwise set forth on Exhibit 1.4 hereto
(the "Preliminary Closing Date Net Assets Schedule").
To the extent the Preliminary Net Assets shown on the
Preliminary Closing Date Net Assets Schedule exceeds
$76,859,000, such excess amount shall be paid to the
Seller by Purchaser at the Closing as additional
Purchase Price. To the extent such Preliminary Net
Assets shown on the Preliminary Closing Date Net Assets
Schedule is less than $76,859,000, such deficiency
shall be deducted from the Purchase Price to be paid to
the Seller by Purchaser at the Closing. For the
purposes of this Section 1.4, "Preliminary Net Assets"
shall mean Seller's and TTL's consolidated total assets
minus their consolidated total current liabilities as
reflected on Seller's Preliminary Consolidated Balance
Sheet.
Section 1.5 Post Closing Purchase Price
Adjustment.
(a) Within 90 days following the Closing Date,
Purchaser shall prepare and deliver to Seller a
consolidated balance sheet of Seller and TTL as of the
close of business on the day before the Closing Date
(the "Closing Date Consolidated Balance Sheet")
together with a schedule of Seller's Closing Date Net
Assets as of the close of business on the day before
the Closing Date (the "Closing Date Net Assets
Schedule") which Closing Date Net Asset Schedule has
been audited (at Purchaser's expense) by Purchaser's
independent auditor, Ernst & Young LLP (whose
procedures shall include observing the taking of a
physical inventory) in accordance with Exhibit 1.4
hereto and generally accepted accounting principles
applied on a basis consistent with those used in the
preparation of prior interim financial statements of
Seller's Business and Exhibit 1.4 hereto. For purposes
of this Section 1.5, "Seller's Closing Date Net Assets"
shall mean Seller's and TTL's total consolidated assets
minus their total consolidated current liabilities as
reflected on Seller's Closing Date Consolidated Balance
Sheet.
(b) Within 30 days after Seller's receipt of the
Closing Date Net Assets Schedule, Seller shall deliver
to Purchaser a written report ("Seller's Report")
setting forth, in reasonable detail and with reasonable
specificity as to each item, any amounts included in
Seller's Closing Date Net Assets which Seller disputes
and Seller's proposed alternative thereto.
(c) Purchaser and Seller shall permit the other
and the other's representatives, during normal business
hours, at the other's expense, to have full and
complete access to, and to examine, all work papers of
or relating to the business for the periods prior to
the Closing which are in its possession, and which work
papers and schedules are necessary or appropriate to
prepare and/or review the Closing Date Net Assets
Schedule.
(d) If Seller disagrees with the Seller's Closing
Date Net Assets shown on the Closing Date Net Assets
Schedule and has timely delivered Seller's Report, and
such disagreement cannot be resolved by Purchaser and
Seller within 30 days after Purchaser's receipt of
Seller's Report, either party, by written notice to the
other, may elect to have any such disagreement tendered
to and resolved by a firm of independent certified
public accountants of recognized national standing
("Accountant") to make a determination as to the
subject matter of such disagreement, which
determination shall be final and binding on the parties
hereto for the purpose of this Agreement, and Purchaser
and Seller shall each pay one-half the fees and
expenses charged by such Accountant. If Purchaser and
Seller are unable to agree on the Accountant within the
30 day period, then the Accountant shall be
PricewaterhouseCoopers (Pittsburgh, Pa. office), (an
accounting firm which both Purchaser and Seller
represent to be independent). The Accountant shall be
instructed to use every reasonable effort to perform
its function within 30 days following submission of the
matter to it and, in any case, as soon as practicable
after such submission to it. The Accountant shall be
limited to deciding each such disagreement in an amount
which shall be equal to or in between the amounts
proposed by Seller and Purchaser, and no more and no
less.
(e) Once the parties agree upon or otherwise
arrive at the Seller's Closing Date Net Assets as shown
on the Closing Date Net Assets Schedule ("Agreed Net
Assets Amount"), the Agreed Net Assets Amount shall be
compared to the Preliminary Net Assets shown on the
Preliminary Closing Date Net Assets Schedule
("Preliminary Net Assets Amount"). To the extent the
Agreed Net Assets Amount exceeds the Preliminary Net
Assets Amount, such excess amount shall be paid to
Seller by Purchaser as additional Purchase Price within
ten days following such determination. To the extent
the Agreed Net Assets Amount is less than the
Preliminary Net Assets Amount, such deficiency shall be
repaid to Purchaser by Seller within ten days following
such determination as a reduction of the Purchase
Price.
Section 1.6 Receivables Adjustment. (a) Within
five business days after the Closing Date, Purchaser
shall deliver to Seller a true, correct and complete
schedule of all aged Accounts Receivable as of the
close of business on the day before the Closing Date,
which will include the account debtor thereof, the
invoice date thereof and the face amount of each such
Account Receivable. Purchaser shall in good faith use
commercially reasonable efforts following the Closing
Date to collect the Accounts Receivable. Such efforts
shall include without limitation the following through
September 30, 1999: Purchaser shall continue to employ
substantially the same number of employees, of similar
skills and experience, to administer accounts
receivable collections as Seller presently employs to
administer Seller's collection of accounts receivable
and shall cause such employees to continue to
administer the collection of the Accounts Receivable
after the Closing utilizing substantially the same
procedures and exercising substantially the same
standard of care as they presently utilize and exercise
on behalf of Seller.
(b) (i) In the event any particular Account
Receivable or portion thereof remains unpaid for a
period of more than 70 days after its payment due date,
it shall be deemed a "Reverted Receivable". At such
time as the cumulative amount of Reverted Receivables
exceeds the allowance for bad debts contained on the
Closing Date Consolidated Balance Sheet ("Excess
Reverted Receivables"), Seller shall be obligated to
pay Purchaser an amount equal to 95% of the face value
of such Excess Reverted Receivables, such payments to
be made monthly on or before the tenth day of the month
following the month in which an Account Receivable
became an Excess Reverted Receivable; provided,
however, that in the event and at such time the
cumulative, aggregate difference between 95% of the
face value of the Reverted Receivables and 100% thereof
reaches $25,000, then Seller shall thereafter be
obligated to pay Purchaser 100% of the face value for
Excess Reverted Receivables.
(ii) In the event that (A) a customer shall be
entitled to an allowance for customer deductions, an
accrual for cash discounts or sales, a volume rebate
accrual or an accrual for co-op advertising allowance
(each, individually, an "A/R Accrued Liability" and
collectively, the "A/R Accrued Liabilities"), (B) such
A/R Accrued Liability is reflected on the Closing Date
Consolidated Balance Sheet, and (C) such customer makes
such deduction from, or applies such discount, rebate
or allowance to an Accounts Receivable, the provisions
of Section 1.6(b)(i) hereof shall be unaffected;
provided, however, that in the event such deduction,
discount, rebate or allowance is not reflected on the
Closing Date Consolidated Balance Sheet, or is in
excess of any applicable A/R Accrued Liability
reflected therein, the excess over any such applicable
reflected A/R Accrued Liability shall thereafter
constitute a Reverted Receivable (in the amount of such
excess) for purposes of Section 1.6(b)(i).
(c) Upon the payment to Purchaser by Seller as
specified in Section 1.6(b) above, all Reverted
Receivables shall become the property once more of
Seller. However, Purchaser shall continue to
administer the collection of such Reverted Receivables
as Seller's collection agent, and to the extent
Purchaser successfully collects any such Reverted
Receivables, Purchaser shall be obligated to remit to
Seller an amount equal to 95% of the face value of such
collected Reverted Receivables (retaining 5% thereof as
a collection commission), such payments to be made
monthly on or before the tenth day of the month
following the month in which such Reverted Receivables
were collected by Purchaser.
(d) For purposes of this Section 1.6, any amounts
Purchaser receives which are generally attributable to
the Accounts Receivable but are not identified by the
payor as applying to a specific invoice shall be
credited against such payor's open invoices in date
order (i.e., against the oldest open invoices first).
Section 1.7 Allocation of Purchase Price.
(a) Purchaser and Seller agree that Purchaser and
Seller shall allocate the sum of the Purchase Price and
the Assumed Liabilities, including for purposes of this
Section 1.7 any adjustments to the Purchase Price or
Assumed Liabilities, among the Assets and the covenant
not to compete (set forth in Article XI of this
Agreement) as of the Closing Date on Internal Revenue
Service ("IRS") Form 8594, in accordance with Section
1060 of the Internal Revenue Code of 1986, as amended
(the "Code") and the regulations promulgated
thereunder. The allocation described in the preceding
sentence shall be determined on behalf of Purchaser and
Seller by Valuation Resources which shall base such
allocation on the agreed fair market value of the
Assets and the aforesaid covenant not to compete as of
the Closing Date. The allocation described herein
shall be set forth in Schedule 1.7. Purchaser and
Seller shall each bear one-half of the cost of the
valuation performed by Valuation Resources.
Notwithstanding such valuation, for purposes of real
estate conveyances the assessed values on the
applicable public real estate tax records shall be used
in computing any conveyance fees or taxes.
(b) Purchaser and Seller shall timely file with
the appropriate tax authorities copies of the IRS Form
8594 and shall use the allocation set forth therein and
in Schedule 1.7 in the preparation of IRS Form 8594 and
of all Tax Returns (as defined in Section 2.31(c) of
this Agreement) (including any attachments thereto) and
for all other tax purposes. In the event any party
hereto receives notice of an audit in respect of the
allocation of the Purchase Price specified herein, such
party shall notify the other party in writing as to the
date and subject of such audit as promptly as
reasonably practicable.
(c) If any Tax Return filed by Purchaser or
Seller relating to the transactions contemplated hereby
is challenged by the tax authority with which such Tax
Return was filed on the basis of the allocation set
forth in Schedule 1.7, as finally adjusted, the filing
party shall assert in good faith the validity and
correctness of such allocation and such party shall not
agree to any adjustment to the allocation set forth in
Schedule 1.7 or on the IRS Form 8594 without obtaining
the prior written consent of the other party (which
consent shall not be unreasonably withheld). If any
such Tax Return is challenged as herein described, the
party filing such Tax Return shall keep the other party
apprised of its decisions and the current status and
progress of all administrative and judicial
proceedings, if any, that are undertaken at the
election of such party with respect thereto.
(d) Any adjustment to the Purchase Price or the
Assumed Liabilities pursuant to this Agreement shall
result in an appropriate adjustment to the allocation
set forth in Schedule 1.7 and the IRS Form 8594.
(e) If either party (including permitted
successors and assigns thereof) to this Agreement
defaults under this Section 1.7, it shall pay as
damages to the other party, so long as such other party
is not in default under this Section 1.7, an amount
which, after reduction for all taxes which would be
incurred (calculated at the highest marginal rate
applicable in the relevant jurisdiction) as a result of
receiving said amount, is equal to the result (but not
less than zero) of subtracting the amount in (ii) below
from the amount in (i) below:
(i) the total amount of income, franchise,
transfer, sales or gains taxes (calculated at the
highest marginal rate applicable in the relevant
jurisdictions and including interest and penalties)
payable to all jurisdictions imposing such taxes upon
the nondefaulting party with respect to the
transactions contemplated hereby, and
(ii) the total amount of such taxes which would
have been incurred (calculated at the highest marginal
rate applicable in the relevant jurisdictions and
including interest and penalties) and payable to all
jurisdictions imposing such taxes upon the
nondefaulting party with respect to the transactions
contemplated hereby, if such taxing jurisdictions had
accepted the allocations specified in the Schedule 1.7.
ARTICLE II
Representations , Warranties and Certain
Agreements of Seller,
Hufco And Huffy
Seller, Hufco and Huffy, jointly and severally,
hereby make the following representations, and
warranties to and agreements with Purchaser, its
successors and assigns:
Section 2.1 Organization.
(a) Seller, Hufco and Huffy are each a corporation
duly organized, validly existing and in good standing
under the laws of the state of its respective
incorporation, duly authorized to carry on the business
presently conducted by it. Seller is qualified to do
business in the jurisdictions listed on Schedule 2.1(a)
and is not required to be qualified to do business in
any other jurisdiction where the failure to be so
qualified would have a Material Adverse Effect (as such
term is defined in Section 2.29 below).
(b) TTL is a corporation duly organized and
validly existing under the laws of the Republic of
Ireland, and is duly authorized to carry on the
business presently conducted by it. TTL is qualified,
licensed or otherwise authorized to do business in the
jurisdictions listed on Schedule 2.1(b) and is not
required to be so qualified, licensed or otherwise
authorized to do business in any other jurisdiction
where the failure to be so qualified would have a
Material Adverse Effect. All of the issued and
outstanding shares of capital stock of TTL are owned by
Seller and Huffy free and clear of all Liens except
Permitted Liens. There are no outstanding options,
warrants, convertible or exchangeable securities or
other rights to purchase shares of capital stock of
TTL.
Section 2.2 Authority and Enforceability.
Seller, Hufco and Huffy have the full right, power,
legal capacity and authority to sell and transfer the
Assets, free and clear of any statutory, contractual or
other limitation except as otherwise set forth in this
Agreement or any Schedule hereto, and to enter into and
perform their respective obligations under this
Agreement. The execution, delivery and performance by
Seller, Hufco and Huffy of this Agreement and any other
agreements contemplated hereby and the consummation by
them of the transactions contemplated hereby and
thereby have been duly authorized by Hufco as the sole
shareholder of Seller, by Huffy as the sole shareholder
of Hufco and the majority shareholder of TTL and by the
Board of Directors of Seller. No other corporate or
stockholder action is necessary for the authorization,
execution, delivery and performance by Seller, Hufco or
Huffy of this Agreement and any other agreements
between the parties contemplated hereby and the
consummation by Seller, Hufco and Huffy of the
transactions contemplated hereby or thereby. This
Agreement has been duly executed and delivered by
Seller, Hufco and Huffy and constitutes a valid and
legally binding obligation of Seller, Hufco and Huffy,
enforceable against each of them in accordance with the
terms hereof.
Section 2.3 Financial Statements. Except as set
forth on Schedule 2.3, the unaudited consolidated
balance sheets of Seller and TTL, at December 31, 1997
and 1998, and unaudited statements of income for the
two years ended December 31, 1997 and December 31,
1998 (the "Annual Financial Statements"), copies of
which have been previously delivered to Purchaser, and
the internally generated consolidated financial
statements of Seller and TTL delivered following the
date hereof pursuant to Section 4.3(q) hereof (the
"Interim Financial Statements" and together with the
Annual Financial Statements, the "Financial
Statements") are true and correct and have been
prepared from the books and records of Seller and TTL
(as the case may be) in accordance with generally
accepted accounting principles consistently applied
(except as set forth in Exhibit 1.4 hereto), the
balance sheets contained in the Financial Statements
fairly present in all material respects the financial
position of the business as of their respective dates
and set forth in full and reflect all liabilities of
such business as of such dates; the income statements
fairly present in all material respects the results of
the operations of such business for the periods
indicated and covered thereby; the inventory valuations
are based upon pricing the inventories at the lower of
cost or market in accordance with generally accepted
accounting principles consistently applied (except as
set forth in Exhibit 1.4 hereto), with all obsolete or
unusable or not readily saleable inventories having
been either eliminated, properly written down or
reserved against; there are no liabilities against
Seller or TTL required to be reflected or reserved
against in the balance sheets according to generally
accepted accounting principles, consistently applied,
that are not so reflected or reserved. Since December
31, 1998, no liabilities or obligations have been
incurred by Seller or TTL except for liabilities and
obligations (absolute, accrued, contingent or
otherwise) incurred in the ordinary course of business
and consistent with past practice.
Section 2.4 Pending Claims. Except as set forth
in Schedule 2.4:
(a) there is no litigation, suit, action, claim,
arbitration, administrative or legal or other
proceeding, or governmental investigation pending or,
to Seller's knowledge threatened, against Seller or TTL
relating to the Assets (including without limitation,
the assets of TTL) or the Seller's Business or TTL and
there are no unasserted claims possible of assertion
involving Seller's Business or the Assets (including
without limitation, the assets of TTL) of which Seller
has notice or knowledge;
(b) there are no audits by a governmental
authority, claims for unpaid taxes of any kind, or
other similar actions, proceedings or disputes pending
or, to Seller's knowledge, threatened against or
affecting Seller's Business;
(c) there are no unpaid judgments of any kind
against Seller, Hufco, Huffy or TTL relating to their
respective businesses or the Assets (including without
limitation, the assets of TTL);
(d) there are no business entities with which
Seller, Huffy and/or Hufco have had discussions or
negotiations during the past two years regarding a
possible merger or other business combination with or
acquisition of Seller or TTL which, to Seller's,
Huffy's or Hufco's knowledge could result in any
liability to Purchaser;
(e) none of Seller, Hufco, Huffy or TTL is
charged with or, to such corporations' knowledge
threatened, with a charge or violation or, to such
corporations' knowledge, is it under investigation with
respect to any alleged violation of any provision of
any federal, state, local or foreign law or
administrative ruling or regulation relating to any
aspect of its business or the Assets including without
limitation the assets of TTL.
Section 2.5 Legal Compliance. Except as set
forth in Schedule 2.5, since November 7, 1990 in the
case of Seller and since June 7, 1991 in the case of
TTL, each of Seller and TTL has conducted, and is
presently conducting, its business in material
compliance with all applicable U.S., state, local and
foreign laws, statutes, ordinances, rules and
regulations. None of Seller, Hufco, Huffy or TTL is in
violation of any term of any judgment, writ, decree,
injunction or order entered by any court or
governmental authority (domestic or foreign) and
outstanding against any of them with respect to any of
the Assets including without limitation the TTL Assets
(as defined in Section 2.34(a)).
Section 2.6 Title to Assets. Except as set forth
in Schedule 2.6: (i) Seller is the sole and exclusive
owner of, and has good and marketable title to, all of
the Assets, wherever located, free and clear of all
liens, mortgages, pledges, claims, encumbrances or
other charges or any other restriction of any kind or
nature (collectively, "Liens"), except for taxes which
are a Lien but are not yet due and payable and except,
in the case of the Real Property, for easements,
restrictions, covenants and other matters of record
which, singly and in the aggregate, do not and after
the Closing will not have a Property Material Adverse
Effect (as such term is defined in Section 2.32(k) of
this Agreement) or, in the case of all other Assets,
any Liens expressly accepted by Purchaser in writing
(Liens covered by the foregoing exceptions are referred
to as "Permitted Liens" in this Agreement); and (ii) no
other person, firm or corporation has or will have on
the Closing Date any interest whatsoever in any of the
Assets.
Section 2.7 Condition of Assets. Except as set
forth on Schedule 2.7, all Assets, including without
limitation, all Equipment, having a net book value in
excess of $25,000 are in good state of repair, in sound
operating condition, ordinary wear and tear excepted,
and have been given regular maintenance in the ordinary
course of business. Schedule 2.7 also contains an
itemized list of all idled fixed assets (including
without limitation all fixed assets not currently in
use in the ordinary course of Seller's Business) having
a net book value in excess of $25,000.
Section 2.8 Leases. Except as may be set forth
in Schedule 2.8, neither Seller nor TTL is a lessee of
any personal property under any lease agreement
covering property not owned by Seller or TTL (as the
case may be), and in connection with all leases set
forth in such Schedule, no shareholder nor any officer,
director or key employee of Seller or TTL, nor any
spouse, child or relative of any of these persons owns
or has any interest, directly or indirectly, in any of
the personal property leased to Seller or TTL (as the
case may be). All leases listed in Schedule 2.8 are
valid and in full force and effect, and there does not
exist any default or event that with notice or lapse of
time, or both, would constitute a default or event of
acceleration under any of these leases.
Section 2.9 Inventory. The Inventory being
transferred on the Closing Date (including without
limitation, Inventory included in the TTL Assets (as
defined below)) consists of items of a quality and
quantity useable or salable in the ordinary course of
business of Seller or TTL (as the case may be), except
as reserved for in the Financial Statements. The
Inventory (including without limitation, Inventory
included in the TTL Assets) is not subject to any
material write-down or write-off for which appropriate
reserves have not been included in the Financial
Statements. Schedule 1.1(a)(i) of this Agreement sets
forth the location of all Inventory, including without
limitation, Inventory included in the TTL Assets, and
Inventory located in public or off-site warehouses, the
Owned Real Property, the Leased Real Property, or
otherwise. Schedule 1.1(a)(i) to this Agreement
further sets forth, as to all Inventory (including
without limitation, Inventory included in the TTL
Assets) located in public or off-site warehouses, a
reasonably detailed summary description of Seller's or
TTL's other property (as the case may be) arrangements
with each such warehouse.
