SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report:
March 04, 1998
PACER TECHNOLOGY
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(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation or organization)
0-8864 77-0080305
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Commission File No. IRS Employer ID No.
9420 Santa Anita Avenue, Rancho Cucamonga, California 91730
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(Address of principal executive office) (Zip Code)
909-987-0550
------------------------------
(Issuer's telephone number,
including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
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On March 04, 1998, Pacer Technology ("Pacer") completed the
acquisition of certain assets of Cook Bates, Division of London
International Group, Inc. Cook Bates designs, manufactures, and markets
an extensive line of manicure products. These products are marketed under
such name brands as Gem and Mr. Mustache. The Company holds numerous patents
and also licenses such brand-name products as Oleg Cassini and Brut.
The assets purchased from Cook Bates primarily consisted of Inventory,
fixed assets, and intellectual property. The total purchase price consisted
of approximately $4,850,000 cash. The purchase price represented a nego-
tiated discount from the estimated net book value of the assets acquired.
The transaction was financed by Comerica Bank utilizing Pacer's existing
line of credit facility. The costs for this acquisition have not been
finalized. However, these will be reported on Form 8-KA when submitted.
Cook Bates has annual revenues of approximately $20 million and
leases facilities in Spartansburg, S.C. and Venice, FL. Pacer
intends to operate these facilities for approximately four months
and subsequently plans to integrate these operations to existing
Pacer locations.
<PAGE>
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements of businesses acquired - Cook Bates.
Audited financial statements will be submitted with the
amended Form 8-K on Form 8-KA on or before May 18, 1998.
(b) Proforma Financial Statements
Audited pro forma financial statements will be submitted with
the amended Form 8-K on Form 8-KA, on or before May 18, 1998.
(c) Exhibits:
2.1 Asset Purchase Agreement
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the under-
signed hereunto duly authorized.
PACER TECHNOLOGY
______________________
Roberto J. Cavazos, Jr.
Chief Financial Officer
Date: March 12, 1998
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the under-
signed hereunto duly auithorized.
PACER TECHNOLOGY
/s/Roberto J. Cavazos, Jr.
--------------------------
Roberto J. Cavazos, Jr.
Chief Financial Officer
Date: March 12, 1998
<PAGE>
- -----------------------------------------------------------------
AGREEMENT
between
LONDON INTERNATIONAL GROUP, INC. - SELLER
and
PACER TECHNOLOGY - PURCHASER
re
SALE OF ASSETS OF COOK BATES
- -----------------------------------------------------------------
This agreement ("Agreement") is made effective this 2nd day of
March, 1998, by and between PACER TECHNOLOGY ("Purchaser"), a California
Corporation having its principal office at 9420 Santa Anita Avenue, Rancho
Cucamonga, California 91730, LONDON INTERNATIONAL GROUP, INC. ("Seller" or
"LIG"), a New Jersey Corporation having its principal office at 3585 Engineer-
ing Drive, Second Floor, Norcross, Georgia 30092, the transactional subject-
matter of which is the sale of certain assets of the COOK BATES DIVISION
("Cook Bates") of Seller to Purchaser.
Recitals
A. Seller has conducted, and continues to conduct, a
business under the name and style "Cook Bates" which primarily engages in the
business ("Business") of manufacturing, packaging, marketing and distributing
manicure and nailcare implement products ("Manicure Implement Products") under
generic, private label, brand-names, and valid brand-name licenses. The Cook
Bates production facility ("Production Facility") is located in Spartanburg,
South Carolina, and its distribution center ("Distribution Center") is located
in Anderson, South Carolina
B. For the consideration and on the terms and conditions
provided in this Agreement, Seller desires to sell and Purchaser desires to
purchase only those assets set forth in Section 1.1 and specifically excluding
those assets set forth in Section 1.2.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises, covenants, agreements, representations, and warranties
contained in this Agreement, the parties hereto agree as follows:
Agreement
1. PURCHASE AND SALE OF ASSETS:
---------------------------
1.1 Purchased Assets:
----------------
Subject to the terms and conditions set forth in this Agreement, on
the Closing Date and through the Closing procedure specified in Section
5 hereof, for the purchase price hereafter specified, Seller agrees to
sell, assign, transfer, convey, set over and deliver to Purchaser, and
Purchaser agrees to purchase from Seller, the following described assets
associated with the Business (sometimes collectively referred herein
as the "Assets"):
<PAGE>
1.1.1 United States and foreign patents, registered and
unregistered trademarks, tradenames, trade dress, and service marks
owned by Seller or LRC North America, Inc. ("LRC"), and currently
or formerly used by Seller in connection with the Business as more
particularly described and set forth in Schedule 1.1.1;
1.1.2 All artwork and files for graphics and package design
used by Seller exclusively in connection with the Business;
1.1.3 All past and present customer and marketing information
relating to the distribution or sale of Manicure Implement Products,