Section 2.10 Other Property. Schedule 1.1(a)(ii)
to this Agreement is a complete and accurate list of
all other property related to Seller's Business not
otherwise listed, except for office supplies and other
items having an individual book value of less than
$5,000. Except as set forth on Schedule 1.1(a)(ii),
all property described thereon is situated at one of
the locations set forth on Schedule 1.1(a)(v). Except
as stated in Schedules 2.8, 1.1(a)(ii), or 1.1(a)(iv),
no personal property used by Seller or TTL in
connection with Seller's Business is held under any
lease, security agreement, conditional sales contract,
or other title retention or security arrangement, or is
located other than in the possession of Seller or TTL
(as the case may be).
Section 2.11 Customers. Schedule 2.11 to this
Agreement is a correct and current list, in all
material respects, of all material customers and
suppliers of Seller's Business as of a recent date
(which date is specified on such Schedule). None of
Seller, Hufco, Huffy or TTL has received any
communication from any material customer or supplier of
any intention to terminate or materially reduce
purchases from, or supplies to, Seller, TTL or Seller's
Business, or otherwise has any knowledge that any
material customer has any intention of so doing.
Section 2.12 No Breach or Violation. Except as
set forth on Schedule 2.12, the execution, delivery
and performance of this Agreement and any other
agreements contemplated hereby between the parties
hereto by Seller, Hufco or Huffy and the consummation
of the transactions contemplated by this Agreement or
any other agreements contemplated hereby will not (i)
result in or constitute a breach or an event that,
with notice or lapse of time or both, would be a
default, breach or other violation of the articles of
incorporation or code of regulations (or similar
charter documents) of Huffy, Hufco, Seller or TTL; (ii)
violate (with or without the giving of notice or the
lapse of time or both), or require any consent,
approval, filing or notice under, any provision of any
law, rule or regulation, court or administrative order,
writ, judgment or decree applicable to Seller, TTL,
Seller's Business or any of the Assets or the TTL
Assets, or (iii) with or without the giving of notice
or the lapse of time or both (x) violate or conflict
with, or result in the breach, suspension or
termination of any provision of, or constitute a
default under, or result in the acceleration of the
performance of the obligations of Seller or TTL under,
or (y) result in the creation of any Liens upon all or
any portion of the properties, assets (including the
Assets and the TTL Assets) or business of Seller or TTL
pursuant to, the articles of incorporation or code of
regulations (or similar charter documents) of Seller or
TTL, or any indenture, mortgage, deed of trust, lease,
agreement, contract or instrument to which Seller or
TTL is a party or by which Seller, TTL or any of their
respective properties, assets (including the Assets and
the TTL Assets) or business is bound.
Section 2.13 Interest in Customers, Suppliers and
Competitors. Except as set forth on Schedule 2.13,
none of Seller, TTL, or any officer, director or key
employee of Seller or TTL, or any spouse, child or any
Affiliate of any of them, has any direct or indirect
ownership interest in any competitor, supplier or
customer of its business or in any person from whom or
to whom Seller or TTL leases any real or personal
property, or in any other person with whom Seller or
TTL is doing business, except for interests of less
than 2% held in publicly traded companies.
Section 2.14 Corporate Documents. Seller has
furnished to Purchaser for its examination true and
correct copies of the following:
(i) the articles of incorporation and code of
regulations of Seller and the Certificate of
Incorporation and the Memorandum and Articles of
Association of TTL;
(ii) the minute books of Seller and TTL for the
period commencing January 1, 1997, containing all
records required to be set forth of all proceedings,
consents, actions and meetings of shareholders and the
board of directors (including committee meetings) of
Seller and TTL; and
(iii) all current permits, orders and consents
which are in effect with respect to Seller's Business,
and all applications for such permits, order and
consents.
Section 2.15 Year 2000 Compliance.
(a) Schedule 2.15 hereto describes (i) all
projects which Seller has completed prior to the date
hereof (the "Completed Y2K Projects") in order to
ensure that the Computer Products (as defined below)
contain Year 2000 Capabilities (as defined below), and
(ii) Seller's internal projects and budgeted expenses
for 1999 (the "Projected Y2K Plans and Budgets") in
order to ensure that the Computer Products contain Year
2000 Capabilities. The Projected Y2K Plans and Budgets
may reasonably be completed, installed and in operation
prior to December 31, 1999 assuming that Seller
continues to perform in accordance with the Projected
Y2K Plans and Budgets prior to Closing and that
Purchaser completes the Projected Y2K Plans and Budgets
following the Closing, in accordance with the terms
thereof. Except as set forth on Schedule 2.15,
following the completion, installation and operation of
the Projected Y2K Plans and Budgets, all computer
hardware and software or other systems owned, licensed
or used by Seller or TTL (collectively, "Computer
Products") will, at no additional cost to Purchaser (i)
be designed for use prior to, during and after the
calendar year 2000 A.D., (ii) operate during each such
time period without error relating to date data and
date-dependent data, specifically including any error
relating to, or the product of, date data which
represents or references different centuries or more
than one century, (iii) not abnormally end or provide
invalid or incorrect results as a result of date data,
specifically including date data which represents or
references different centuries or more than one
century, (iv) properly perform date data century
recognition calculations which accommodate same century
and multi century formulas and date values and date
data interface values that reflect the century; and (v)
will include Year 2000 Capabilities.
(b) For the purposes of this Agreement, "Year
2000 Capabilities" means that each Computer Product
which is material to the operations of Seller's
Business: (i) manages and manipulates data involving
dates, including single century formulas and multi-
century formulas, and will not cause an abnormality
ending scenario within the application or generate
incorrect values or invalid results involving such
dates; (ii) provides that all date-related user
interface functionalities and data fields include the
indication of century; and (iii) provides that all
date-related data interface functionalities include the
indication of century.
(c) Schedule 2.15 contains the test results for
the "Year 2000 Capabilities" testing completed for
Seller's Computer Products.
(d) Seller makes no representation or warranty as
to its vendors' or retailers' Year 2000 Capabilities
and except as set forth on Schedule 2.15, Seller has
received no written notice from any such vendors or
retailers indicating they will not be Year 2000
compliant.
Section 2.16 Zoning. Except as disclosed on
Schedule 2.16, Seller's Business, as conducted on the
Closing Date, and all current uses of the Owned Real
Property and Leased Real Property do not conflict
and/or are presently in compliance with applicable
foreign, federal, state or local laws, ordinances,
regulations, orders or zoning laws and therefore do not
interfere with or prevent, in any manner which would
have a Property Material Adverse Effect on its
continued use for the purposes for which it is being
used; provided, however, that no representation is made
with respect to the effect of destruction of, or change
in the nature or discontinuance of the use of, any part
of the Real Property the current use of which is a
permitted nonconforming use under any applicable zoning
ordinance.
Section 2.17 OSHA and Similar Statutes. Other
than as described on Schedule 2.17, Seller's and TTL's
respective operations and properties, as such relate to
Seller's Business, are presently in material compliance
with all applicable Occupational Safety and Health
Administration ("OSHA"), Americans with Disabilities
Act, Family and Medical Leave Act, Fair Labor Standards
Act, Title VII of the Civil Rights Act, the Age
Discrimination in Employment Act, and similar
applicable foreign rules, regulations and laws and
neither Seller nor TTL has received any notice of any
potential occupational safety and health problem in
connection with the operations or properties of Seller
or TTL.
Section 2.18 Intellectual Property. All U. S.
and foreign intellectual property owned by or licensed
to Seller and TTL, including without limitation, all
license agreements relating to patents and/or
inventions, and all patents and patent applications,
all copyrights, trademarks (whether registered or
unregistered) and trade names owned by or licensed to
Seller or TTL which are of any value or importance to
its business or which it is authorized to use in the
production or marketing of any products now produced or
proposed to be produced by Seller or TTL (collectively,
the "Intellectual Property") are listed in Schedule
2.18, and to the extent indicated therein have been
duly registered in, filed in or issued by the United
States and foreign Patent Offices or other appropriate
governmental office. Except as set forth in Schedule
2.18, except for any residual rights retained by the
owners of any third party-owned Intellectual Property
licensed to Seller or TTL (all of which are described
on Schedule 2.18), Seller or TTL ( as the case may be)
are the only persons entitled to use the Intellectual
Property, free and clear of any claims or demands of
any other person. Except as noted above, Seller or TTL
does not use any of the Intellectual Property by
consent of any other rightful owner thereof and there
are no attachments, liens or encumbrances thereon.
Except as set forth on Schedule 2.18, (i) Seller or TTL
does not pay any licensing fee, royalty or other
payment to any other person or entity with respect to
any of the Intellectual Property or the use thereof,
and (ii) Seller's or TTL's right to use and transfer
any and all of the Intellectual Property is perpetual
and unrestricted. Except as set forth on Schedule
2.18, there are no claims or demands of any other
person, firm or corporation pertaining to any of the
Intellectual Property and no actions or proceedings
which have been instituted or are pending or, to the
best of Seller's knowledge, threatened, which challenge
the validity of, or the rights of Seller or TTL with
respect thereto, and, to the best of Seller's
knowledge, no Intellectual Property infringes or is
being infringed by others or is subject to any
outstanding order, decree, judgment or stipulation.
Section 2.19 Environmental Matters.
(a) Definitions:
"Environmental Authority" means any governmental
or regulatory body, or political subdivision thereof,
whether federal, state, local or foreign, or any
agency, instrumentality or authority thereof, or any
court or arbitrator (public or private) having
jurisdiction over or in any way regulating or enforcing
any Environmental Law.
"Environmental Law" means any federal, state,
local, or foreign law (including common law), statute,
code, ordinance, rule, regulation or other requirement
relating to the environment, natural resources, or
public or employee health and safety and includes, but
is not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. Section 9601 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., the
Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C.
Section 1251 et seq., the Clean Air Act, 33 U.S.C. Section 2601 et
seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq., the Federal Insecticide Fungicide, and
Rodenticide Act, 7 U.S.C. Section 136 et seq., Indiana
Responsible Property Transfer Law, Ind. Code 13-25-3-1,
Pennsylvania Residual Waste Management Regulations, Pa.
Code Chapter 287, Occupational Safety and Health Act,
29 U.S.C. Section 651 et seq., and the Oil Pollution Act of
1990, 33 U.S.C. Section 2701 et seq., as such laws have been
amended or supplemented, and the regulations
promulgated pursuant thereto, and all analogous state
or local statutes.
"Hazardous Substances" shall mean residual waste,
petroleum products, radioactive material, hazardous,
acutely hazardous, noxious, toxic, or polluting
substances or wastes defined and regulated as such
under any Environmental Law.
"Release" means any release, spill, emission,
leaking, pumping, pouring, dumping, emptying,
injection, deposit, disposal, discharge, dispersal,
leaching, or migration on or into the indoor or outdoor
environment or into or out of any property in a
quantity exceeding relevant thresholds found in or not
in compliance with applicable Environmental Law.
"Remedial Action" means all action, including,
without limitation, any capital expenditures, required
pursuant to Environmental Law to (i) investigate,
assess, clean up, remove, treat, or in any other way
address any Hazardous Substance; (ii) prevent the
Release or threat of Release, or minimize the further
Release of any Hazardous Substance so it does not
migrate or endanger or threaten to endanger public
health or welfare or the environment; (iii) perform
pre-remedial studies and investigations or post-
remedial monitoring; or (iv) bring Seller's Business
and any Owned Property or Leased Real Property into
compliance with Environmental Law.
"Remedial Action Cost" means any and all losses,
liabilities, obligations, damages, fines, penalties,
judgments, actions, claims, costs and expenses
(including, without limitation, reasonable fees,
disbursements and expenses of legal counsel, experts,
engineers and consultants and the costs of any Remedial
Action) arising from or under any Remedial Action.
(b) Except as disclosed on Schedule 2.19(b), the
Owned Real Property, the Leased Real Property and
Seller's Business and, to Seller's knowledge, any of
Seller's operations conducted elsewhere during the
period of Seller's ownership thereof, do not violate,
and during the period of any applicable statute of
limitations have not violated, in a material manner any
applicable Environmental Law, and Seller is in material
compliance with any Environmental Law that is or is
expected to become applicable to the Owned Real
Property, the Leased Property or the Seller's Business
prior to the Closing, will be timely attained and
maintained, without material expense, and Seller is not
subject to any existing, pending or, to Seller's
knowledge, threatened investigation, inquiry or
proceeding by any person or to any order, decree,
judgment, agreement or similar obligation under any
Environmental Law;
(c) Except as disclosed on Schedule 2.19(c), all
notices, permits, licenses or similar authorizations,
and operational or employee programs, if any,
currently required to be obtained or filed under any
Environmental Law in connection with the use of the
Owned Real Property, the Leased Real Property and
Seller's Business including, without limitation,
underground storage tanks (hereinafter the
"Environmental Permits"), have been prepared, obtained
or filed and to have been timely renewed and complied
with, without material expense, and any additional
Environmental Permits that may be required prior to
Closing will be timely obtained and complied with,
without material expense;
(d) Except as disclosed on Schedule 2.19(d), all
Hazardous Substances stored, processed, generated,
disposed or otherwise used at or in connection with
the Owned Real Property, the Leased Real Property and
Seller's Business during the period of Seller's
ownership thereof have been transported and otherwise
handled, treated, and disposed of in substantial
compliance with all applicable Environmental Law;
(e) Except as disclosed on Schedule 2.19(e),
Seller has not Released, handled, used, processed,
stored, or otherwise used Hazardous Substances on, at
or under (aa) the Owned Real Properties and the Leased
Real Properties or (bb) elsewhere, except in material
compliance with all applicable Environmental Law.
(f) Except as disclosed on Schedule 2.19(f),
during the period of Seller's ownership, lease or other
use thereof, no Hazardous Substance has been Released
on, in or under or has migrated from Owned Real
Property, the Leased Real Property or Seller's
Business.
(g) Except as disclosed on Schedule 2.19(g), no
notice of any violation of any Environmental Law has
been received by Seller concerning the Owned Real
Property, the Leased Real Property or Seller's Business
or other property used by Seller (excluding Seller's
discontinued operations) and to Seller's knowledge
there are no existing or pending requirements of any
governmental authority or pursuant to any Environmental
Law requiring any Remedial Action. Seller has not been
named as a "potentially responsible party" in
connection with any litigation, investigation or
similar matter, and Seller does not know of any matter
in which Seller may be so named.
(h) Except as set forth in Schedule 2.19(h),
there is not located in, on or under the Owned Real
Property, the Leased Real Property or Seller's Business
or other property used by Seller's Business (excluding
discontinued operations) (1) electrical transformers
containing PCBs that are not in material compliance
with Environmental Law, (2) underground storage tanks,
whether or not regulated under the Resources
Conservation Recovery Act, or (3) asbestos in friable
form that would require abatement in accordance with
Environmental Law.
Section 2.20 Leases and Contracts.
(a) Schedule 2.20 hereto sets forth a complete
and accurate list of all contracts, agreements,
purchase orders, leases, subleases, options and
commitments, oral or written, and all assignments,
amendments, schedules, exhibits and appendices thereof,
involving net book value amounts in the aggregate in
excess of $25,000 or which are otherwise material to
Seller's Business, affecting or relating to any asset,
the business, or any interest therein, to which Seller
or TTL is a party or by which Seller or TTL or the
Assets or TTL Assets is bound or affected, including
without limitation, software licenses, service
contracts, management agreements, equipment leases,
leases of space and ground leases pertaining to any
real estate (collectively the "Leases and Contracts"
and individually a "Lease and Contract").
(b) Other than as described on Schedule 2.20, none
of the Leases and Contracts has been modified, amended,
assigned or transferred and each of the Leases and
Contracts which are included in Assumed Liabilities, as
that term is defined in Section 1.2(c), is in full
force and effect and is valid, binding and enforceable
in accordance with its respective terms on each party
thereto.
(c) Other than as described on Schedule 2.20, no
event or condition has happened or presently exists
which constitutes a default or breach or, after notice
or lapse of time or both, would constitute a default or
breach by any party under any of the Leases and
Contracts which are part of the Assumed Liabilities,
and neither Seller nor TTL shall do any act or omit to
do any act which would cause such a default or breach.
There are no counterclaims or offsets under any of the
Leases and Contracts which are part of the Assumed
Liabilities.
(d) There does not exist, and between the date
hereof and the Closing Date neither Seller nor TTL will
grant or suffer, any security interest, lien,
encumbrance, mortgage or claim of others created or
suffered to exist on any interest created under any of
the Leases or Contracts which are part of the Assumed
Liabilities.
(e) None of the Leases or Contracts shall be
amended in any material respect between the date hereof
and the Closing Date without the prior written consent
of Purchaser.
(f) Except as identified on Schedule 2.20 hereto,
none of the Leases and Contracts is: (i) a capitalized
lease within the meaning of generally accepted
accounting principles; or (ii) a lease with a remaining
term of one year or more from Closing and which cannot
be canceled within 30 days at the option of Seller or
TTL without penalty.
(g) Other than as described on Schedule 2.20, the
assignment to Purchaser of the Leases and Contracts
constituting the Assumed Liabilities will not cause a
default under, alter or terminate any of the Leases and
Contracts, and such assignment will confer all Seller's
rights thereunder to Purchaser except for those
consents described on Schedule 2.20 not received by the
Closing Date which were waived by Purchaser in writing.
Other than as set forth on Schedule 2.20 hereto, the
assignment to Purchaser of the Leases and Contracts
constituting the Assumed Liabilities does not require
any consents.
(h) Any leases of space or real property to third
parties are set forth or described (if they are oral)
on Schedule 2.20. Each of such third party leases is
in full force and effect and in each case free and
clear of all Liens and free from defaults and events
which with the passage of time or notice or both would
constitute a default (by landlord or tenant
thereunder). Neither Seller nor TTL has transferred,
assigned, hypothecated, pledged or encumbered any of
its respective rights under any of such leases. Except
as set forth on Schedule 2.20, (i) none of the third
party leases grant any options or other rights to the
tenant thereunder to purchase any real property
interest of Seller or TTL, and (ii) no person has any
option, right of possession or interest of any kind in
or to any real property interest of Seller or TTL.
Neither Seller nor TTL has any outstanding obligations
under any of such leases including without limitation
any obligations to make any repairs or improvements or
renovations (whether such improvements or renovations
are to be made prior to or after the Closing Date).
There are no outstanding negotiations with any such
lessees regarding any matter relating to the leased
space, except as set forth on Schedule 2.20.
Section 2.21 Employees and Independent
Contractors.
(a) Schedule 2.21 hereto sets forth true, correct
and complete information regarding Seller's and TTL's
employees. Except as provided on Schedule 2.21,
neither Seller nor TTL has any employment agreements
with its employees and all such employees are employed
on an "at will" basis. Seller intends to terminate all
of its employees at closing. Except for the
liabilities assumed by Purchaser hereunder pursuant to
Section 1.1(e) above and the covenant contained in
Section 4.17 herein, Seller, Hufco and Huffy shall each
be jointly and severally responsible for, and shall
jointly and severally indemnify and hold harmless
Purchaser from and against any and all claims of
Seller's employees, and Seller, Hufco and Huffy shall
retain sole responsibility for and fully and timely pay
(or otherwise pro rate with Purchaser) all salaries,
wages and benefits that have accrued to Seller's
employees through the Closing Date.
(b) Seller previously has delivered to Buyer the
names, annual compensation and the method of
determining such compensation of all present
independent contractors (which shall include without
limitation, consultants) retained by, or engaged in,
Seller's Business ("Independent Contractors") along
with the compensation for each such Independent
Contractor as reflected on the Form 1099 for the 1998
calendar year. The Independent Contractors (and all
other independent contractors who have previously
rendered services to Seller's Business) have in the
past and continue to be treated as non-employees for
all Federal, state, local and foreign tax purposes, as
well as all ERISA and other employee benefit purposes.
Seller shall have accrued, or to the extent due shall
have paid in full, all compensation (and other amounts)
owed to the Independent Contractors for all periods up
to and including the Closing Date for all products
shipped and invoiced. There has been no determination
by any governmental authority, or by any tribunal or
commission, that any Independent Contractor, who is or
has previously rendered services to Seller's Business,
constitutes an employee of Seller or Seller's Business.
Section 2.22 Labor Matters.
(a) Other than as described on Schedule 2.22
hereto, neither Seller nor TTL is a party to any labor
contract, collective bargaining agreement, contract,
letter of understanding (or to Seller's knowledge any
other agreement, formal or informal) with any labor
union or organization which obligates Seller or TTL to
compensate its employees at prevailing rates or union
scale, nor are any of its employees represented by any
labor union or organization. Other than as set forth
on Schedule 2.22, there is no pending, or to Seller's
knowledge, threatened labor dispute, work slowdown,
work stoppage, unfair labor practice charge or
complaint, strike, administrative, arbitration or court
proceeding or order between Seller or TTL and any
present or former employees thereof or affecting
Seller, TTL or Seller's Business and during the past
five years there has not been any such action. There
have been no labor union organizing activities at
Seller's or TTL's facilities within the last five years
except as described on Schedule 2.22. Seller has
provided to the Purchaser true, correct and complete
copies of the executed collective bargaining
agreements, including true, correct and complete copies
of any and all written modifications and
interpretations thereof and descriptions of any and all
oral modifications and interpretations thereof. No
representations have been made to Huffy, Hufco, Seller,
TTL or their respective employees or agents or to
employees of Seller with respect to the Purchaser's
intentions to employ, or not to employ, Seller's
employees.
(b) Without limiting the generality of the
foregoing, except as identified on Schedule 2.22, (i)
no unfair labor practice charge or complaint is
currently pending against Seller or TTL with any
governmental authority, of which Seller or TTL has
received written notice; (ii) Seller has no knowledge
of any intention or threat to file any such charge or
complaint; (iii) no person has made any claim or
charge, nor has the Seller or TTL received any written
notice or communication reflecting an intention to make
any claim or charge against the Seller or TTL under any
statute, regulation or ordinance relating to the
discrimination with respect to employees or employment
practices; (iv) no claim or charge is pending, or, to
the knowledge of the Seller, threatened against the
Seller or TTL in connection with the Fair Labor
Standards Act, Title VII of the Civil Rights Act, the
Americans with Disabilities Act, The Occupational
Safety and Health Act, the Age Discrimination in
Employment Act, Executive Order No. 11, 246, or similar
federal, state, local or foreign laws; (v) Seller has
no knowledge of any grievance arising out of any
collective bargaining agreement or other grievance
procedure; and (vi) neither Seller nor TTL has received
written notice of the intent of any federal, state,
local or foreign governmental authority responsible for
the enforcement of labor or employment laws to conduct
an investigation with respect to or relating to Seller
or TTL and no such investigation is in progress.
(c) To the knowledge of Seller or TTL, no
employee, consultant or agent of Seller or TTL is in
violation of any material term of any employment
contract, confidentiality or non-disclosure agreement
or any other written contract, agreement, commitment or
understanding relating to the relationship of such
employee, consultant or agent with Seller or TTL or any
other party.
(d) The general employee policies of Seller's
Business include a policy to the effect that each
employee of Seller or TTL with permitted access to
confidential or proprietary information of Seller or
TTL shall hold confidential and not disclose to third
parties Seller's or TTL's confidential and proprietary
information in violation of the policy. Except as set
forth on Schedule 2.22(d), Seller has no knowledge of
any current or past violation of this policy by any
officer, director or employee of Seller or TTL.
(e) Seller and TTL have complied in all material
respects with all applicable laws material to the
Seller's Business relating and TTL's business,
respectively, to the employment of its employees,
including, but not limited to, those relating to wages,
hours, collective bargaining, unemployment insurance,
workers' compensation, discrimination, and the
withholding of payroll taxes.
Section 2.23 WARN Act. As of the date hereof,
neither Seller nor TTL has taken any action so as to
require any compliance under the Worker Adjustment and
Retraining Notification Act or similar foreign law
("WARN"). Seller shall comply with its obligations
under the Act and, if applicable, make the appropriate
notifications thereunder 60 or more days prior to the
Closing Date. Huffy and Seller shall be solely liable
and responsible for any debt, obligation, contribution
or other liability arising from any failure by Seller
to comply fully with WARN.
Section 2.24 Employee Benefit Plans.
(a) Schedule 2.24(a) lists all pension,
retirement, profit-sharing, stock bonus, deferred
compensation, bonus, incentive, performance, stock
option, phantom stock, stock purchase, restricted
stock, premium conversion, medical, hospitalization,
vision, dental or other health, life, disability,
severance, termination or other employee benefit plan,
program, arrangement, agreement or policy, whether
written or unwritten, which covers or otherwise
provides benefits to the employees of Seller's Business
(hereinafter "Benefit Plans").
(b) Seller has delivered to Purchaser current,
correct and complete copies of all plan documents,
amendments, summary plan descriptions and summaries of
material modifications relating to each Benefit Plan.
(c) Except for participation by Huffy Bicycle
Company in the UIU Pension Trust (the "UIU Plan") with
respect to employees of its former Celina, Ohio
facility, neither the Seller or any Related Employer
(or any predecessor of the Seller or any Related
Employer) sponsors, contributes to or maintains, and
has not at any time after September 26, 1980 sponsored,
contributed to or maintained and has or had no
liability under any multiemployer plan (as defined in
section 3(37) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")).
(d) With respect to Huffy Bicycle Company's
withdrawal from the UIU Plan, either: (i) no withdrawal
liability under Part 1 of Subtitle E of Title IV of
ERISA ("Withdrawal Liability") arose in connection with
that withdrawal, or (ii) any Withdrawal Liability that
did arise in connection with that withdrawal has been
fully paid.
(e) For purposes of this Agreement, "Related
Employer" means any entity that with Seller is a member
of a controlled group of corporations, within the
meaning of section 414(b) of the Internal Revenue Code
(the "Code"), is a trade or business under common
control within the meaning of section 414(c) of the
Code, or is a member of the same affiliated service
group, within the meaning of section 414(m) of the
Code. There does not exist any lien under section
412(n) of the Code upon any asset of Seller or any
Related Employer. Except with regard to health
benefits provided to current retirees of Seller and
current employees of Seller who have satisfied the
eligibility requirements for retiree health benefits,
Seller has not made any representations or promises or
otherwise created any expectation among any of its
employees respecting any compensation, benefits or
payments from Purchaser.
(f) Schedule 2.24(f) lists each Benefit Plan that
will be assumed by Purchaser, or from which Purchaser
(or a plan or arrangement sponsored by Purchaser or an
affiliate of Purchaser) will accept a transfer of
assets, or with respect to which Purchaser will assume
or otherwise acquire any liability in connection with
the transactions contemplated by this Agreement
(collectively, the "Assumed Plans"). Except as
otherwise noted on Schedule 2.24(f), at all times after
November 7, 1990 in the case of Seller and after June
7, 1991 in the case of TTL, all the Assumed Plans
conform (and have conformed) in all material respects
to, and are being administered and operated (and have
been administered and operated) in compliance with the
requirements of all applicable laws including, without
limitation, ERISA and the Code. All communications
with respect to each Assumed Plan by any person having
the requisite authority to make such communications
reflect and, at all times after November 7, 1990 in the
case of Seller and June 7, 1991 in the case of TTL in
all material respects, have reflected accurately the
plan documents and operations of each such Assumed
Plan. All returns, reports and disclosures required to
be made under ERISA and the Code with respect to the
Assumed Plans have been timely filed or made, and all
statements made on such returns, reports and
disclosures been true and complete in all material
respects. The Seller has not incurred any liability for
any tax, excise tax, penalty or fee with respect to any
Assumed Plan, and no event has occurred and no
circumstance exists or, after November 7, 1990 in the
case of Seller or after June 7, 1991 in the case of
TTL, has existed that could give rise to any such
liability.
(g) Except with regard to health benefits
provided to current retirees of Seller and current
employees of Seller who have satisfied the eligibility
requirements for retiree health benefits, and other
than restrictions imposed by collective bargaining
agreements or by Section 411(d)(6) of the Code, each
Assumed Plan may be amended, modified or terminated at
any time without restriction. The termination of any
Assumed Plan that is not a defined benefit pension plan
will not cause any increase in the liabilities accrued
thereunder to date.
(h) Seller has delivered to Purchaser current,
correct and complete copies of the following documents:
(i) all plan documents, amendments and trust agreements
relating to each Assumed Plan; (ii) the most recent
annual and periodic accountings of plan assets; (iii)
the most recent Internal Revenue Service determination
letter issued with respect to each Assumed Plan that is
an "employee pension benefit plan" (as that term is
defined in ERISA section 3(2)) and a list identifying
any amendment not covered by such determination or
notification letter; (iv) the most recent actuarial
valuation for each Assumed Plan that is subject to
section 412 of the Code; (v) annual reports filed on
Form 5500 (including accompanying schedules) for each
Assumed Plan for the past three years (if such reports
were required to be filed); (vi) the current summary
plan description, if any is required by ERISA, for each
Assumed Plan; and (vii) all insurance contracts,
annuity contracts, investment management or advisory
agreements, administration contracts, service provider
agreements, audit reports, fidelity bonds and fiduciary
liability policies relating to any Assumed Plan.
(i) There are no pending or to Seller's knowledge
any threatened claims by or on behalf of any Assumed
Plan, or by or on behalf of any individual participants
or beneficiaries of any such Assumed Plan, alleging any
violation of ERISA or any other applicable laws, or
claiming benefit payments (other than those made in the
ordinary operation of such plans), nor to Seller's
knowledge is there any basis for such claim. No
Assumed Plan is the subject of any pending or to
Seller's knowledge any threatened investigation or
audit by the Internal Revenue Service, the U.S.
Department of Labor or the Pension Benefit Guaranty
Corporation or any other governmental authority.
(j) No fiduciary, party in interest, or
disqualified person with respect to any of the Assumed
Plans has engaged in any transaction described in
section 406(a) or (b) of ERISA (and not exempt under
section 408 of ERISA) or in any transaction described
in section 4975 of the Code.
(k) Each Assumed Plan that is intended to be
qualified under Section 401(a) of the Code and exempt
from tax under Section 501(a) of the Code has been
determined by the Internal Revenue Service to be so
qualified and exempt. Any such Internal Revenue
Service determination remains in effect and has not
been revoked. Other than changes in applicable laws
which are subject to the remedial amendment period
described in Revenue Procedure 97-41 (1997-33 IRB),
nothing has occurred since the date of any such
determination that is reasonably likely to affect
adversely such qualification or exemption.
(l) Except as otherwise described in Schedule
2.24(l), with respect to any employee pension benefit
plan (as defined in section 3(2) of ERISA) sponsored,
maintained or contributed by Seller or any Related
Employer (including but not limited to any plan that
has been frozen, terminated or partially terminated):
(i) there is no accumulated funding deficiency, as
defined in section 302(a)(2) of ERISA or section 412 of
the Code; (ii) there has not been issued a waiver of
the minimum funding standard under section 412 of the
Code; and (iii) there does not exist any current
liability of any party to the Pension Benefit Guaranty
Corporation.
Section 2.25 Broker's Fee. Other than
PaineWebber Incorporated, whose fee will be paid in
full by Huffy, none of Huffy, Hufco, Seller or TTL have
employed or are liable for the payment of any fee to,
any finder, broker, consultant or similar person in
connection with the transactions contemplated by this
Agreement.
Section 2.26 Receivables. The accounts
receivables and other receivables being sold pursuant
to this Agreement, including without limitation, the
Accounts Receivables (collectively, the "Receivables")
of Seller's Business constitute valid receivables,
arose from bona fide transactions in the ordinary
course of business, consistent with past practices.
Other than ordinary course adjustments not material in
the aggregate, (i) no counterclaims or offsetting
claims with respect to presently outstanding
Receivables are pending or, to the knowledge of Seller,
threatened and (ii) such Receivables are fully
collectible in their stated amount, net of Seller's
allowance for doubtful accounts. No part of the
Accounts Receivable is contingent upon performance by
Seller or any other party of any obligation, and no
agreements for deductions or discounts have been made
with respect to any part of such Accounts Receivable.
No portion of such Accounts Receivable represents
amounts due for goods consigned by the Seller and no
agreements have been made allowing for the return of
goods represented by such Accounts Receivable, or any
portion thereof.
Section 2.27 Insurance. Schedule 2.27 hereto
sets forth a complete and accurate list of Seller's and
TTL's insurance (including the amount and type of
coverage) maintained on its respective properties and
assets (including the Assets and the TTL Assets) and
with respect to its employees and representatives and
business and which, in the reasonable judgment of
Seller, covers risks customarily insured by businesses
similar to the Seller's Business. Such insurance
includes fire, casualty, business interruption and
flood coverage in respect of all of the Assets and TTL
Assets owned or leased by Seller and TTL. All such
insurance policies are valid, binding and enforceable
in accordance with their terms against the respective
insurers, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditor's rights
generally, and between the date hereof and the Closing
Date will be outstanding and duly in force and the
premiums thereon fully paid when and as the same are
due and payable. To Seller's knowledge, no insurer is
the subject of insolvency proceedings.
Section 2.28 Governmental Licenses, Permits and
Related Approvals. Except as set forth on Schedule
2.28 hereto, Seller and TTL each has all licenses,
permits, consent, approvals, authorizations,
qualifications and orders of governments, governmental
agencies, or other governmental authorities required
for the conduct of the Seller's Business as presently
conducted.
Section 2.29 Absence of Certain Changes or
Events. Since December 31, 1998 and except as
otherwise disclosed herein or set forth in Schedule
2.29 hereto, there has not been (i) any material
adverse change in the condition (financial or
otherwise), results of operations, Assets, TTL Assets,
properties, business or prospects of Seller and TTL
taken as a whole (a "Material Adverse Effect"), (ii)
any material damage, destruction or loss relating to
the business or assets of Seller or TTL, whether or not
insured, (iii) any liability created or incurred which
Purchaser will assume hereunder pursuant to this
Agreement other than liabilities created or incurred in
the ordinary course of business and in amounts not
unusual in respect of Seller's Business as customarily
conducted, (iv) any material Lien (except for Permitted
Liens) created on any Asset or TTL Asset, (v) any
material capital expenditures or commitment to make any
such expenditures with respect to the Assets or TTL
Assets, or as to which Purchaser will become obligated
after the Closing pursuant to Section 1.2 of this
Agreement, (vi) any condemnation proceedings commenced
with respect to any of the Assets or TTL Assets, or
notice received by Seller or TTL as to the proposed
commencement of any such proceedings, (vii) any rights
of substantial value knowingly waived with respect to
the Assets, TTL Assets, or Seller's Business, (viii)
any increase in the compensation of any of Seller's
employees (including any such increase pursuant to any
bonus, pension, profit-sharing or other plan or
commitment), except for reasonable increases in the
ordinary course of business and consistent with past
practice, or (ix) any sale or transfer of any Assets or
TTL Assets other than dispositions in the ordinary
course of business. Since December 31, 1998, other
than acts relating to the transactions contemplated by
this Agreement, the Seller's Business has been
conducted in all significant respects only in the
ordinary course, consistent with past practice.
Section 2.30 Product Liability Claims; Product
Warranties.
(a) Schedule 2.30 hereto sets forth a complete
and accurate summary of each Product Liability Claim
(as defined below) (including all legal fees) paid by
Seller, TTL or their respective insurance carriers
during the past three (3) years, and each outstanding
Product Liability Claim (including all legal fees).
For purposes of this Section 2.30, the term "Product
Liability Claim" shall mean any claim arising out of
any injury to individuals or property as a result of
the ownership, possession, or use of any product sold
or leased by Seller or TTL.
(b) Schedule 2.30 hereto sets forth a description
of all warranties (the "Warranty Obligations") related
to the products sold by Seller's Business. Other than
normal product returns and the claims described on
Schedule 2.30, pursuant to the foregoing warranties, no
claims of a customer, distributor, government agency or
other person based upon an alleged defect in any such
product are presently pending or, to Seller's
knowledge, anticipated. Except for the Warranty
Obligations set forth on Schedule 2.30, neither the
Seller nor TTL has given or made any warranties to
third parties with respect to any products sold by it,
except for warranties arising by operation of law.
Except as set forth on Schedule 2.30, no claims under
product warranties or guarantees to customers have been
received by Seller or TTL which were not, or will not
be, satisfied on or prior to the Closing Date. There
has not been any product recall, post-sale warning or
similar action conducted with respect to any product
manufactured, shipped, delivered or sold by Seller or
TTL, or any investigation or consideration of, or
decision made by, Seller or TTL concerning whether or
not to undertake any of the foregoing.
Section 2.31 Tax Matters. (a) With respect to
Seller's Business and TTL's business, Seller and TTL
have delivered to Purchaser correct and complete copies
of all federal and state income Tax Returns,
examination reports, and statements of deficiencies
assessed against or agreed to by any of the Seller, TTL
or any of their respective subsidiaries, if any, since
1994. Except as set forth on Schedule 2.31, all Tax
Returns required to be filed by Huffy, Seller or TTL
(or any of their predecessors) on or before the Closing
Date have been or shall be timely filed and all Taxes
which are due or which may be claimed to be due have
been or shall be paid when due. To Huffy's and
Seller's best knowledge, all such Tax Returns were
correct and complete in all respects. There are no
Liens upon any of the Assets in respect of Taxes except
for Liens for current Taxes that are not yet due and
payable. All Taxes required to be withheld by Seller
or TTL have been withheld and paid over to the
appropriate Tax authority. None of Huffy, TTL or
Seller (or any predecessor of any of them) is a party
to or has received any written notice with respect to
any proposed or pending action by any governmental
authority for assessment or collection of Taxes, nor is
party to any dispute or, to their knowledge, threatened
dispute in which an adverse determination of such
action or dispute reasonably could be expected to
result in a foreclosure of the Assets and no such claim
for assessment or collection of Taxes has been made
upon Huffy, TTL or Seller. No claim has ever been made
by an authority in a jurisdiction where Seller or TTL
does not file Tax Returns that it is or may be subject
to taxation by that jurisdiction.
(b) Seller has not filed any agreement or consent
under Section 341(f) of the Code; no property of Seller
is "tax-exempt use property" within the meaning of
Section 168(h) of the Code; and Seller is not a
"foreign person" within the meaning of Section
1445(b)(2) of the Code.
(c) For purposes of this Agreement, (i) the term
"Tax" or "Taxes" shall mean all income, gross receipts,
gains, sales, use, employment, franchise, profits,
excise, property, value added and other taxes, fees,
stamp taxes and duties, assessments or charges of any
kind, together with any interest and penalties,
additions to tax or additional amounts imposed by any
Tax authority with respect thereto, (ii) the term "Tax
Returns" shall mean any and all returns, reports and
information statements with respect to Taxes required
to be filed with the Internal Revenue Service or other
Tax authority, whether domestic or foreign, including,
without limitation any and all consolidated, combined
and unitary tax returns and (iii) the term "Tax
authority" shall mean any authority having jurisdiction
over Taxes, including without limitation the Irish
Revenue Commissioners.
Section 2.32 Real Property. (a) Schedule 2.32(a)
hereto sets forth a legal description of all Owned Real
Property. Except for the Owned Real Property listed on
said Schedule 2.32, neither Seller nor TTL owns any
real property or interest therein that is used in, held
for use in or otherwise pertains to the Seller's
Business. Seller or TTL (as the case may be) has good
and sufficient, valid, marketable and indefeasible
title to the Owned Real Property, free and clear of any
Liens except for easements, restrictions, covenants and
other matters of record which singly and in the
aggregate do not and after the Closing will not have a
Property Material Adverse Effect as defined in Section
2.32(k). No part of the Owned Real Property, and no
use of any part thereof, is in violation of (i) any
restrictive covenant, condition, restriction or
limitation or (ii) any statute, code, ordinance,
order, regulation, or requirement applicable thereto,
which in either case, singly or in the aggregate, has
or after the Closing will have a Property Material
Adverse Effect; provided, however, that no
representation is made with respect to the effect of
destruction of, or change in the nature or
discontinuance of the use of, any part of the Owned
Real Property the current use of which is a permitted
nonconforming use under any applicable zoning
ordinance.
(b) Schedule 2.32(b) hereto is a true, complete,
correct and current list, by address, owner and usage,
of all real property agreements (including all
amendments and supplements thereto) pursuant to which
Seller or TTL (as the case may be) leases, subleases or
otherwise occupies any Leased Real Property (each a
"Real Property Lease" and collectively the "Real
Property Leases"), copies of which have been furnished
to Purchaser. Pursuant to the Real Property Leases,
Seller or TTL (as the case may be) has validly existing
and enforceable leasehold, subleasehold or occupancy
interests in the Leased Real Property leased
thereunder, in each case free and clear of all Liens
and free from defaults, and events which with the
passage of time or notice or both would constitute a
default. Except as set forth in Schedule 2.32, the
consummation of the transaction contemplated by this
Agreement will not require any consent or approval of
any landlord or sublandlord under any such Real
Property Lease, result in any increase in rent or
penalty to the party which is a tenant or subtenant
thereunder or result in the early termination of any
Real Property Lease. Neither Seller nor TTL has
transferred, assigned, hypothecated, pledged or
encumbered any of its rights or interest under any Real
Property Lease. Neither Seller nor TTL has received
any notice from any landlord or sublandlord or any
other party of the termination of any Real Property
Lease. No part of the Leased Real Property, and no use
of any part thereof, is in violation of (i) any
restrictive covenant, condition, restriction or
limitation, or (ii) any statute, code, ordinance,
order, regulation, or requirement applicable thereto,
which in either case, singly or in the aggregate, has
or after the Closing will have a Property Material
Adverse Effect; provided, however, that no
representation is made with respect to the effect of
destruction of, or change in the nature or
discontinuance of the use of, any part of the Leased
Real property the current use of which is a permitted
nonconforming use under any applicable zoning
ordinance.