including, customer list, payment histories, rebate and other
pricing arrangements or commitments and all other ongoing customer
contracts or commitments relating to the distribution or sale of
Manicure Implement Products;
1.1.4 All information concerning purchases and production of
inventory and supplies, including costs, quality control and
specifications, relating to the Business and a list of all suppliers
to the Business;
1.1.5 All other business records, trade secrets and other
information to the extent used by Seller in connection with the
Business;
1.1.6 All technology and know-how used by Seller exclusively
in connection with the Business;
1.1.7 All of Seller's goodwill in the Business including, but
not limited to, the name "Cook Bates", "Gem", "Cosmetco", or any
names similar thereto;
1.1.8 Seller's interest and rights under those brand-name
licenses identified in Schedule 1.1.8 ("Name Brand Licenses");
1.1.9 Seller's interest and rights under any and all customer
purchase orders, purchase contracts, licenses, and indebtedness
(but only to the extent assumed pursuant to Section 3 hereof) to
which Seller is a party with respect to the Business and prepaid
expenses identified in Schedule 1.1.9;
1.1.10 All plant machinery, equipment, fixtures, office equipment, computer
hardware and software of Seller as used in the Business
as itemized and set forth in Schedule 1.1.10; and
1.1.11 The following inventory items (collectively "Inventory"): (i) the
onsite and offsite warehoused raw materials inventory
relating to the Manicure Implement Products (herein the "Warehoused
Raw Material Inventory" as itemized and set forth in Schedule
1.1.11(i); (ii) the raw materials inventory relating to the Manicure
Implement Products which are in transit to Seller as to the Date
of Closing (herein the "In Transit Inventory") as itemized and set
forth in Schedule 1.1.11(ii); (iii) the onsite and offsite work-in-
<PAGE>
process inventory of the Manicure Implement Products (herein the
"Work-In-Process Inventory") as itemized and set forth in Schedule
1.1.11(iii); (iv) any onsite or offsite finished goods inventory of
the Manicure Implement Products (herein the "Finished Goods
Inventory") as itemized and set forth in Schedule 1.1.11(iv); and
(v) all returns of finished goods ("Returns") generally described
in Schedule 1.1.11(v) [which will be dealt with in accordance with
Section 2.3]. "Onsite and offsite" refers to those items of
Inventory which are located at the Production Facility, Distribution
Center, as well as in the hands of any third party being processed,
packaged, modified or otherwise dealt with for the Business.
All assets described in Sections 1.1 through 1.1.10 inclusive
and specifically excluding any items of Inventory are collectively
referred to herein as the "Tangible and Intangible Assets".
1.2 Excluded Assets:
---------------
Assets other than those described in Section 1.1. above will
be excluded from the transfer and sale of assets to Purchaser
under this Agreement including, without limitation, the following assets
of Seller related to or used by Seller in connection with the Business:
1.2.1 Trade accounts receivable for goods actually shipped
before Closing;
1.2.2 Cash and cash equivalents of Seller;
1.2.3 Insurance policies issued to Seller with respect to the
Assets or the Business and any claims against and proceeds of such
policies, subject, however, to Section 12.2.1 relating to
continuation of products liability coverage for Manicure Implement
Products sold by Seller prior to Closing;
1.2.4 Any real property owned by Seller;
1.2.5 U.S. Patent No. 4,943,462 (Nail Treatment Device); and
1.2.6 Tax Refunds due to Seller with respect to any period
ending on or before Closing;
1.3 Mechanism for Dealing with Inventory Assets:
-------------------------------------------
The different types of Inventory will be dealt with as
follows:
1.3.1 Warehoused Raw Material Inventory:
---------------------------------
The Warehoused Raw Material Inventory corresponding with
Seller's Perpetual Book Inventory listing, as set forth in
Schedule 1.1.11(i) to be attached hereto at Closing, and updated
through the Reconciliation procedure set forth in Section 2.5,
will be delivered, and title relative thereto shall pass, to
Purchaser, at Closing.
1.3.2 In Transit Inventory:
--------------------
Purchaser shall receive and inspect each shipment of In
Transit Inventory. Within five (5) days of such receipt,
Purchaser shall notify Seller, in writing, as to what items set
forth in Schedule 1.1.11(ii) are unusable or damaged and therefore
<PAGE>
not accepted by Purchaser. If Purchaser fails to so notify Seller,
then Purchaser will be deemed to have purchased the shipment in its
entirety, and the purchase price associated therewith shall be
released from the In Transit Inventory Escrow Account specified in
Section 2.2. If Purchaser exercises its rights of rejection, the
unaccepted goods shall be excluded from the sale of the In Transit
Inventory hereunder and the purchase price associated with the
acceptable portion of the In Transit Inventory contained in any
particular shipment shall be paid from the In Transit Inventory
Escrow Account in accordance with Section 2.2. Any rejected goods
will be delivered by Purchaser to Seller, or as Seller reasonably
directs, and title thereto shall never pass to Purchaser. Non-
Conforming, but otherwise usable and undamaged, items of In Transit
Inventory may not be rejected by Purchaser and shall be deemed sold
to, and accepted by, Purchaser, and Purchaser shall have all rights
against the vendor of such goods relative to the non-conformity
thereof to the applicable purchase order.