(c) Except as set forth on Schedule 2.32(c) there
are (i) no outstanding contracts for any improvements
to the Real Property which have not been fully paid and
(ii) no expenses of any kind (including brokerage and
leasing commissions) pertaining to the Real Property
which have not been fully paid. Seller has furnished
or will furnish Purchaser with copies of all recorded
deeds, legal descriptions, surveys and title policies
for the Real Property in Seller's or TTL's possession,
custody or control. Seller has furnished or will
furnish Purchaser with all reports, and environmental
and engineering or other studies in Seller's or TTL's
possession, custody or control relating to the Real
Property.
(d) Except as set forth on Schedule 2.32 (d),
excluding building occupancy permits required to be
obtained by owners of the Real Property prior to the
ownership thereof by Seller and TTL, each of Seller and
TTL has all permits and certificates of occupancy
necessary to own or operate its Real Property as such
is currently being operated and used. Neither Seller
nor TTL lacks any permit or certificate of occupancy
the absence of which, singly or in the aggregate, has
or after the Closing will have a Property Material
Adverse Effect. No such permits will be required, as a
result of the consummation of the transaction
contemplated by this Agreement, to be issued, modified
or supplemented after the Closing in order to permit
Purchaser or TTL (as the case may be) following the
consummation of the transaction contemplated by this
Agreement to own or operate its Real Property as such
is currently being operated and used. All charges and
fees for such have been paid in full.
(e) There is no pending or, to Seller's
knowledge, threatened condemnation, expropriation,
eminent domain or other governmental taking of all or
any part of any of the Real Property and neither Seller
nor TTL has received any oral or written notice of any
of the same.
(f) Except as set forth in Schedule 2.32(f), none
of the Real Property is subject to any contract or
other restriction of any nature whatsoever (recorded or
unrecorded) preventing or limiting Seller's or TTL's
right to convey or use it, as the case may be, except
for easements, restrictions, covenants and other
matters of record which, singly and in the aggregate,
do not and after the Closing will not have a Property
Material Adverse Effect; provided, however, that no
representation is made with respect to the effect of
destruction of, or change in the nature or
discontinuance of the use of, any part of the Real
Property the current use of which is a permitted
nonconforming use under any applicable zoning
ordinance.
(g) Except as set forth on Schedule 2.32(g), all
components of buildings, structures and other
improvements included within the Owned Real Property
and the Leased 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, and systems and
facilities included therein, are in good working order
and repair and free of material structural defects.
(h) Except as set forth on Schedule 2.32(h), all
Real Property and the improvements thereon are supplied
with all utilities, useable sanitary and storm sewers,
water facilities, electric facilities and, if any, gas
facilities (collectively, the "Utilities") necessary
for the operation of such facilities as currently
operated. The Utilities are installed in, and are duly
connected to, the Real Property, and can be used
without charge except the normal and usual metered
utility charges and water and sewer charges. All
Utilities required for the operation of the Real
Property either enter the Real Property through
adjoining public streets or, if they pass through
adjoining public land, do so in accordance with valid
public easements or private easements which will inure
to the benefit of Purchaser at no cost to the owner or
occupant of the Real Property. All of said Utilities
are installed and operating and all installation,
connection and "tap-in" charges have been paid for in
full.
(i) Neither Seller nor TTL has received written
notice of any special assessment relating to any Owned
or Leased Real Property or any portion thereof, and
Seller has no knowledge of any pending or threatened
special assessments.
(j) To Seller's knowledge and except as set forth
in Schedule 2.32(j), no portion of the Real Property
lies within a flood hazard area, flood plain or
wetland. Within 15 days after the execution hereof,
Seller shall provide Purchaser with a flood hazard
certification issued by a reputable certification
service with respect to each parcel of Real Property.
If the flood hazard certification for any parcel of
Real Property shows that any portion of such parcel
lies within a flood hazard area, then Purchaser shall
cause the flood hazard area on such parcel to be
delineated on the Survey of such parcel under Section
7.10(b) hereof. There are no outstanding notices of
any violations issued by any governmental authority
having jurisdiction over the Real Property. Seller
shall use reasonable efforts to provide Purchaser,
prior to Closing, with an estoppel certificate from the
zoning code enforcement (or other appropriate) officer
of the governmental authority having jurisdiction over
each parcel of Real Property confirming that no portion
of such parcel of Real Property is in violation of any
applicable codes, and that such parcel of Property is
in compliance with applicable zoning restrictions.
Seller or TTL (as the case may be) has paid all taxes
and assessments, including assessments payable in
installments, which have become due and payable or a
Lien on any portion of the Real Property. Except as
set forth on Schedule 2.32(j), no work having a
contract price, individually or in the aggregate of
more than $50,000 has been performed or is in progress
at, and no materials have been furnished to any portion
of the Real Property which, though not presently the
subject of, might give rise to construction,
mechanic's, materialmen's, or other liens against any
portion of the Real Property, and Seller or TTL (as the
case may be) shall pay for all such work and materials
in full and shall provide Purchaser with evidence of
such payment (including a receipt and a release or
waiver of liens executed by the person that performed
such work or furnished such materials) at or prior to
Closing (with any such payments by Seller to be
excluded from the dollar limitation contained in
Section 10.2(b)(ii) below). If any lien for any such
work is filed before or after Closing, Seller shall
promptly discharge the same. Any and all applicable
charges, fees and assessments (including condominium
fees, to the extent applicable) and any and all other
sums due under declarations, cross-easements and like
agreements to which any portion of the Real Property
may be subject, have been paid, and no special
assessments thereunder are pending, and all consents
and approvals required to be obtained under any such
declarations, cross-easements and like agreements have
been obtained pursuant to the requirements of such
documentation. There are no outstanding agreements,
options, rights of first refusal, conditional sales
agreements or other agreements or arrangements, whether
oral or written, regarding the purchase and sale of any
portion of the Owned Real Property. Except as set
forth on Schedule 2.32(j), there are no outstanding
agreements, options, rights of first refusal,
conditional sales agreements or other agreements or
arrangements, whether oral or written, regarding the
purchase and sale of any portion of the Leased Real
Property. All debts, liabilities, and obligations of
Seller arising out of the construction, ownership, and
operation of the Real Property including, but not
limited to, construction costs, salaries, taxes,
accounts payable and the like, have been paid as they
became due and payable and shall continue to be so paid
from the date hereof until the Closing Date. The Real
Property is not subject to any roll-back or
agricultural taxation or other tax abatement program.
Each of Seller and TTL is in compliance with and has
fully paid and discharged all obligations arising
under any and all development, tri-party and like
agreements, and any and all other agreements with
county, municipal and other governmental and quasi-
governmental agencies and authorities respecting the
ownership, development and operation of the Real
Property and all portions thereof. No lien or
superlien has been recorded, filed or otherwise
asserted against any portion of the Real Property for
any clean-up costs or other response costs incurred in
connection with any environmental contamination.
(k) "Property Material Adverse Effect" shall mean
any material adverse effect on or change in all or any
individual parcel of the Owned Real Property or Leased
Real Property, as the case may be, or on the condition
(financial or otherwise) or the use thereof (as
currently utilized).
(l) There are no public improvements in the
nature of off-site improvements, or otherwise, which
have been ordered to be made and/or which have not
heretofore been assessed, and, to Seller's knowledge,
there are no special or general assessments currently
affecting or pending against any portion of the Real
Property.
(m) Except as set forth on Schedule 2.32(m),
Seller and TTL have not entered into any oral or
written lease, sublease, license, or any other grant of
a right of use or occupancy of or other right, title or
interest in any portion of the Real Property with any
third party where Seller or TTL acts or acted as
lessor, sublessor, licensor, grantor or in any similar
capacity.
(n) Neither Seller nor TTL has received any
written notice from any insurance company, board of
fire underwriters or rating organization (or other body
exercising similar functions) (i) claiming any defects
or deficiencies which have not been addressed and fully
cured or corrected, or (ii) requesting the performance
of any repairs, alterations or other work which have
not been performed, or (iii) claiming any default
which, if not corrected, would result in a cancellation
of insurance coverage.
(o) The current use of the Real Property is free
from any restrictions which restrict or prevent the
continued use of the Real Property as such, except for
easements, restrictions covenants and other matters of
record which, singly and in the aggregate, do not and
after the Closing will not have a Property Material
Adverse Effect; provided however, that no
representation is made with respect to the effect of
destruction of, or change in the nature or
discontinuance of the use of, any part of the Real
Property the current use of which is a permitted
nonconforming use under any applicable zoning
ordinance.
(p) All curb cut and street opening permits or
licenses required for vehicular access to and from the
Real Property to any adjoining public street have been
obtained and paid for by Seller or TTL and shall be in
full force and effect at the Closing.
Section 2.33 [Reserved]
Section 2.34 Assets of TTL.
(a) Schedule 2.34 of this Agreement is a complete
and accurate schedule setting forth in detail all of
the assets, rights, properties, claims, contracts and
business of TTL having a book value greater than $5,000
(the "TTL Assets"), including but not limited to those
TTL Assets comprised of those categories of assets,
rights, properties, claims, contracts and business
enumerated in Section 1.1(a) hereto.
(b) Except as set forth in Schedule 2.34: (i)
TTL is the sole and exclusive owner of, and has good
and marketable title to, all of the TTL Assets,
wherever located, free and clear of all Liens; and (ii)
no other person, firm or corporation has or will have
on the Closing Date any interest whatsoever in any of
the TTL Assets.
Section 2.35 Entire Business. On the Closing
Date, Seller will transfer to Purchaser all of the
Assets used in or necessary for the conduct by
Purchaser of Seller's Business, except for (i) the
Assets excluded from purchase hereunder pursuant to
Section 1.1(c) and (ii) any Potentially Excludable
Contracts (as such term is defined in Section 8.6
below), if the applicable third party consents cannot
be obtained, which Assets, together with all Assets
owned by TTL, are adequate to operate Seller's Business
in substantially the manner it is presently operated.
Section 2.36 Full Disclosure; Assumptions. No
representation or warranty made in this Agreement or
any exhibit or schedule hereto and no statement or
certificate or memorandum furnished or to be furnished
to Purchaser pursuant hereto or in connection with the
transactions covered hereby contains or will contain
any untrue statement of a material fact, or omit any
material fact, the omission of which would be
misleading. The assumptions used by Seller, Hufco and
Huffy in the preparation of the projections prepared by
such parties and furnished or to be furnished to
Purchaser pursuant hereto or in connection with the
transactions covered hereby were reasonable at the time
such projections were prepared, and there is no fact or
circumstance which has occurred since that time which,
if known at that time, would have affected the
reasonableness of any such assumption.
ARTICLE III
Purchaser's Representations and Warranties
Purchaser represents and warrants to Seller, Hufco
and Huffy, their respective successors and assigns,
that:
Section 3.1 Organization. It is a corporation
duly organized, existing and in good standing under the
laws of Delaware.
Section 3.2 Authority. It has taken all
necessary corporate action on its part as may be
required under the laws of Delaware and under its
Certificate of Incorporation and By-laws to authorize
the execution, delivery and carrying out of this
Agreement on its behalf.
Section 3.3 Enforceability. This Agreement
constitutes a valid and legally binding obligation of
Purchaser enforceable in accordance with the terms
hereof.
Section 3.4 Broker's Fee. Purchaser has not
employed and is not liable for the payment of any fee
to any finder, broker, government official, consultant
or similar person in connection with the transactions
contemplated by this Agreement.
ARTICLE IV
Covenants and Agreements
From the date of this Agreement through the
Closing Date or through the effective date of
termination of this Agreement in accordance with
Article XII of this Agreement:
Section 4.1 Bulk Sales Compliance. The parties
agree to waive compliance with any applicable bulk
sales statutes (including without limitation, tax
statutes, rules or regulations) with respect to the
sale of the assets hereunder or otherwise applicable to
the transactions contemplated hereby (collectively,
"Bulk Sales Laws")
Section 4.2 Preservation of Business and Assets.
(a) From the date hereof until the Closing,
Huffy, Hufco and Seller jointly and severally agree to
use their best efforts and to do or cause to be done
all such acts and things as may be necessary to
preserve, protect and maintain intact the Assets, and
the business and operation of the Seller's Business as
a going concern consistent with prior practice and in
the ordinary course of business, to preserve, protect
and maintain for Purchaser the goodwill of the
customers, suppliers, employees, tenants and others
having business relations with Seller and/or Seller's
Business. Seller shall continue to collect accounts
receivable consistent with its past practices. Seller
shall provide Purchaser promptly with interim financial
statements of Seller and/or Seller's Business and any
other management reports, as and when they are
available.
(b) If prior to the Closing Date any portion of
the Real Property is damaged or destroyed by fire or
other casualty, and the cost of repair or restoration
thereof shall be equal to or less than 10% of the value
of the damaged or destroyed building or structure in
the case of the Camp Hill, Harrisburg, Pettisville or
TTL facilities (as established by good faith estimates
obtained by Purchaser) or in the case of the sawmills,
less than 100% of the value of the damaged sawmill,
this Agreement shall remain in force, and the Purchase
Price shall be reduced by the amount necessary to
repair the damage, which reduction shall be offset by
any amounts paid by Seller's insurance assigned to
Purchaser. If prior to the Closing Date any portion of
the Real Property is damaged or destroyed by fire or
other casualty, and the cost of repair or restoration
thereof shall be more than 10% of the value of the
damaged or destroyed building or structure (as
established by good faith estimates obtained by
Purchaser) or comprises 100% or more of an individual
damaged sawmill regardless of the extent of the damage,
Purchaser may within ten days after receipt of notice
of said damage or destruction, terminate this Agreement
by giving written notice thereof to Seller. If this
Agreement is so terminated, neither party shall have
any further liability hereunder thereafter. If
Purchaser does not so terminate this Agreement, it
shall remain in full force and effect, and (i) all
proceeds of insurance collected prior to Closing, plus
the amount of deductible under Seller's insurance
policy, shall be adjusted subject to Purchaser's
approval and participation in any adjustment, and shall
be credited to Purchaser against the Purchase Price
payable by Purchaser at Closing, and (ii) all unpaid
claims and rights in connection with losses shall be
assigned to Purchaser at Closing. If, prior to the
Closing Date, all or any portion of the Real Property
is taken by eminent domain or a notice of any eminent
domain proceedings with respect to the Real Property or
any part thereof is received by the Seller, then Seller
shall within five days thereafter give notice thereof
to Purchaser and Purchaser shall have the option to (x)
complete the purchase hereunder or (y) if such taking,
in Purchaser's sole and absolute discretion, adversely
affects the Real Property or its current economic
viability, terminate this Agreement, in which event
this Agreement shall be null and void. Purchaser shall
deliver written notice of its election to the Seller
within ten days after the date upon which the Purchaser
receives written notice of such eminent domain
proceedings. If notice of condemnation is received by
Purchaser and it fails to deliver said written notice
of its election within said time period, such failure
shall constitute a waiver by Purchaser of its right to
terminate this Agreement. If this Agreement is not so
terminated, Purchaser shall be entitled to all awards
or damages by reason of any exercise of the power of
eminent domain or condemnation with respect to or for
the taking of the Real Property or any portion thereof,
and until such time as closing has occurred, or this
Agreement terminates. Any negotiation for, or
agreement to, and all contests of any offers and awards
relating to eminent domain proceedings shall be
conducted with the joint approval and consent of the
Seller and the Purchaser.
(c) In the event there is any damage or loss of
any of the Assets or TTL Assets (other than the Real
Property), whether by fire, theft, vandalism or other
cause or casualty, between the date hereof and the
Closing Date, and the cost of repair, replacement or
restoration thereof shall be equal to or less than 10%
of the Purchase Price (as established by good faith
estimates obtained by Purchaser), this Agreement shall
remain in force, and the Purchase Price shall be
reduced by the amount necessary to repair the damage,
which reduction shall be offset by any amounts paid by
Seller's insurance assigned to Purchaser. If the cost
of repair, replacement or restoration thereof shall be
more than 10% of the Purchase Price, Purchaser may ten
days after receipt of notice of said damage or
destruction, terminate this Agreement by giving written
notice thereof to Seller. If this Agreement is so
terminated, neither party shall have any further
liability hereunder thereafter. If Purchaser does not
so terminate this Agreement, it shall remain in full
force and effect, and (i) all proceeds of insurance
collected prior to Closing, plus the amount of
deductible under Seller's insurance policy, shall be
adjusted subject to Purchaser's approval and
participation in any adjustment, and shall be credited
to Purchaser against the Purchase Price payable by
Purchaser at Closing, and (ii) all unpaid claims and
rights in connection with losses shall be assigned to
Purchaser at Closing.
(d) In the event there is any damage or loss to
any of the production facilities (other than any of
Seller's sawmills) included in the Assets or the TTL
Assets, whether by fire, theft, weather, vandalism or
other cause or casualty whatsoever, and as a result of
such casualty the production of such facility is
Disrupted (as such term is defined below) and cannot be
resumed as of the close of business on the Closing
Date, then notwithstanding any other provisions of this
Agreement, Purchaser shall have the right to delay the
Closing Date until the Disruption is ended; provided,
however, that if the Disruption cannot reasonably be
ended by Seller within a period of two business days in
the case of the Harrisburg wheelbarrow facility, and in
all other cases five business days, after the latest
date that would otherwise have been the Closing Date,
Purchaser shall have the right to terminate this
Agreement by giving written notice thereof to Seller.
If this Agreement is so terminated, neither party shall
have any further liability hereunder. For purposes
hereof, the terms "Disrupted" and "Disruption" shall
mean any decrease or cessation of operations of a
production line resulting in a decrease by a factor of
10% or more of the product in question compared to
Seller's unit production plan therefor for the month(s)
in question.
Section 4.3 Conduct of Business. Without
limiting the generality of Section 4.2, each of Seller
and TTL agrees that, except as required or contemplated
by this Agreement or otherwise consented to in writing
by Purchaser, during the period commencing on the date
hereof and ending on the Closing Date, each of Seller
and TTL will operate Seller's Business in the ordinary
course, and in connection therewith, will:
(a) (i) maintain its books, accounts and records
relating to Seller's Business in the usual, regular and
ordinary manner, on a basis consistent with past
practice, (ii) comply with all laws and contractual
obligations applicable to Seller and the conduct of the
business and (iii) perform all of its material
obligations relating to Seller's Business;
(b) not (i) make any capital expenditures or
commitments to make any capital expenditures, (ii)
dispose of any of the fixed Assets owned by it, (iii)
modify or change in any material respect or enter into
or terminate any material contract relating to Seller's
Business; except in each case for such actions taken in
the ordinary course of business and consistent with
past practice; provided that the aggregate of such
capital expenditures or commitments to make capital
expenditures shall not exceed $100,000 per month,
except for the capital expenditures or commitments to
make capital expenditures described on Schedule 4.3(b),
(iv) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial
portion of the stock or assets of, or by any other
manner, any business or any corporation, partnership,
joint venture, association or other business
organization or division thereof;
(c) not make any change in its accounting
policies from those applied in the preparation of the
Financial Statements;
(d) not (i) permit or allow any of the Assets
owned by it to become subject to any Liens (other than
a Permitted Lien), (ii) waive any claims or rights
relating to the Seller's Business, (iii) grant any
increase in the compensation of any of Seller's
employees (including any such increase pursuant to any
bonus, pension, profit-sharing or other plan or
commitment), except for reasonable increases in the
ordinary course of business and consistent with past
practice, or as a result of contractual arrangements or
sales compensation plans existing on the date hereof or
(iv) enter into any agreements giving rise to
obligations on the part of Seller with respect to the
business in excess of $25,000 individually or $100,000
in the aggregate or otherwise not terminable by the
parties upon 30 days' notice, except commitments to
purchase raw materials and other trade obligations in
the ordinary course of business and consistent with
past practice;
(e) maintain such insurance as is currently in
effect;
(f) give Purchaser a copy of any notice received
during the period from the date hereof to the Closing
Date from any governmental or regulatory authority or
any other person alleging any violation of any rule,
regulation, law, order or ruling;
(g) not enter into any arrangement or transaction
between, or with Huffy or any Affiliate, officer,
director or employee of Huffy, Hufco, TTL or Seller;
(h) not amend its articles of incorporation or
code of regulations or other applicable charter
documents;
(i) not make or permit to be made any
alterations, improvements or additions to the Real
Property without the prior written consent of
Purchaser, except those made by tenants pursuant to the
right to do so under their Leases, or by Seller if
required by applicable law or ordinance;
(j) not enter into any new Seller Lease, nor
amend, modify or terminate any existing Seller Lease
without Purchaser's consent, nor apply any tenant's
security deposit to the discharge of such tenant's
obligations, without Purchaser's consent;
(k) notify Purchaser promptly of the occurrence
of any of the following: (i) a fire or other casualty
causing damage to the Real Property, or any portion
thereof; (ii) receipt of notice of eminent domain
proceedings or condemnation of or affecting the Real
Property, or any portion thereof; (iii) receipt of
notice from any governmental authority or insurance
underwriter relating to the condition, use or occupancy
of the Real Property, or any portion thereof, or any
real property adjacent to any of the Real Property, or
setting forth any requirements with respect thereto;
(iv) receipt or delivery of any default or termination
notice or claim of offset or defense to the payment of
rent from any tenant; (v) receipt of any notice of
default from the holder of any lien or security
interest in or encumbering the Real Property, or any
portion thereof; (vi) a change in the occupancy of the
leased portions of the Real Property; (vii) notice of
any actual or threatened litigation against Seller or
affecting or relating to the Real Property, or any
portion thereof; (ix) the commencement of any strike,
lock-out, boycott or other labor trouble affecting the
Real Property, or any portion thereof;
(l) perform all obligations of the landlord as
required by the Seller Leases or by any order or
direction of any governmental authority having
jurisdiction thereof, and to the extent required by law
or by any of the Seller Leases, maintain all security
deposits held under all Seller Leases in a segregated
account, with interest thereon as required;
(m) not enter into any other agreements which
affect the Real Property or the transactions
contemplated by this Agreement, without the prior
written consent of Purchaser; and not permit the
creation of any liability which shall bind Purchaser or
the Real Property after Closing;
(n) notify Purchaser of any tax assessment
disputes (pending or threatened) and not agree to any
changes in the real estate tax assessment, nor settle,
withdraw or otherwise compromise any pending claims
with respect to prior tax assessments, without
Purchaser's prior written consent;
(o) maintain in full force and effect the Benefit
Plans as they pertain to the Seller's and TTL's
employees or former employees and, in connection
therewith:
(i) except as may be required by law, not adopt,
terminate, amend, extend, or otherwise change any
Benefit Plan without the prior written consent of
Purchaser, and Seller shall give Purchaser prior
written notice of Seller's intention to take any such
action required by law as they pertain to Seller's or
TTL's employees or its former employees; and
(ii) neither Seller nor TTL shall make, cause to
be made, or agree to make any contribution, award, or
payment under any Benefit Plans as they pertain to
Seller's or TTL's employees or former employees, except
at the time and to the extent required by the written
terms thereof, without the prior written consent of
Purchaser; and
(iii) to the extent that all or any portion of
such Benefit Plan is an Assumed Plan, not cause any
assets to be transferred from such Benefit Plan (except
to the extent that such transfer constitutes a
distribution to a participant in that plan made in the
ordinary course of the operation of such plan);
(p) not enter into any contract or agreement or
take any action that violates, or omit to take any
action the result of which would be to violate, any of
the foregoing;
(q) deliver to Purchaser, promptly following the
preparation thereof, internally generated financial
statements of Seller consolidated with TTL, prepared in
accordance with generally accepted accounting
principles, consistently applied, as of the last day of
each fiscal month commencing on February 6, 1999. In
no event will such financial statements be delivered
later than 20 days following the end of the fiscal
month in question;
(r) provide Purchaser with copies of all notices,
correspondence, reports, demands, suits, permits,
inquiries or other documents or information transmitted
to or by Seller's Business with regard to any
environmental matters set forth in Schedule
10.2(g)(iii) or new matters which may arise prior to
Closing pertaining in any way to Hazardous Substances,
shall cooperate with Purchaser in its conduct of all
Remedial Actions, including, but not limited to, the
preparation of any operating procedures or plans, and
will allow Purchaser with a reasonable opportunity to
participate in all actions taken in order to address
the matters set forth in Schedule 10.2(g)(iii) and
(iv);
(s) continue to perform in accordance with the
Projected Y2K Plans and Budgets prior to the Closing;
(t) instruct all of Seller's personnel, and that
of TTL, with the authority to terminate other
employees, to notify Seller's Vice President, Human
Resources of any proposed termination of a salaried
employee of Seller or TTL, and to receive such Vice
President's consent to such proposed termination prior
to effecting such termination; and Seller's Vice
President, Human Resources shall be instructed to in
turn notify Purchaser of any such proposed termination
prior to such Vice President consenting thereto; and
(u) continue to cause the funding of its checks,
in accordance with past practices, for all payments
through the day prior to the Closing Date. Seller
shall have no obligation to fund checks which are
presented for payment on and after the Closing Date,
provided that all appropriate accruals are made on the
Closing Date Consolidated Balance Sheet therefor.
Amounts received in the lockbox and depository accounts
of Seller through the determination time (day prior to
Closing Date) shall continue to be paid to Seller in
accordance with past practices, provided that such
collections are appropriately reflected in the Closing
Date Consolidated Balance Sheet.
Section 4.4 Access to Books and Records. (a)
From the date hereof until the Closing, Seller shall
give to Purchaser and to Purchaser's counsel,
accountants, and other representatives, full access
during normal business hours to all of Seller's and
TTL's offices, properties, books, contracts,
commitments, records and affairs relating to the Assets
and the TTL Assets and to Seller's Business so that
Purchaser may inspect and audit them and shall furnish
to Purchaser a copy of all documents and information
concerning the properties and affairs of the Assets as
Purchaser may reasonably request. If any such books,
records and materials are in the custody of third
parties, Seller shall direct such third parties to
promptly provide them to Purchaser. Copies of
documents furnished to Purchaser by Seller will be
returned to Seller upon request if the transaction is
not consummated.
(b) Following the Closing Date, Purchaser shall
permit Huffy's, Hufco's and Seller's representatives
(including, without limitation, their counsel and
auditors), during normal business hours, to have
reasonable access to, and examine and make copies of
all books and records of Seller's Business which are
transferred to Purchaser hereunder and which relate to
transactions or events occurring prior to the Closing
Date. For a period of seven years after the Closing,
Purchaser agrees that, prior to the destruction or
disposition of any such books or records, Purchaser
shall provide not less than 45 days nor more than 90
days prior written notice to Seller of such proposed
destruction or disposal. If Seller desires to obtain
any of such documents, it may do so by notifying
Purchaser in writing at any time prior to the date
scheduled for such destruction or disposal. In such
event, Purchaser shall not destroy such documents and
the parties shall then promptly arrange for the
delivery of such documents to Seller, its successors or
assigns. All out-of-pocket costs associated with the
delivery of the requested documents shall be paid by
Seller.
(c) Following the Closing Date, Seller, Hufco and
Huffy shall permit Purchaser and its representatives
(including, without limitation, its counsel and
auditors), during normal business hours, to have
reasonable access to, and examine and make copies of
all books and records of Seller and its Affiliates
relating to Seller's Business or the Assets which are
retained by Seller, Hufco and Huffy and which relate to
transactions or events contemplated by this Agreement
occurring prior to the Closing Date. For a period of
seven years after the Closing, Seller, Hufco and Huffy
agree that, prior to the destruction or disposition of
any such books or records, Seller, Hufco and Huffy
shall provide not less than 45 days nor more than 90
days prior written notice to Purchaser of such proposed
destruction or disposal. If Purchaser desires to
obtain any such documents, it may do so by notifying
Seller and Huffy in writing at any time prior to the
date scheduled for such destruction or disposal. In
such event, Seller and Huffy shall not destroy such
documents and the parties shall then promptly arrange
for the delivery of such documents to Purchaser, its
successors or assigns. All out-of-pocket costs
associated with the delivery of the requested documents
shall be paid by Purchaser.
(d) Following the Closing Date, Purchaser shall
make available to Seller, Hufco and Huffy, to the
extent reasonably practicable, such personnel and other
technical assistance from Purchaser as Huffy, Hufco and
Seller shall reasonably require to properly fulfill
their indemnification obligations owed to Purchaser
under Article X below herein. All such personnel and
other technical assistance furnished by Purchaser
hereunder shall be at Huffy's, Hufco's and Seller's
sole cost and expense, including all salary, benefits,
cost and other expenses of the personnel and technical
assistance provided.
Section 4.5 Confidentiality. Huffy, Hufco,
Seller and the Purchaser covenant and agree that they
will not, and they will cause their principals,
Affiliates, officers and other personnel and authorized
representatives not to, use information concerning
another party's business, properties and personnel
received in the course of negotiating this Agreement
and investigation in connection with this transaction
and will hold such information (and will cause the
aforesaid persons to hold such information) in
confidence until such information otherwise becomes
publicly available or as may be required by applicable
law. In the event of the termination of this
Agreement, each party will return to the other any
copies of nonpublic documents furnished it by the
other.
Section 4.6 Hart-Scott-Rodino and Foreign
Filings. The parties hereto shall timely and promptly
make all filings which may be required by them in
connection with the consummation of the transactions
contemplated hereby under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended and any
other applicable antitrust or other similar provision
under United Kingdom, Canadian or Irish law
(collectively, the "Antitrust Improvements Acts"). The
parties shall furnish to each other all necessary
information and assistance as may be reasonably
requested in connection with the preparation of any
necessary filings or submissions to any governmental
agency, including, without limitation, any filings
necessary under the provisions of the Antitrust
Improvements Acts. The parties shall provide each
other with the opportunity to make copies of all
correspondence, filings or communications (or memoranda
setting forth the substance thereof) between them or
their representatives, on the one hand, and the Federal
Trade Commission ("FTC"), the Antitrust Division of the
United States Department of Justice (the "Antitrust
Division"), any applicable foreign governmental
authority, or members of their respective staffs, on
the other hand, with respect to this Agreement or the
transactions contemplated hereby. Each of Purchaser
and Seller shall pay one-half of each Antitrust
Improvements Act filing fee.
Section 4.7 Expenses. Except as otherwise set
forth herein, without regard to whether the sale
contemplated herein is consummated, all costs and
expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by
the party incurring such expenses.
Section 4.8 Shareholder Communication. From and
after the date hereof until the Closing Date, except as
required by law, any government agency or the New York
Stock Exchange, or similar entity, neither Huffy,
Hufco, Seller nor Purchaser will, with respect to the
transactions contemplated hereby, issue any press
release or make any public statements or mail any
communications or letters to their respective
stockholders generally except, in the case of Huffy and
Purchaser, the reports, filings and other materials
pursuant to their respective obligations under the
Securities Exchange Act of 1934, as amended.
Notwithstanding the foregoing, the parties agree that
any party may issue a mutually agreeable press release
upon (i) the execution of this Agreement, (ii) the
Closing, and (iii) the reasonable request of a party
hereto.
Section 4.9 Additional Agreements. Subject to
the terms and conditions herein provided, each of the
parties hereto agrees to use its best efforts to take,
or cause to be taken, all action, and to do, or cause
to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and
make effective the transactions contemplated by this
Agreement, including but not limited to, using its best
efforts to obtain all necessary waivers, consents,
authorizations and approvals of or exemptions by any
domestic or foreign governmental authority, self-
regulatory authority or third party, and effecting all
necessary registrations and filings (including, without
limitation, those described in Section 6.6 hereof);
provided, however, that in no event shall Purchaser be
required to provide any undertakings or comply with any
condition imposed by the FTC or the Antitrust Division
that, in its good faith judgment, would diminish
Purchaser's rights under this Agreement or adversely
affect its, or any of its Affiliate's business, results
of operations or prospects. In case at any time after
the Closing Date any further action is necessary or
desirable to carry out the purposes of this Agreement,
the proper officers and directors of the parties, as
the case may be, shall take all such necessary action.
Where the consent of any third party is required under
the terms of any of the leases or contracts to be
assumed by Purchaser hereunder, Seller will take all
reasonable and necessary steps to obtain such consent
on terms and conditions not materially less favorable
than as in effect on the date hereof or to otherwise
provide Purchaser with the benefits of such leases or
contracts. Seller and Purchaser shall cooperate fully
with each other to the extent reasonably required to
obtain such consents. Notwithstanding anything to the
contrary set forth in this Agreement, to the extent
that any consent or approval is not obtained with
respect to any lease, contract or any other agreement
as contemplated above, this Agreement shall not
constitute an assignment or an attempted assignment
thereof. In each such case, Seller agrees to cooperate
with Purchaser in any reasonable arrangement designed
to (i) provide for Purchaser the benefits under any
such lease, contract or agreement, including
enforcement at the cost and for the account of
Purchaser or any and all rights of Purchaser against
the other party or otherwise and (ii) insure
performance by Purchaser of Seller's obligations
thereunder to the extent Purchaser receives such
benefits. Notwithstanding any other provision of this
Agreement (including Section 1.2(a)), to the extent
that such arrangement cannot be made, Purchaser shall
not have any obligation with respect to any such lease,
contract or agreement.
Section 4.10 Customer Service. Commencing on the
Closing Date, Purchaser shall be responsible for and
shall administer, at its sole cost, all future warranty
claims (including replacement of product) associated
with products sold by Seller.
Section 4.11 Closing Conditions. Except as
otherwise set forth herein, each of the parties hereto
will use its reasonable efforts to cause the
conditions set forth in Articles VI and VII to occur;
provided, however, this provision shall not require any
party to waive any condition.
Section 4.12 Notification. Seller shall
promptly notify Purchaser of, and furnish Purchaser any
information Purchaser may reasonably request, and keep
Purchaser advised of, the occurrence of any event or
condition or the existence of any fact that would cause
any of the conditions to Purchaser's obligations to
consummate the transactions contemplated by this
Agreement not to be fulfilled, including, but not
limited to the occurrence of (i) any litigation or
administrative proceeding pending or, to the best
knowledge of Seller, threatened against Seller, Hufco
or Huffy which could, if adversely determined, have a
Material Adverse Effect; (ii) any material damage or
destruction of any of the Assets or TTL Assets; and
(iii) any material adverse change in the condition
(financial or other), results of operations, assets,
business or prospects of Seller and TTL taken as a
whole.
Section 4.13 No Shopping. Huffy, Hufco and
Seller shall not and shall not permit any of their
respective agents, representatives (including, without
limitation, investment bankers, attorneys and
accountants), officers, employees, or any other
Affiliates to, directly or indirectly, (i) solicit,
initiate or encourage the submission of any inquiries,
indications of interest, proposals of offers from any
corporation, partnership, person, entity or group,
other than Purchaser (collectively, "Third Parties"),
concerning the sale of any of the assets of Seller or
any of its subsidiaries (other than Inventory in the
ordinary course of business), or any equity security
of, or any other interest in, Seller or any subsidiary
of Seller, or any merger, recapitalization or other
business combination transaction involving Seller or
any of its subsidiaries (an "Acquisition Proposal"),
(ii) participate in any discussions or negotiations
regarding, or enter into any agreements of
understandings relating to, any of the foregoing with,
or provide any information concerning Seller, its
subsidiaries or any of the foregoing to, any Third
Parties including any Third Parties that Huffy, Hufco
or Seller had conducted negotiations with prior to the
date of this Agreement, or (iii) otherwise cooperate in
any way with, or assist or participate in, facilitate
or encourage, any effort or attempt by any Third Party
to do or seek any of the foregoing. Prior to the
Closing, at Purchaser's request, Huffy shall use its
best efforts to cause the destruction or return of all
non-public, confidential or proprietary information
concerning the operations of Seller provided to
potential purchasers of the Seller or TTL or the assets
thereof. Huffy, Hufco or Seller will immediately
notify Purchaser after the receipt by any of them or
any of their Affiliates, employees, officers,
representatives or agents of any inquiry, indication of
interest, proposal or offer with respect to an
Acquisition Proposal by any Third Party and will
immediately deliver to Purchaser any written
documentation relating thereto.
Section 4.14 Affiliated Transactions. Except as
set forth in Schedule 4.14 hereto, Huffy and Seller
shall terminate any transactions or agreements between
Seller and/or TTL, on the one hand, and any officers,
directors, employees or Affiliates of Seller and/or
TTL, on the other hand.
Section 4.15 Assignment of Confidentiality
Agreements. At the Closing, Seller shall assign to
Purchaser its rights with respect to the
confidentiality of information related to the Seller's
Business executed by each of the prospective purchasers
who received such information to the extent such rights
are assignable.
Section 4.16 Insurance Matters. Seller shall
add Purchaser as an additional insured as their
interests may appear on Seller's and TTL's insurance
policies which are currently in effect ("Seller's
Insurance Policies"). To the extent that any of
Seller's Insurance Policies, cover any loss, liability,
damage or claim relating to Seller's Business arising
out of occurrences prior to the Closing Date, Seller
and TTL shall cooperate with Purchaser in submitting
such claims (or pursuing claims previously made).
Section 4.17 Employee Matters. Purchaser will
make an offer of employment at substantially the same
rate of base wage or salary to those employees of
Seller identified on Schedule 1.1(e) to become
employees of Purchaser commencing on the Closing Date
and Purchaser at such time shall hire all such
employees who accept such offer of employment. All
such offers of employment and the actual employment of
any such employee shall be subject to Purchaser's
right, in its sole discretion, to establish and modify
from time to time the terms and conditions of such
employment and to terminate any such employee at any
time. Any employee identified on Schedule 1.1(e) who
accepts an offer of employment from Purchaser will be
known as a "Transferred Employee." Except as Purchaser
may expressly provide (or except as may be specifically
required with respect to certain Transferred Employees
under the terms of certain collective bargaining
agreement specifically assumed by Purchaser), all
Transferred Employees shall be treated as new, at-will
employees of Purchaser from their date of employment.
The U.S.-based employees listed on Schedule 1.1(e)
shall not reflect a decrease of more than 49 employees
from Seller's current total U.S. employment level as of
the date hereof. On the Closing Date, Seller will
provide Purchaser with the personnel files of each
Transferred Employee (or true and complete copies of
such files).
Section 4.18 Certain Employee Non-Competes.
Seller shall cooperate with and assist Purchaser in its
efforts to enter into employment arrangements to be
effective after the Closing with such employees of
Seller as Purchaser may designate, provided that such
cooperation and assistance of Seller shall not include
the expenditure of any funds by Seller.
Section 4.19 Grant of License. Huffy hereby
grants to Purchaser a limited license to use the names
"Huffy" or "a Huffy Company" on all of Seller's and
TTL's packaging, catalogs, labeling and other written
materials containing such names which are sold to
Purchaser on the Closing Date (the "Huffy Packaging
Materials"). Purchaser shall have the right to use all
such Huffy Packaging Materials containing such names
until the later of such date on which all such Huffy
Packaging Materials are fully depleted or December 31,
1999. On and after December 31, 1999 Purchaser shall
not have the right or license to reorder or use any new
Huffy Packaging Materials containing such names. Huffy
shall have the right to inspect Purchaser's packaging
materials and products utilizing its name to determine
and ensure that its name is being used in the same
manner, and in accordance with the same standards that
Seller is using it prior to the Closing Date.
Purchaser shall indemnify Huffy, in accordance with
Sections 1.2(b) and 10.3 hereof, for any liability,
cost or other expense arising out of Purchaser's use of
its name hereunder.
Section 4.20 Union Agreements. It is understood
and agreed that the Purchaser shall be considered a
successor employer for purposes of this Agreement.
Purchaser shall assume from Seller and after the
Closing Date shall be responsible for all of the legal
and contractual obligations that the Seller has under
applicable collective bargaining agreements with
various labor organizations. These obligations
include, but are not limited to, all obligations under
WARN arising after the Closing and any obligations
arising after the Closing which might be imposed as a
matter of law under the National Labor Relations Act.
Section 4.21 Severance. Huffy, Hufco and Seller,
jointly and severally, shall pay:
(a) the Permitted Termination Costs (as such term
is defined below) with respect to all employees of
Seller's Business who either (i) are not offered
employment by Purchaser (or its Affiliates) from and
after the Closing, or (ii) become employed by Purchaser
(or its Affiliates) as of the Closing but are
discharged by Purchaser (or its Affiliates) at any time
up to and until the six month anniversary of the
Closing; provided that, the total amount of such
payments for which Huffy, Hufco and/or Seller shall be
jointly and severally obligated under Section 4.21(a)
shall not exceed $750,000; and
(b) the Executive Permitted Termination Costs (as
such term is defined below) with respect to the eight
executives identified on Schedule 4.21(b) hereto who
either (i) are not offered employment by Purchaser (or
its Affiliates) from and after the Closing or (ii)
become employed by Purchaser (or its Affiliates) as of
the Closing but are discharged by Purchaser (or its
Affiliates) at any time up to and until the six month
anniversary of the Closing.