1.3.3 Work-In-Process Inventory:
-------------------------
The Work-In-Process Inventory corresponding with Seller's Perpetual
Book Inventory listing set forth in Schedule 1.1.11(iii) to be
attached hereto at Closing, and updated through the Reconciliation
procedure set forth in Section 2.5, will be delivered to Purchaser,
and title relative thereto shall pass to Purchaser, at Closing.
1.3.4 Finished Goods Inventory:
------------------------
The Finished Goods Inventory corresponding with Seller's
Perpetual Book Inventory listing as set forth in Schedule
1.1.11(iv) to be attached hereto at Closing, and updated through the
Reconciliation procedure set forth in Section 2.5, will be delivered
to Purchaser, and title relative thereto shall pass to Purchaser, at
Closing.
1.3.5 Returns:
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As Returns are received by Seller, the purchase price
associated therewith shall be ascertained and the amount thereof
shall be released from the Returns Escrow Account specified in
Section 2.3. This mechanism shall continue through and including
August 31, 1998. Any monies remaining in the Returns Escrow Account
as of close of business, August 31, 1998, shall be released back to
Purchaser.
1.4 Assets to be Sold Free of Encumbrances:
---------------------------------------
Except as may be specified herein, the Assets
are sold by the Seller to Purchaser free and clear of any and
all liens, encumbrances, or claims of any third person, firm or entity
whatsoever.
2. PURCHASE PRICE - PAYMENT:
------------------------
As full payment for the sale and transfer of the Assets by Seller
to Purchaser, Purchaser shall pay to Seller a total consideration ("Total
Purchase Price") calculated as follows:
2.1 Cash - Warehoused Raw Material Inventory, Work-In-Process Inventory and
-----------------------------------------------------------------------
Finished Goods Inventory:
------------------------
At Closing, the Perpetual Book Inventory Value (determined in
accordance with generally accepted accounting principles) of the
Warehoused Raw Goods Inventory, Work-In-Process Inventory and Finished
Goods inventory respectively shall be determined. The sum of $500,000
shall be subtracted from such Perpetual Book Inventory Value and the
<PAGE>
result multiplied times 72.5%. The result so obtained will be the amount
paid by wire transfer by Purchaser to Seller at Closing and such amount
shall be applied towards the final purchase price for all items specified
in Schedules 1.1.11(i), 1.1.11(iii) and 1.1.11(iv) which will be
determined through the Reconciliation procedure set forth in Section 2.5.
2.2 Cash - Escrow - In Transit Inventory:
------------------------------------
Based upon the records of Seller, immediately prior to Closing, Schedule
1.1.11(ii) itemizing all In Transit Inventory will be updated and finalized
and a Verifiable Book Value (as defined in Section 2.7) thereof shall be
specified on such Schedule. An amount equal to 100% of such Verifiable
Book Value shall be deposited by Purchaser by wire transfer into an
account at a mutually agreeable financial institution ("In Transit Inven-
tory Escrow Account") subject to withdrawal only upon the signatures of
both Seller and Purchaser. As In Transit Inventory shipments are received
and processed in the manner specified in Section 1.3.2, the purchase price
associated therewith shall be withdrawn from the In Transit Inventory
Escrow Account and paid to Seller and delivery and title thereto shall
pass to Purchaser at the time of such payment. Risk of loss of In Transit
Inventory shall repose in Seller until payment is received therefor. After
all In Transit Inventory Shipments have been received and processed in
the manner set forth and contemplated in Section 1.3.2, any monies remain-
ing in the In Transit Inventory Escrow Account shall be the property of
Purchaser and remitted to Purchaser.
2.3 Cash - Escrow - Returns:
-----------------------
Based upon the records of Seller, immediately prior to Closing, the parties
have made a good faith estimate of $425,000.00 as being the approximate
value of the anticipated post-Closing Returns. An amount equal to 72.5%
of such estimate ($308,125.00) shall be deposited by Purchaser by wire
transfer into an account at a mutually agreeable financial institution
("Returns Escrow Account") subject to withdrawal only upon the signatures
of both Seller and Purchaser. On or before the fifth (5th) business day
of each month after Closing, Seller and Purchaser shall prepare and sub-
mit to the other a written list of Returns received by either during the
immediate preceding