For purposes of this Section 4.21(a) , the term
"Permitted Termination Costs" means all severance and
other related termination costs incurred with respect
to the employees described in Section 4.21(a) (other
than Executive Permitted Termination Costs as defined
below) to the extent they do not exceed the amount, in
the case of any particular employee, equal to the
lesser of (i) the amount such employee would otherwise
have received from Seller under Seller's standard
severance policy (including, if applicable, the
execution of a waiver and release) as in effect on the
date of this Agreement or (ii) in the case of TTL
employees who are not listed on Exhibit 4.21(b), any
severance benefits required to be paid under applicable
non-U.S. law, or applicable labor agreements or other
custom and practice operating at TTL.
For the purposes of Section 4.21(b), "Executive
Permitted Termination Costs" shall mean all severance
and other related termination costs incurred with
respect to the employees described in Section 4.21(b),
and shall be limited to (i) costs arising out of or as
a consequence of a lack of enforceability of the Huffy
Corporation Special Incentive Executive Bonus Plan, as
amended, or any other similar plan or arrangement, (ii)
up to the amount such employee would receive (by
executing a waiver and release) from Seller under
Seller's standard severance policy as in effect on the
date of this Agreement; and (iii) in the case of TTL
employees any severance benefits required to be paid
under applicable non-U.S. law, or applicable labor
agreements or other custom and practice operating at
TTL.
In no event will Huffy, Hufco and Seller assume or
otherwise become in any way liable for any severance or
similar costs or expenses after the Closing other than
as specifically set forth in this Agreement.
Section 4.22 Satisfaction of TTL Funded Debt.
TTL shall pay in full all outstanding indebtedness for
borrowed money on or immediately prior to the Closing,
and shall terminate the credit facilities,
accommodations or other arrangements relating thereto.
The foregoing shall not include the Industrial
Development Authority grants to TTL.
Section 4.23 Assignment of Camp Hill Lease.
Seller's net worth on November 30, 1994, as reflected
on its internally generated balance sheet dated as of
November 30, 1994, prepared in accordance with
generally accepted accounting principles, consistently
applied, was $39,590,000. On or prior to the Closing,
Seller will provide Purchaser with written notice of
Seller's net worth as reflected on its internally
generated balance sheet dated as of the Closing Date,
prepared in accordance with generally accepted
accounting principles, consistently applied, as of the
Closing Date. Purchaser shall not take any action
prior to or on the Closing Date the result of which
would be to reduce Purchaser's net worth as of the
completion of the Closing below that of Seller
immediately prior to the Closing.
Section 4.24 Lantz Snow Saucers and Snow Boards.
Notwithstanding the fact that the Assets include
tooling, equipment and inventory used by Seller's Lantz
division to manufacture snow boards and snow saucers
("Snow Boards and Saucers"), Purchaser shall not use
such tooling, equipment and inventory after the Closing
to manufacture Snow Boards and Saucers and shall not
otherwise distribute or sell Snow Boards and Saucers
after the Closing (i) in any manner for a period of 24
months after the Closing, or (ii) after such 24-month
period, unless any Snow Boards and Saucers then
manufactured or distributed by Purchaser are clearly
and indelibly marked to distinguish them from Snow
Boards and Saucers manufactured by Seller prior to the
Closing Date.
ARTICLE V
The Closing
If all of the conditions to Closing set forth in
Articles VI and VII hereof are satisfied, the
consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place on the third
business day after the satisfaction of all such
conditions or at such time and place as the parties may
mutually agree (the "Closing Date").
ARTICLE VI
Seller's Conditions to Close
The obligations of Seller under Article VIII of
this Agreement shall, at the option of Seller (which
may be waived specifically in writing by Seller in
whole or in part) be subject to the satisfaction on or
prior to Closing, of the following conditions:
Section 6.1 Representations and Warranties True
at Closing; Compliance with Agreement. The
representations and warranties of Purchaser contained
in this Agreement (including the Schedules and
Attachments hereto) or in any certificate or document
delivered to Seller pursuant hereto), shall be deemed
to have been made again at the Closing Date and shall
then be true in all respects; and Purchaser shall have
performed and complied with all covenants, agreements
and conditions required by this Agreement to be
performed or complied with by it prior to or at the
Closing Date.
Section 6.2 Regulatory Approvals. Any
applicable waiting period required by each of the
applicable Antitrust Improvements Acts shall have
expired and no other review, approval or any other
action of the Federal Trade Commission, the Antitrust
Division of the United States Department of Justice or
any other applicable governmental authority shall be
required in order to consummate the transactions
contemplated hereby.
Section 6.3 No Action/Proceeding. No action or
proceeding before a court or any other governmental
agency or body shall have been instituted or threatened
to restrain or prohibit the transaction herein
contemplated, and no governmental agency or body shall
have taken any other action or made any request of
Huffy or Seller or Purchaser as a result of which Huffy
and Seller reasonably and in good faith deem that to
proceed with the transactions hereunder may constitute
a violation of law.
Section 6.4 Compliance with Article IX. The
Purchaser shall have made to the Seller the deliveries
required by Article IX.
Section 6.5 Other Prohibiting Transaction. No
order shall have been entered in any action or
proceeding before any court or governmental agency, and
no preliminary or permanent injunction by any court
shall have been issued, which would have the effect of
(a) making the transactions contemplated by this
Agreement illegal, (b) otherwise preventing
consummation of such transactions, or (c) imposing
material limitations on the ability of Purchaser
effectively to acquire and hold Assets, or, in either
case, to exercise rights of ownership pursuant thereto.
There shall have been no United States federal or
state, or any foreign, statute, rule or regulation
enacted or promulgated after the date of this Agreement
that would reasonably, directly or indirectly, result
in any of the consequences referred to in this Section.
Section 6.6 Approvals Concerning True Temper
Limited. (a) Seller shall have obtained all necessary
consents, waivers, authorizations, approvals or other
action from all third-party and governmental entities,
including but not limited to, the Minister for
Enterprise, Trade and Employment, stating in writing
that she does not intend to make an order under section
9 of the Mergers, Take-overs and Monopolies (Control)
Act, 1978 (as amended) ("the Mergers Act") in relation
to the proposed purchase of the capital stock; or if
she makes an order subject to conditions, Purchaser
accepting those conditions; or, if no such order is
made and the Minister does not state in writing that
she does not intend to make such an order, that the
relevant period within the meaning of section 6 of the
Mergers Act elapses.
(b) Seller shall have obtained all necessary
consents, waivers, authorizations, approvals or other
action from all relevant nongovernmental third parties,
including but not limited to the lessor of any real
and/or personal property of TTL that are necessary and
legally required before all of the capital stock of TTL
may be sold to Purchaser hereunder.
ARTICLE VII
Purchaser's Conditions to Close
The obligations of Purchaser under Article IX of
this Agreement are, at the option of Purchaser (which
may be waived specifically in writing by Purchaser in
whole or in part) subject to the satisfaction on or
prior to Closing, of the following conditions:
Section 7.1 Representations and Warranties True
at Closing; Compliance with Agreement. The
representations and warranties of Seller, Hufco and/or
Huffy contained in this Agreement (including the
Schedules and Attachments hereto) or in any certificate
or document delivered to Purchaser pursuant hereto,
shall be deemed to have been made again at the Closing
Date and shall then be true in all respects; and Seller
shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to
be performed or complied with by it prior to or at the
Closing Date, including without limitation, the
deliveries set forth in Section 8.6 hereof.
Section 7.2 No Loss, Damage or Destruction. In
the event there is any damage to or loss of any of the
Assets or TTL Assets (whether by fire, theft, vandalism
or other cause or casualty), the terms of Section 4.2
shall have been complied with to the satisfaction of
Purchaser.
Section 7.3 No Adverse Material Change. Since
December 31, 1998 there shall not have been, any change
in the condition (financial or otherwise), results of
operations, assets, properties, business or prospects
of Seller's Business that would constitute a Material
Adverse Effect.
Section 7.4 Regulatory Approvals. Any
applicable waiting period required by each of the
applicable Antitrust Improvements Acts shall have
expired, and no other review, approval or other action
of the Federal Trade Commission, the Antitrust Division
of the United States Department of Justice,
environmental land transfer acts, environmental
approvals, or any other applicable governmental
authority shall be required in order to consummate the
transactions contemplated hereby. Further, Seller
shall have filed all notices and obtained all approvals
necessary for transfer of any real property interest to
Purchaser under any applicable environmental real
estate transfer laws and shall have obtained all
approvals necessary to transfer all environmental
permits currently held by Seller's Business to
Purchaser.
Section 7.5 No Action/Proceeding. No action or
proceeding before a court or any other governmental
agency or body shall have been instituted or threatened
to restrain or prohibit the transaction herein
contemplated, and no governmental agency or body shall
have taken any other action or made any request of
Huffy, Hufco, Seller or TTL or Purchaser as a result of
which Purchaser reasonably and in good faith deems that
to proceed with the transactions hereunder may
constitute a violation of law or may enable a third
party to recover damages in respect thereto.
Section 7.6 Compliance with Article VIII. The
Seller shall have made to the Purchaser the deliveries
required by Article VIII.
<PAGE>
Section 7.7 Other Prohibiting Transaction. No
order shall have been entered in any action or
proceeding before any court or governmental agency, and
no preliminary or permanent injunction by any court
shall have been issued, which would have the effect of
(a) making the transactions contemplated by this
Agreement illegal, (b) otherwise preventing
consummation of such transactions, or (c) imposing
material limitations on the ability of Purchaser
effectively to acquire and hold Assets, or, in either
case, to exercise rights of ownership pursuant thereto.
There shall have been no United States federal or
state, or any foreign, statute, rule or regulation
enacted or promulgated after the date of this Agreement
that would reasonably, directly or indirectly, result
in any of the consequences referred to in this Section.
Section 7.8 Environmental Due Diligence.
Purchaser shall be reasonably satisfied with the
results of Purchaser's due diligence with respect to
the presence or potential presence of any Hazardous
Substances on, in or under any or associated with any
Real Property. Purchaser will agree to waive this
condition if, in its reasonable discretion, it is
satisfied with Seller's agreement to indemnify
Purchaser for or to remediate the conditions raised as
a result of its due diligence, provided Seller has no
obligation to indemnify Purchaser for or remediate such
conditions other than as provided for in this
Agreement.
Section 7.9 Lien Search. Subject to Seller's
right to cure under Section 7.10(a) below, Purchaser
shall have received satisfactory results of Lien
searches with respect to the Assets, provided that
Purchaser provides to Seller copies of all Lien
searches it obtains with respect to any Assets and
Seller had a reasonable opportunity to cure any issues.
Section 7.10 Title and Survey. Subject to
Seller's right to cure under Section 7.10(c) below,
Purchaser shall have obtained, at its sole cost and
expense, the following for each parcel of Real
Property, in form and substance satisfactory to
Purchaser in its sole and unreviewable discretion:
(a) A policy of owner's or lessee's title
insurance in the form of a duly issued and marked-up
commitment for title insurance (the "Title Policy")
issued at regular rates by Commonwealth Land Title
Insurance Company (the "Title Company") under an ALTA
1970 Form B (Revised 10/17/70 and 3/30/84), with
affirmative endorsements (i) against mechanic's liens,
(ii) insuring against any violation of existing
covenants, conditions or restrictions, and insuring
that future violation will not result in forfeiture of
title, (iii) insuring that all foundations in place as
of the date of such policy are within the lot lines and
applicable set back lines, (iv) insuring that the
buildings and structures on the Real Property do not
encroach onto adjoining land or onto any easements, (v)
insuring that there are no encroachments of
improvements from adjoining land onto the Real Property
(vi) removing any exceptions for matters which an
accurate survey would disclose, and (vii) providing
affirmative insurance with respect to such other
matters as Purchaser shall reasonably specify.
(Easements, restrictions, covenants and other matters
of record disclosed in the Title Policies to which
Purchaser does not object at or prior to Closing are
hereinafter referred to collectively as "Permitted
Exceptions.")
(b) A current survey of the Real Property (the
"Survey"), prepared by a duly licensed land surveyor
acceptable to Purchaser (the "Surveyor"). The Survey
shall be currently dated, shall show the location on
the Real Property of all buildings and improvements,
building and set-back lines, easements, rights-of-way,
encroachments, elevations between public roads
providing access to the Real Property, and the boundary
of the Real Property, and other such matters affecting
the Real Property whether physically apparent from the
ground, of record in public offices, or otherwise, and
shall contain a legal description of the boundaries of
the Real Property by metes and bounds which shall
include a reference to the recorded plat, if any. The
Surveyor shall certify to Purchaser and to the Title
Company and to any party participating in the financing
of the purchase of the Real Property that the Survey is
correct and was made on the ground; and that there are
no visible discrepancies, conflicts, encroachments,
overlapping of improvements, violations of set-back
lines, easements, rights-of-way or other such matters
affecting the Real Property except as are shown on the
Survey, and that the Survey conforms to all ALTA/ACSM
and other applicable standards and requirements for a
Class A Land Title Survey in the state in which the
Real Property is located.
(c) Purchaser shall (i) provide Seller with
copies of all surveys, title reports, Lien searches or
other evidence of Liens or other defects it receives
regarding any of the Assets or TTL's properties and
assets promptly after Purchaser's receipt thereof and
(ii) advise Seller in writing as to any Liens or other
defects revealed in such reports, searches or evidence
to which Purchaser objects ("Defects"). Seller may,
but shall not be required to, use reasonable efforts to
resolve any such Defects, provided, however, that if
any such Defect can be removed solely by the payment of
a sum certain to a third party, then Seller shall make
any such payment in order to cure such Defect. If
Seller is unable to resolve any Defects within 30 days
of the date of Purchaser's notice to Seller thereof,
Seller shall so notify Purchaser of its inability to
cure. Upon Purchaser's receipt of such notice, it
shall either waive the incurable Defects and proceed to
Closing (in which case such incurable Defects shall
constitute Permitted Liens for purposes of this
Agreement), or declare the condition to Closing set
forth in Section 7.9 or 7.10 as the case may be, not to
have been met.
In addition, a Certificate of Title from A&L
Goodbody, counsel for Seller, will be provided at
Seller's cost, in a form satisfactory to Purchaser, as
to title to TTL's Real Property.
Section 7.11 Approvals Concerning True Temper
Limited. (a) Seller shall have obtained all necessary
consents, waivers, authorizations, approvals or other
action from all governmental entities, including but
not limited to, the Minister for Enterprise, Trade and
Employment stating in writing that she does not intend
to make an order under section 9 of the Mergers, Take-
overs and Monopolies (Control) Act, 1978 (as amended)
("the Mergers Act") in relation to the proposed
purchase of the capital stock; or if she makes an order
subject to conditions, Purchaser accepting those
conditions; or, if no such order is made and the
Minister does not state in writing that she does not
intend to make such an order, that the relevant period
within the meaning of section 6 of the Mergers Act
elapses.
(b) Seller shall have obtained all necessary
consents, waivers, authorizations, approvals or other
action from all relevant nongovernmental third parties,
including but not limited to the lessor of any real
and/or personal property of TTL that are necessary and
legally required before all of the capital stock of TTL
may be sold to Purchaser hereunder.
ARTICLE VIII
Obligations of Seller at Closing
At Closing, Seller shall deliver or cause to be
delivered to Purchaser the following in a form and
substance reasonably satisfactory to Purchaser:
Section 8.1 Documents Relating to Title of
Assets. Seller or Huffy, as the case may be, shall
execute, acknowledge, deliver and cause to be executed,
acknowledged and delivered to Purchaser:
(a) Deeds, bills of sales, vehicle titles,
assignments and endorsed stock certificates, in form
and substance satisfactory to Purchaser and sufficient
to convey to Purchaser good, valid and marketable fee
simple title to all owned Assets free and clear of all
Liens, except Permitted Liens.
(b) An assignment to Purchaser and assumption by
Purchaser of all of Seller's rights and interests in,
to and under each Lease of real and personal property
and Contracts constituting an Assumed Liability, except
for any Potentially Excludable Contracts for which the
applicable third party consents could not be obtained
by the Closing Date.
(c) Warranty deeds (or equivalent) in recordable
form and substance satisfactory to Purchaser and
sufficient to convey to Purchaser all of Seller's
interest in the Owned Real Property free and clear of
all Liens, mortgages, pledges, encumbrances, security
interest, covenants, easements, rights of way,
equities, options, rights of first refusal,
restrictions, special tax or governmental assessments,
defects in title, encroachments and other burdens,
except for Permitted Exceptions. To the extent that
Seller or any affiliate of Seller originally acquired
title to any parcel of Owned Real Property by general
warranty deed (or equivalent), such parcel shall be
conveyed by general warranty deed (or equivalent);
otherwise all parcels of Owned Real Property shall be
conveyed by special warranty deed (or equivalent).
(d) An Affidavit of Non-Foreign Status as
required by the Foreign Investment and Real Property
Tax Act Section 1445(b)(2), as amended.
(e) A trade mark and patent assignment agreement.
(f) Seller will deliver to Purchaser all bills of
material containing the recipes for the mix of resins
(prime, off-spec, reground or any other kinds of
resins), colorants, fillers and all other ingredients
which it uses in the manufacture of plastic products of
substantially the same quality as produced, marketed
and sold by Seller on the date of this Agreement and
the identity (including the individual to contact),
address, telephone numbers and e-mail address of
Seller's vendors and other sources of supply of
reground resin and off-spec resin as of the date of
this Agreement.
(g) Such other documents as Purchaser may
reasonably request to facilitate the transfer of the
Owned Real Property and Purchaser's obtaining title
insurance insuring Purchaser's title in and to the
Owned Real Property.
Section 8.2 Possession. Seller shall deliver to
Purchaser full possession and control of the Assets.
Section 8.3 Opinion of Seller's Counsel. Seller
shall deliver to Purchaser the favorable opinions of
counsel for Seller and for TTL, each dated as of the
Closing Date, and each in a form reasonably
satisfactory to Purchaser.
Section 8.4 Corporate Good Standing and Corporate
Resolution. Seller, Huffy and Hufco shall deliver to
Purchaser Certificates of Good Standing from the
secretaries of states of organization for Seller (and
equivalents, if any, for TTL), together with a
certified copy of the resolutions of the Board of
Directors of Huffy, Hufco and Seller, and of the sole
stockholder of Seller, Huffy and Hufco, authorizing the
execution, delivery and consummation of this Agreement
and the execution, delivery and consummation of all
other agreements and documents executed in connection
herewith by them, including all deeds, bills of sale
and other instruments required hereunder and certified
by officers of the respective entities to be validly
adopted and in full force and effect and unamended as
of Closing.
Section 8.5 Closing Certificate. Huffy, Hufco
and Seller, respectively, shall deliver to Purchaser
certificates of their respective executive officers,
dated as of Closing, certifying that (a) each covenant
and obligation of Huffy, Hufco or Seller, as the case
may be, has been complied with in all material
respects, and (b) each representation and warranty of
Seller, Hufco and Huffy, as the case may be, are true
and correct on the Closing as if made on and as of the
Closing.
Section 8.6 Third Party Consents. Seller shall
deliver to Purchaser any consents, approvals, waivers
and authorizations of third parties which are necessary
in the reasonable opinion of Purchaser for the
execution, delivery and consummation of this Agreement,
including without limitation, those referred to in
Section 6.6 hereof, as well as those necessary for the
assignment of the Leases and Contracts included in the
Assumed Liabilities, except any such consents the
absence of which, individually or cumulated with all
other absent consents, would not have a Material
Adverse Effect, each of which is listed on Schedule 8.6
and is herein referred to as a "Potentially Excludable
Contract."
Section 8.7 Additionally Requested Documents;
Post Closing Assistance. At the reasonable request of
Purchaser at the Closing Date and at any time or from
time to time thereafter, Huffy, Hufco and Seller shall
cooperate with Purchaser to put Purchaser in actual
possession and operating control of the Assets, execute
and deliver such further instruments of sale,
conveyance, transfer and assignment, as Purchaser may
reasonably request in order to effectively sell,
convey, transfer and assign the Assets to Purchaser, to
execute and deliver such further instruments and to
take such other actions as Purchaser may reasonably
request to release Purchaser from all obligation and
liability with regard to any obligation or liability
retained by Seller.
ARTICLE IX
Obligations of Purchaser at Closing
At Closing, Purchaser shall deliver or cause to be
delivered to Seller the following in a form and
substance reasonably satisfactory to Seller:
Section 9.1 Purchase Price. Purchaser shall
deliver to Seller cash or other immediately available
funds in the aggregate amount of the Purchase Price
specified herein and shall deliver to the Escrow Agent
the balance of the Purchase Price (prior to adjustment
as set forth in Section 1.5 hereof) as specified
herein.
Section 9.2 Corporate Good Standing and Certified
Board Resolutions. Purchaser shall deliver to Seller
a certificate of Good Standing from the secretary of
the state of organization for the Purchaser and a
certified copy of the resolutions of the Board of
Directors of the Purchaser approving this Agreement and
consummation of the transactions intended hereby.
Section 9.3 Assumption of Liabilities.
Purchaser shall assume and covenant to fully perform
and comply with all of the Assumed Liabilities pursuant
to the form of Assumption Agreement attached hereto as
Exhibit B.
Section 9.4 Assumption of Benefit Plans.
(a) Seller will cause an amount to be transferred
from the Huffy Corporation Retirement Plan (the
"Salaried Plan") to a designated pension plan
maintained by Purchaser (or a designated affiliate of
Purchaser) equal to the assets attributable to the
accrued benefits of active and retired employee's of
Seller's Business under the Salaried Plan as of the
Closing (which assets will be sufficient to the amount
required to satisfy Code section 414(l) or to provide
benefits on a termination basis in accordance with
ERISA section 4044 as certified by Seller's actuary in
accordance with actuarial assumptions consistent with
prior practice or pursuant to Code section 414(l) or
ERISA section 4044, as applicable). In addition, an
appropriate reduction in the Purchase Price shall be
made as specified on Schedule 9.4(b). All amounts
transferred pursuant to the preceding sentence will be
increased or decreased to reflect the interim period
between the Closing and the date of such transfer based
on the actual investment performance of the Salaried
Plan trust fund. Such asset transfer will be completed
as soon as reasonably practicable following the later
of (i) the Closing Date; (ii) the date on which the
Internal Revenue Service issues a determination letter
in response to the application submitted with respect
to the Salaried Plan on July 31, 1998; or (iii)
December 31, 1999.
(b) With respect to each Assumed Plan that
constitutes the entirety of a Benefit Plan, Seller will
cause such plan (and any trust(s) maintained in
connection with such plan) to be amended to reflect
Purchaser (or a designated affiliate of Purchaser) as
the plan sponsor and will take such actions as are
reasonably requested by Purchaser to facilitate the
adoption of such plan and trust(s) by Purchaser (or a
designated affiliate of Purchaser).
Section 9.5 Closing Certificate. Purchaser
shall deliver to Seller a certificate of officers of
the Purchaser, dated as of Closing, certifying that (a)
each covenant and condition precedent of Purchaser has
been complied with by Purchaser in all material
respects and (b) each representation and warranty of
Purchaser is true and correct on the Closing as if made
on and as of the Closing.
Section 9.6 Group Health Continuation. With
respect to any Benefit Plan that is a group health plan
(as defined in section 607 of ERISA), Seller will
comply with the requirements of Part 6 of Subtitle B of
Title I of ERISA and Section 4980B of the Code to
provide continuation coverage and notice of such
coverage to any employees of Seller's Business and any
eligible dependents of such employees who incur a
"qualifying event" on or prior to the Closing, or
otherwise in connection with the transactions
contemplated hereunder. Seller will continue to
provide such continuation coverage for the full
continuation period set forth in ERISA Section 602(2),
determined without regard to ERISA Section 602(2)(B).
Seller and Purchaser agree that Purchaser is not
intended to be and is not a successor employer to the
Seller with respect to COBRA.
ARTICLE X
Indemnification and Survival of Provisions
Section 10.1 Survival. The covenants and
agreements contained in this Agreement and any
agreements, certificates or other instruments delivered
pursuant to this Agreement, shall survive the Closing
and remain in full force and effect. The
representations and warranties set forth in Articles II
and III shall survive the Closing and remain in full
force and effect until the second anniversary of the
Closing Date; provided, however, that the
representations and warranties contained in Sections
2.1, 2.2, 2.6, 2.35, 3.1, 3.2 and 3.3 or which
otherwise relate to title of the Assets shall survive
indefinitely and the representations and warranties
contained in Section 2.19, 2.24, 2.31, 2.32 and 2.34
and the indemnities contained in Sections 10.2(g)(i),
(ii) and (iii) shall survive for the applicable statute
of limitations period and any extensions thereof.
Section 10.2 Seller's Indemnification
Obligations. Huffy, Hufco and Seller shall, jointly
and severally, indemnify and hold Purchaser and its
Affiliates, their successors and assigns, and their
respective officers, shareholders, attorneys and agents
(collectively, the "Purchaser Indemnified Parties")
harmless from and against, and in respect of:
(a) all obligations and liabilities of Seller or
any of its Affiliates, whether accrued, absolute,
fixed, contingent or otherwise, not assumed herein by
Purchaser or pursuant to the Assumption Agreement or
under any other agreement executed and delivered by the
parties in furtherance of the transactions described
herein;
(b) any claim, cost, loss, liability, settlement,
judgment, charge, fee, expense, or damage
(collectively, "Damages") incurred or sustained by
Purchaser or its Affiliates as a result of any
inaccuracy or breach of any representation or warranty
by Seller, Hufco or Huffy contained herein or under any
other agreement executed and delivered by the parties
in furtherance of the transactions described herein
(notwithstanding any investigation made by Purchaser or
any disclosure made by Huffy, Hufco, Seller or TTL
herein or otherwise); provided, however, that (i)
Seller, Hufco and Huffy shall be required to indemnify
Purchaser or its Affiliates pursuant to this clause (b)
for any such breaches or inaccuracies, except with
respect to Section 2.28 above, only to the extent that
the aggregate Damages resulting from such breaches or
inaccuracies to Purchaser or its Affiliates (excluding
any claims described in the following subclause (ii))
exceed $250,000; (ii) Purchaser and its Affiliates
shall not assert any claim against Seller which
individually (or in the aggregate with respect to
related claims) which is less than $25,000; and (iii)
any claim for indemnification under this clause (b)
must be made in writing in reasonable detail to Huffy
not later than the expiration of the applicable
survival period specified in Section 10.1;
(c) any Damages incurred or sustained by
Purchaser or its Affiliates as a result of a breach by
Seller, Hufco or Huffy of any covenant or other
agreement contained herein or under any other agreement
executed and delivered by the parties in furtherance of
the transactions described herein;
(d) any Damages for Taxes arising at any time out
of the operation of the business of Seller or TTL and
their Affiliates prior to the close of business on the
Closing Date or incurred in connection with the
transactions contemplated by this Agreement (including
any transfer or recording taxes);
(e) any Damage (including liabilities for any
Taxes) imposed upon, asserted against, incurred or
sustained by Purchaser or its Affiliates as a result of
the noncompliance by the parties hereto with any
applicable Bulk Sales Laws;
(f) any Damages incurred or sustained by
Purchaser or its Affiliates as a result of the
operation of the Seller's Business prior to the close
of business on the Closing Date, including without
limitation, Damages based upon alleged injuries to
persons, property or business by reason of alleged
defectiveness, improper design or manufacture or
malfunction, or otherwise, of any product manufactured
by Seller, TTL or Seller's Business, whether known or
unknown, currently asserted or arising hereafter, if
such claims are based upon or arise out of injuries to
person or property (i) occurring or alleged to have
occurred prior to the date ten months after the Closing
Date and/or (ii) occurring or alleged to have occurred
at any time if such injury is related to Snow Boards
and Saucers manufactured or sold by Seller, except to
the extent assumed herein by Purchaser or pursuant to
the Assumption Agreement;
(g) any Damages or Remedial Action Costs suffered
or incurred by the Purchaser Indemnified Parties as a
result of, arising out of or with respect to:
(i) subject to the limitations and requirements
set forth in Section 10.1 and 10.2(b), any breach or
inaccuracy of any representation or warranty set forth
in Section 2.19;
(ii) subject to the limitations and requirements
set forth in Section 10.1 and 10.2(b), and unless
covered or otherwise contemplated by Sections
10.2(g)(iii) or 10.2(g)(iv) hereof, operation of
Seller's Business or use of the Owned Real Property,
Leased Real Property or any other property owned,
operated or otherwise used by Seller's Business
(collectively, the "Seller Sites") prior to the Closing
Date, pertaining to or in any way associated with (A)
Remedial Action of Hazardous Substances located at, on,
in or under any of the Seller Sites or any property
affected by the migration of Hazardous Substances from
any of the Seller Sites required by any Environmental
Law or pursuant to the requirement of any Governmental
Authority ("Seller Real Estate Matter"), (B) fines,
penalties or Remedial Action required to bring Seller's
Business into compliance, in all material respects,
with any Environmental Law, Environmental Permit or
pursuant to the requirement of any Governmental
Authority ("Seller Compliance Matter"), (C) the
transportation, treatment, handling, recycling, sale or
off-site disposal of Hazardous Substances by Seller's
Business or from any of the Seller Sites ("Seller
Disposal Matter"), (D) the exposure of any person not
an employee of Seller's Business to any Hazardous
Substances handled, stored, processed, generated,
Released, or otherwise used by Seller's Business or at
the Seller Sites ("Seller Exposure Matter"), and (E)
the destruction or loss of or other impact to natural
resources ("Seller Natural Resources Matter"). Damages
and Remedial Action Costs do not include the demands,
directives or orders of any Governmental Authority
which would not reasonably have arisen or been issued
except for actions by Purchaser, its Affiliates, agents
or assigns to solicit or seek such an order, directive
or demand for action, provided such limitation does not
apply to notices required by applicable law.
(iii) those matters set forth in Schedule
10.2(g)(iii) hereto.
(iv) those matters set forth in Schedule
10.2(g)(iv) hereto.
Notwithstanding the foregoing, if as a result of
Purchaser's due diligence pursuant to Section 7.8,
Purchaser identifies Remedial Action required by
Section 10.2(g)(iii) the cost of which would exceed
$3,000,000 (including the $1,000,000 held in escrow
pursuant to the Escrow Agreement which is applicable to
environmental matters), Seller may elect, by serving
written notice to Purchaser, not to proceed with such
Remedial Action and such non-action by Seller shall not
be deemed a breach of this Agreement. If Purchaser
nevertheless elects to waive the taking of such
Remedial Action by Seller and to Close, Seller shall
not incur additional obligations under Section 10.2(g)
for the cost of such Remedial Action not taken.
(h) 50% of any Damages incurred or sustained by
Purchaser or its Affiliates as a result of Purchaser's
failure to achieve the appropriate sales levels
specified pursuant to that certain License Agreement,
dated January 1, 1999 by and between Stanley Logistics,
Inc., the Stanley Works and the Seller, as amended,
which sales levels are described on Schedule 10.2(h)
appended hereto, provided that Purchaser is not in
breach under such License Agreement for any reason
other than its failure to achieve such sales levels,
and provided further, that Seller shall have no
liability hereunder in the event Purchaser, as Seller's
successor-in-interest to such License Agreement, enters
into an amended, restated or revised License Agreement
with Stanley Logistics, Inc. and Stanley Works;
(i) any Damages incurred or sustained by
Purchaser or its Affiliates arising out of, relating
to, or in connection with, Timothy D. Clark vs. True
Temper Hardware Company, or any of the facts and
circumstances thereof including any costs incurred by
Purchaser in retaining counsel to defend Purchaser in
the event the Complaint in such litigation is amended
after the Closing to specifically name Purchaser as a
defendant, provided that Seller's indemnification
obligation shall not extend to any costs reasonably
related to allegations that Purchaser is liable for any
of its acts, or failures to act, occurring after the
Closing;
(j) those matters for which Purchaser is entitled
to indemnification as set forth in Section 13.12
hereof; and
(k) all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred
by Purchaser or its Affiliates in connection with any
action, investigation, suit, proceeding, demand,
assessment or judgment incident to any of the matters
indemnified against in this Section 10.2.
Section 10.3 Purchaser's Indemnification
Obligation. Purchaser shall indemnify and hold Huffy,
Hufco, Seller, and their Affiliates, their respective
successors and assigns, and their respective officers,
shareholders, attorneys and agents (collectively the
"Seller Indemnified Parties") harmless from and
against, and in respect of:
(a) all obligations and liabilities of Purchaser
or any of its Affiliates, whether accrued, absolute,
fixed, contingent or otherwise, assumed herein by
Purchaser or pursuant to the Assumption Agreement or
assumed under any other agreement executed and
delivered by the parties in furtherance of the
transactions described herein;
(b) any Damages incurred or sustained by Seller
or its Affiliates as a result of any inaccuracy or
breach of any representation or warranty by Purchaser
contained herein or under any other agreement executed
and delivered by the parties in furtherance of the
transactions described herein; provided, however, that
(i) Purchaser shall be required to indemnify Seller or
its Affiliates pursuant to this clause (b) for any such
breaches or inaccuracies only to the extent that the
aggregate Damages resulting from such breaches or
inaccuracies to Seller or its Affiliates (excluding any
claims described in the following subclause (ii))
exceed $250,000; (ii) Seller and its Affiliates shall
not assert any claim against Purchaser which
individually (or in the aggregate with respect to
related claims) which is less than $25,000; and (iii)
any claim for indemnification under this clause (b)
must be made in writing in reasonable detail to
Purchaser not later than the expiration of the
applicable survival period specified in Section 10.1;
(c) any Damages incurred or sustained by Seller
or its Affiliates as a result of a breach by Purchaser
of any covenant or other agreement contained herein or
under any other agreement executed and delivered by the
parties in furtherance of the transactions described
herein;
(d) any Damages for Taxes arising at any time out
of the operation of the business of Purchaser after the
close of business on the Closing Date or incurred in
connection with the transactions contemplated by this
Agreement, other than Taxes assumed by or allocated to
Seller pursuant to the terms of this Agreement;
(e) any Damages incurred or sustained by Seller
or its Affiliates as a result of the operation of the
business after the Closing Date by Purchaser, including
but not limited to Damages arising out of product
liability claims based upon or arising out of injuries
to person or property occurring or alleged to have
occurred on or after the date ten months after the
Closing Date, but specifically excluding any
liabilities relating to Snow Boards and Saucers
manufactured or sold by Seller at any time, to the
extent that the Damages do not relate to actions taken
by Seller or its Affiliates prior to the Closing Date
or otherwise relate to matters for which Seller is
obligated to Purchaser pursuant to Section 10.2 hereof;
(f) any Damages incurred or sustained by Seller
or its Affiliates as a result of the operation of
Seller's Business after the close of business on the
Closing Date, including without limitation, Damages
based upon alleged injuries to persons, property or
business by reason of alleged defectiveness, improper
design or manufacture or malfunction, or otherwise, of
any product manufactured by Purchaser in the operation
of Seller's Business, if such claims are based upon or
arise out of injuries or other events occurring, or
products manufactured, after the Closing Date, except
to the extent specifically retained herein by Seller or
pursuant to the Assumption Agreement.
(g) any Damages and Remedial Action Costs
suffered or incurred by the Seller Indemnified Parties
as a result of, arising out of or with respect to
Purchaser's business operations ("Purchaser's
Business") or use of the Owned Real Property, Leased
Real Property or any other property owned, operated or
otherwise used by Purchaser's Business after the
Closing Date (collectively, the "Purchaser Sites"),
pertaining to or in any way associated with (A)
Remedial Action of Hazardous Substances located at, on,
in or under any of the Purchaser Sites or any property
affected by the migration of Hazardous Substances from
any of the Purchaser Sites required by any
Environmental Law or pursuant to the requirement of any
Governmental Authority ("Purchaser Real Estate
Matter"), (B) fines, penalties or Remedial Action
required to bring Purchaser's Business into compliance,
in all material respects, with any Environmental Law,
Environmental Permit or pursuant to the requirement of
any Governmental Authority ("Purchaser Compliance
Matter"), (C) the transportation, treatment, handling,
recycling, sale or off-site disposal of Hazardous
Substances by Purchaser's Business or from any of the
Purchaser Sites ("Purchaser Disposal Matter"), (D) the
exposure of any person not an employee of Purchaser's
Business to any Hazardous Substances handled, stored,
processed, generated, Released, or otherwise used by
Purchaser's Business or at the Purchaser Sites
("Purchaser Exposure Matter"), and (E) the destruction
or loss of or other impact to natural resources caused
by Purchaser's Business ("Purchaser Natural Resource
Matter"). Damages and Remedial Action Costs do not
include the requirement of any Governmental Authority
which would not reasonably have been the subject of an
order, directive or demand except for actions by
Seller, its Affiliates, agents or assigns to solicit
directly or indirectly such an order, directive or
demand for action.
(h) those matters for which Purchaser is
obligated to provide indemnification as set forth in
Section 13.12 hereof; and
(i) all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred
by Seller or its Affiliates in connection with any
action, suit, proceeding, demand, assessment or
judgment incident to any of the matters indemnified
against in this Section 10.3.
Section 10.4 Procedure for Indemnification. The
procedure to be followed in connection with any claim
for indemnification by Purchaser under Section 10.3 or
by Seller, Hufco or Huffy under Section 10.2 or any
claims by one party against the other, is set forth
below:
(a) Notice. Whenever any indemnified party shall
have received notice that a claim has been asserted or
threatened against such indemnified party, which, if
valid, would subject the indemnifying party to an
indemnity obligation under this Agreement, the
indemnified party shall promptly notify the
indemnifying party of such claim, together with
supporting facts and data to support the claim for
indemnification, provided, however, that the failure of
the indemnified party to give timely notice hereunder
shall relieve the indemnifying party of its
indemnification obligations under this Agreement to the
extent, but only to the extent that, such failure
materially prejudices the indemnifying party's ability
to defend such claim.
(b) Defense of a Claim. Except as provided in
Section 10.4(f) as to environmental claims, the
indemnifying party will have the right, but not the
obligation, to assume the defense of any claim which is
the subject of indemnification under this Agreement so
long as, in either event, the indemnifying party
acknowledges in writing its obligation to indemnify the
indemnified party hereunder; provided, however, if
there is a reasonable probability that a claim may
adversely affect the business or property of the
indemnified party despite the indemnity of the
indemnifying party, the indemnified party shall have
the right at its option to defend, at its own cost and
expense, and to compromise or settle such claim, which
compromise or settlement (with respect to amounts to be
paid by the indemnifying party) shall be made only with
the written consent of the indemnifying party, such
consent not to be unreasonably withheld, provided the
indemnifying party receives a complete release of all
obligations and liabilities in any manner related to
such claim. The indemnified party shall promptly
notify the indemnifying party of any compromise or
settlement proposal with respect to the claim and shall
not unreasonably refuse to accept that portion of any
such proposal requiring the payment by the indemnifying
party if the same is acceptable to the indemnifying
party and the indemnifying party receives a complete
release of all obligations and liabilities in any
manner related to such claim.
If the indemnifying party fails to assume the
defense of such claim (by failing to notify the
indemnified party that it acknowledges its obligation
to indemnify the indemnified party or that it will
undertake the defense) within ten business days after
receipt of notice of a claim for indemnification, the
indemnified party against which such claim has been
asserted will (upon delivering notice to such effect to
the indemnifying party) have the right to undertake, at
the indemnifying party's cost and expense, the defense,
compromise or settlement of such claim on behalf of and
for the account and risk of the indemnifying party, and
provided, however, that the indemnified party shall not
enter into any such compromise or settlement with
respect to amounts to be paid by the indemnifying party
without the written consent of the indemnifying party,
which consent shall not be unreasonably withheld
provided the indemnifying party receives a complete
release of all obligations and liabilities in any
manner related to such claim. In the event the
indemnifying party assumes defense of the claim, the
indemnifying party will keep the indemnified party
reasonably informed of the progress of any such
defense, compromise or settlement. The indemnifying
party shall have the sole right to defend, settle or
otherwise dispose of such claim, on such terms as the
indemnifying party, in its sole discretion, shall deem
appropriate; provided, however, that the indemnifying
party shall obtain the written consent of the
indemnified party, which shall not be unreasonably
withheld, prior to ceasing to defend, settling or
otherwise disposing of any such claim if as a result of
such settlement the indemnified party would become
subject to injunctive or other equitable relief or the
business of the indemnified party would be adversely
affected in any manner (including without limitation
the payment or obligation to pay on the part of the
indemnified party any amount) or the indemnified party
would not receive on the effective date of the
indemnifying party's ceasing to defend, settling or
otherwise disposing of such claim without any cost or
expense to the indemnified party a complete release of
all obligations and liabilities arising out of, or in
respect of such claims in form and content reasonably
satisfactory to indemnified party. If the indemnified
party has elected to be represented by separate
counsel, such settlement or compromise shall be
effected only with the consent of the indemnified
party, which consent shall not be unreasonably
withheld.
After notice from the indemnifying party to the
indemnified party of its election to assume the defense
of such claim or action, except as otherwise
contemplated by this Agreement, the indemnifying party
shall not be liable to the indemnified party under this
Section 10.4(b) for any legal or other expenses
subsequently incurred by the indemnified party in
connection with the defense thereof, provided, however,
that the indemnified party shall have the right to
employ counsel to represent it if, in the indemnified
party's counsel's opinion, it is advisable for the
indemnified party to be represented by separate
counsel, and in that event the reasonable fees and
expenses of such separate counsel shall be paid by the
indemnifying party. The parties each agree to render
to the other parties such assistance as may reasonably
be requested in order to insure the proper and adequate
defense of any such claim or proceeding.
(c) No Additional Obligations. The obligation
of the indemnifying party to defend, or be responsible
for indemnifying the indemnified party, with respect to
any claim made pursuant to this Article X, shall be
limited to the specific indemnification obligations set
forth in this Agreement.
(d) Survival. The indemnities provided in this
Article X shall survive the Closing.
(e) Treatment of Indemnity Payments. The
parties agree that any indemnification payments made
pursuant to this Agreement shall be treated for tax
purposes as an adjustment to the Purchase Price, unless
otherwise required by applicable law. To the extent
that any indemnity claim is required by any taxing
authority or by applicable law to be treated as taxable
income to the party making the claim and is not under
applicable law permitted to be treated as an adjustment
to the Purchase Price, the amount of any indemnity
payment shall be determined on an after-tax basis
(after taking into consideration any related deductions
and assuming a tax rate equal to the maximum marginal
federal corporate income tax rate for the taxable year
in which the indemnity is determined to be taxable).
(f) Procedure Relating to Purchaser's
Environmental Indemnity. (i) To the extent Purchaser
Indemnified Parties seek indemnification under Section
10.2(g) hereof, they shall first be obligated to
provide Seller with prompt written notice of each such
claim, loss, Remedial Action Cost or Damages
("Purchaser Environmental Claim Notice"). For Seller
Compliance Matters in which Remedial Action must be
undertaken, the Purchaser will be automatically
responsible for carrying out all such action, and any
negotiations with Governmental Authorities, except as
to fines and penalties or other monetary assessments to
the extent such fines and/or penalties are attributable
to Seller's Business. For all other matters and Seller
Real Estate Matters, Seller Disposal Matters, Seller
Exposure Matters and Seller Natural Resource Matters,
Seller shall have 30 days following delivery of any
Purchaser Environmental Claim Notice to advise the
Purchaser Indemnified Parties in writing of its intent
to defend and indemnify the Purchaser Indemnified
Parties for the matter set forth in the Purchaser
Environmental Claim Notice. If Seller denies the
Claim, fails to respond within 30 days or advises that
it will choose not to undertake management of the
defense of the Claim, the Purchaser Indemnified Parties
may do so, as long as such management is commercially
reasonable and acceptable under applicable
Environmental Law and to Governmental Authorities with
jurisdiction, if any, over such matters.
(ii) To the extent the Seller Indemnified Parties
seek indemnification under Section 10.3(g) hereof, they
shall first be obligated to provide Purchaser with
prompt written notice of each such claim, loss,
Remedial Action Cost or Damages ("Seller Environmental
Claim Notice"). For Purchaser Compliance Matters in
which Remedial Action must be undertaken the Seller
will be automatically responsible for carrying out all
such action (unless the Purchaser and Seller otherwise
agree), and any negotiations with Governmental
Authorities, except as to fines and penalties or other
monetary assessments to the extent such fines and/or
penalties are attributable to Purchaser's Business.
For all other matters and Purchaser Real Estate
Matters, Purchaser Disposal Matters, Purchaser Exposure
Matters and Purchaser Natural Resource Matters,
Purchaser shall have 30 days following delivery of any
Seller Environmental Claim Notice to advise the Seller
Indemnified Parties in writing of its intent to defend
and indemnify the Seller Indemnified Parties for the
matter set forth in the Seller Environmental Claim
Notice. If Purchaser denies the Claim, fails to
respond within 30 days or advises that it will choose
not to undertake management of the defense of the
Claim, the Seller Indemnified Parties may do so, as
long as such management is commercially reasonable and
acceptable under applicable Environmental Law and to
Governmental Authorities with jurisdiction, if any,
over such matters.
Regardless of which Party has undertaken
management of any Claim, the parties shall at all times
cooperate with one another and shall direct their
respective agents to so cooperate. Said cooperation
shall include, but is not limited to, providing access
to all documents and data prepared by either party or
its agent, providing notice prior to entry on any
property and the opportunity for joint inspection of
site work and sharing of samples intended for analysis,
accepting reasonable requested revisions to any
proposed work plan, report, summary, position paper, or
similar document, providing reasonable advance notice
of any meeting or teleconference with Governmental
Authorities and allowing the participation of the non-
managing party at any such conference or meeting.
Further, with regard to Real Estate Matters affecting
any Owned Real Property or Leased Real Property, in
undertaking any Remedial Action, the managing party
shall seek to employ Remedial Action alternatives which
(i) are commercially reasonable and available, (ii)
are, or should be, acceptable under prevailing
Environmental Law and governmental Authorities, and
(iii) result in or impose a burden that lowers the
market value or marketability of any of the Owned Real
Property or Leased Real Property or Seller's business
or causes material inconvenience or disruption to any
of the operations of Seller's Business.
ARTICLE XI
Non-Competition and Non-Solicitation Covenant
Section 11.1 Basic Covenant. Huffy, Hufco and
Seller agree, jointly and severally, that for a period
of five years from and after the Closing Date they
will not, directly or indirectly, engage as a
principal, agent, partner, stockholder (other than as
passive investor owning less than 5% of a publicly-
traded company), member, consultant, lender or in any
other capacity, in a business, directly or indirectly,
that would be competitive with Seller's Business sold
to Purchaser hereunder. From the date hereof until the
second anniversary of the Closing Date, none of Huffy,
Hufco or Seller or any other Affiliate will (i) solicit
for hiring or hire (or assist or encourage the
solicitation of) any of the employees, consultants,
agents, or distributors of Purchaser, Seller or their
respective Affiliates as of the date hereof or at any
time during the period ending on the second anniversary
of the Closing; provided, that the foregoing
restriction shall not prohibit general solicitations of
employment in a publication of general circulation or
otherwise not specifically targeted at Purchaser's
employees and shall not apply to employees of Purchaser
whose employment by Purchaser has been terminated by
Purchaser, (ii) influence or attempt to influence any
supplier, customer or potential customer of the
Purchaser or Seller's Business to terminate or modify
any written or oral agreement or course of dealing with
the Purchaser or Seller's Business, or (iii) actively
solicit to employ or retain, or arrange to have any
other person or entity employ or retain, any person who
is an employee of Seller's Business (on the date
hereof) or who is presently being recruited to become
employed or retained by Seller's Business as an
employee, or in a similar such capacity.
Section 11.2 Enforcement. Huffy, Hufco and
Seller hereby agree and acknowledge that the
restrictions contained in this Article XI are
reasonable and necessary to protect the legitimate
interests of the Purchaser and its Affiliates and that
Purchaser would not enter into this Agreement or
purchase the Assets without the covenant and agreement
of Huffy, Hufco and Seller to the non-competition
covenant contained herein. The parties agree that if
Huffy, Hufco or Seller violates this covenant that
continuing and irreparable harm will be caused to
Purchaser thereby for which there is no adequate remedy
at law and that Purchaser shall be entitled, in
addition to any other remedies and damages available,
to seek an injunction to restrain the violation of this
covenant. None of Huffy, Hufco or Seller shall, in any
action or proceeding to enforce any of the provisions
of this Agreement, assert the claim or defense that
such an adequate remedy at law exists. In the event of
such breach by Huffy, Hufco or Seller, the Purchaser
shall have the right to enforce the provisions of this
Article XI by seeking injunctive or other relief in
any court, and this Agreement shall not in any way
limit remedies of law or in equity otherwise available
to the Purchaser. If an action at law or in equity is
necessary to enforce or interpret the terms of this
agreement, the prevailing party shall be entitled to
recover, in addition to any other relief, reasonable
attorneys' fees, costs and disbursements.
Section 11.3 Savings Clause. In the event that
the provisions of this Article XI should ever be
adjudicated to exceed the time, geographic, or other
limitations permitted by applicable law in any
applicable jurisdiction, then such provisions shall be
deemed reformed in such jurisdiction to the maximum
time, geographic, or other limitations permitted by
applicable law. In the event that any of Huffy, Hufco
or Seller shall be in breach of any of the restrictions
contained in this Article XI, then the period of time
in which such restrictions shall be effective shall be
extended for a period of time equal to the period of
time that Huffy, Hufco or Seller (as the case may be)
is in breach of such restriction.
Section 11.4 Covenant. From the date hereof
until the second anniversary of the Closing Date, none
of Purchaser, U. S. Industries, Inc. or their
respective Affiliates will (i) solicit for hiring or
hire (or assist or encourage the solicitation of) any
of the employees, consultants, agents or distributors
of Huffy, Hufco or their respective Affiliates as of
the date hereof or at any time during the period ending
on the second anniversary of the Closing (excluding
Seller and TTL); provided, that the foregoing
restrictions shall not prohibit general solicitations
of employment in a publication of general circulation
or otherwise not specifically targeted at such
employees and shall not apply to any such employees who
have been terminated.
ARTICLE XII
Termination
Section 12.1 General. This Agreement may be
terminated and the transactions contemplated herein may
be abandoned, (a) by mutual written consent of
Purchaser and Seller, (b) by either Purchaser or
Seller, if any permanent injunction or action by any
governmental authority preventing the consummation of
the Closing shall have become final and nonappealable,
(c) by any party by notice to the other party in the
event that the Closing Date shall not have occurred on
or before April 1, 1999; provided, if the only
condition to Closing not satisfied is the Antitrust
Improvements Act compliance set forth in Section 4.6
hereto, then that date shall be September 30, 1999;
provided further, that if the Closing Date shall not
have occurred on or before such dates due to the act or
omission of one of the parties in violation of any
provision of this Agreement, that party may not
terminate the Agreement pursuant to this clause (c) of
Section 12.1.
Section 12.2 No Liabilities in Event of
Termination. In the event of any termination of the
Agreement as provided in Section 12.1 above, this
Agreement shall forthwith become wholly void and of no
further force and effect and there shall be no
liability on the part of Purchaser, Seller, Hufco or
Huffy, except that the obligations of Purchaser,
Seller, Hufco and Huffy under Sections 4.5, 4.7 and
Article X of this Agreement shall remain in full force
and effect, and except that termination shall not
preclude any party from suing the other party for
breach of this Agreement.
ARTICLE XIII
Miscellaneous
Section 13.1 Headings. The subject headings of
the sections, paragraphs and subparagraphs of this
Agreement are included for purposes of convenience
only, and shall not affect the construction or
interpretation of any of its provisions.
Section 13.2 Entire Agreement, Modification and
Waiver. This Agreement, together with the agreements
referenced herein or contemplated hereby, constitute
the entire agreement between the parties pertaining to
its subject matter and supersede all prior and
contemporaneous agreements, representations and
understandings of the parties. No supplement,
modification or amendment of this Agreement shall be
binding unless executed in writing by all the parties.
No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any
other provision, whether or not similar, nor shall any
waiver constitute a continuing waiver. No waiver shall
be binding unless executed in writing by the party
making the waiver.
Section 13.3 Counterparts. This Agreement may
be executed simultaneously in one or more counterparts,
each of which shall be deemed an original, but all of
which together shall constitute one and the same
instrument.
Section 13.4 Rights of Parties. Nothing in
this Agreement, whether expressed or implied, is
intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the
parties to it and their respective successors and
assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any
third persons to any party to this Agreement, nor shall
any provision give any third persons any right of
subrogation or action over or against any party to this
Agreement.
Section 13.5 Assignment. Purchaser shall not
assign this Agreement except to an Affiliate or
successor. This Agreement shall be binding on, and
shall inure to the benefit of, the parties to it and
their respective heirs, legal representatives and
successors. Seller shall be free to assign its right
to receive payments under Section 1.3 to any party upon
delivery of written notice thereof to Purchaser not
less than two days prior to the Closing Date; provided
however, that none of Huffy, Hufco or Seller may assign
any other right, or delegate any obligation hereunder,
without the prior written consent of Purchaser.
Section 13.6 Remedies. Each party's obligation
under this Agreement is unique. If any party should
default in its obligations under this Agreement, the
parties each acknowledge that it would be extremely
impracticable to measure the resulting damages;
accordingly, the nondefaulting party, in addition to
any other available rights or remedies, may sue in
equity for specific performance, and the parties each
expressly waive the defense that a remedy in damages
will be adequate.
Section 13.7 Effect of Certain Actions. No
action taken pursuant to or related to this Agreement,
including without limitation any investigation by or on
behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance
with any representation, warranty, condition or
agreement contained herein.
Section 13.8 Schedules and Exhibits. All
Schedules and Exhibits are incorporated herein by
reference and are an integral part of this Agreement as
if set fully herein. Seller may at any time between
execution of this Agreement and the Closing Date
provide Purchaser in writing as a supplement to any
Schedule hereto any information considered necessary by
Seller to cause such Schedule to be complete and
accurate. The provision of such information shall not
affect the right of Purchaser to elect not to close the
transactions contemplated by this Agreement if the
representations and warranties of Seller contained in
this Agreement at the time of execution hereof shall
not be true and correct in all material respects at the
time of the Closing Date, and if, despite such right,
Purchaser nevertheless elects to close, Purchaser shall
not thereby be deemed to have waived any such disclosed
misrepresentation or breach of warranty, as of the date
of this Agreement, any claim against Seller by reason
thereof.
Section 13.9 Notices. All notices, requests,
demands and other communications under this Agreement
shall be in writing and shall be deemed to have been
duly given on the date of service if served personally
on the party (including without limitation service by
overnight courier service) to whom notice is to be
given, or on the third day after mailing if mailed to
the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid, at the
address set forth below, or on the date of service if
delivered by facsimile to the facsimile number set
forth below which facsimile is confirmed within three
days by deposit of a copy of such notice in first class
mail, registered or certified, postage prepaid at the
address set forth below. Any party may change its
address for purposes of this paragraph by giving the
other parties written notice of the new address in the
manner set forth above.
If to Seller, Hufco or Huffy Corporation
to Huffy: 225 Byers Road
Miamisburg, OH 45342
Attn: Ms. Nancy A. Michaud
Vice President-General
Counsel and Secretary
Fax: (937) 865-5414
with a copy to: Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202
Attn: Clifford A. Roe, Jr., Esq.
Fax: (513) 977-8501
If to Purchaser: TTHA Corp.
c/o USI Hardware & Tools
230 Half Mile Road
Red Bank, New Jersey 07701
Attn: Charles D. Carpenter, VP -
Corporate Development
Fax: (732) 345-1635
With a copy to: Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, Pennsylvania 19103
Attn: Cary S. Levinson, Esq.
Fax: (251) 981-4750
And as to Edwards & Angell, LLP
environmental 150 John F. Kennedy Parkway
matters, with a Short Hills, NJ 07078-2701
copy to: Attn: Eric J. Nemeth
Fax: (888) 325-9146
Section 13.10 Knowledge of Seller. To the
knowledge of Seller, to Seller's knowledge or any
counterparts thereof shall mean the actual knowledge of
the officers of Seller and the Managing Director of TTL
and those other natural persons listed on Schedule
13.10 hereto.
Section 13.11 Severability. If any provision of
this Agreement shall be declared by any court of
competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement
shall not be affected and shall remain in full force
and effect.
Section 13.12 Meanings of Certain Terms. As
used in this Agreement the term "Affiliate" as to any
person, means any other person, that, directly or
indirectly, through one or more intermediaries,
controls, is controlled by or is under common control
with such person.
Section 13.13 Transfer Taxes and Recording
Expenses. Seller shall assume and pay and shall
indemnify Purchaser and its Affiliates against all
motor vehicle or transfer taxes and recording expenses,
if any, required to be paid in connection with the
transfer of the Assets (including any interest charge
or penalty with respect thereto). Purchaser shall
assume and pay and shall indemnify Seller, Hufco and
Huffy against all sales taxes, if any, required to be
paid in connection with the transfer of the Assets
(including any interest charge or penalty with respect
thereto).
Section 13.14 Governing Law; Venue. This
Agreement shall be construed in accordance with, and
governed by the laws of, the State of Ohio.
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have
duly executed it as of the date set forth above.
Huffy Corporation True Temper Hardware Company
By:/s/Don R. Graber By:/s/Thomas A. Frederick
Title: Chairman of Title: Treasurer
the Board,
Chief Executive
Officer and
President
Hufco Company TTHA Corp.
By /s/Nancy A. Michaud By /s/Craig C. Sargeant
Title: Vice President Title: Vice President
Secretary and
Assistant
Treasurer
Date: February 11, 1999 at 5:01 P.M.
U. S. Industries, Inc. hereby guarantees, on behalf of
its subsidiary TTHA Corp., the fulfillment of all
obligations contained in this Agreement to be performed
by and on behalf of such corporation, and further
agrees to comply with the covenants contained in
Article XI, Section 11.4 as such applies to it.
U. S. Industries, Inc.
By /s/Craig C. Sargeant
Title: Chairman, USI Hardware & Tools
Date: February 11, 1999 at 5:01 P.M.
<PAGE>
SCHEDULE AND EXHIBIT INDEX
Exhibit A Form of Escrow Agreement
Exhibit B Assumption Agreement
Exhibit 1.1(a)(v) Harrisburg Real Estate Transfer
Exhibit 1.4 Agreed Adjustments
Schedule 1.1(a)(i) Inventory
Schedule 1.1(a)(ii) Equipment and Other Tangible
Property
Schedule 1.1(a)(iv) Contracts
Schedule 1.1(a)(v) Real Property and Leases
Schedule 1.1(a)(vi) Intangible Assets
Schedule 1.1(a)(vii) Governmental Permits and Licenses
Schedule 1.1(a)(x) Cash / Prepaid Expenses
Schedule 1.1(a)(xii) Bank Accounts
Schedule 1.1(c) Excluded Assets
Schedule 1.1(d) Liabilities (ii and iii)
Schedule 1.1(e) Employer Liabilities
Schedule 1.2(c) Assumed Contracts, Purchase Orders,
Leases, etc.
Schedule 1.7 Allocation of Purchase Price
Schedule 2.1 Organization
Schedule 2.3 Financial Statements
Schedule 2.4 Pending Claims
Schedule 2.5 Legal Compliance
Schedule 2.6 Title to Assets
Schedule 2.7 Condition of Assets
Schedule 2.8 Leases
Schedule 2.11 Customers
Schedule 2.12 No Breach or Violation
Schedule 2.13 Interest in Customers, Suppliers and
Competitors
Schedule 2.15 Year 2000 Compliance
Schedule 2.16 Zoning
Schedule 2.17 OSHA and Similar Statutes
Schedule 2.18 Intellectual Property
Schedule 2.19 Environmental Matters
Schedule 2.20 Leases and Contracts
Schedule 2.21 Employees and Independent Contractors
Schedule 2.22 Labor Matters
Schedule 2.24 Employee Benefit Plans
Schedule 2.27 Insurance
Schedule 2.28 Governmental Licenses, Permits and
Related Approvals
Schedule 2.29 Absence of Certain Changes or Events
Schedule 2.30 Product Liability Claims; Product
Warranties
Schedule 2.31 Tax Matters
Schedule 2.32 Real Property
Schedule 2.34 Assets of TTL
Schedule 4.3(b) Conduct of Business - Capital
Expenditures
Schedule 4.14 Affiliated Transactions
Schedule 4.21(b) Severance
Schedule 8.6 Third Party Consents Not Required
Schedule 9.4(b) Assumption of Benefit Plans
Schedule 10.2(g) Seller's Indemnification Obligations
Schedule 10.2(h) Seller's Indemnification Obligations
(relating to that certain License Agreement)
Schedule 13.10 Knowledge of Seller
Note: The above-described exhibits and schedules are
not filed as part of this Form 8-K, as specified in
Section 601(b)(2) of Regulation S-K. The registrant
hereby agrees to supplementally furnish a copy of any
such omitted exhibit or schedule to the Securities and
Exchange Commission upon request.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000225463
<NAME> HUFFY CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 17,834
<SECURITIES> 0
<RECEIVABLES> 71,150
<ALLOWANCES> 2095
<INVENTORY> 46,442
<CURRENT-ASSETS> 226,189
<PP&E> 177,992
<DEPRECIATION> 114,260
<TOTAL-ASSETS> 329,859
<CURRENT-LIABILITIES> 175,896
<BONDS> 29,784
0
0
<COMMON> 16,633
<OTHER-SE> 76,518
<TOTAL-LIABILITY-AND-EQUITY> 329,859
<SALES> 584,201
<TOTAL-REVENUES> 584,201
<CGS> 484,269
<TOTAL-COSTS> 582,473
<OTHER-EXPENSES> (390)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,647
<INCOME-PRETAX> (4406)
<INCOME-TAX> (1759)
<INCOME-CONTINUING> (2647)
<DISCONTINUED> 1982
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (665)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
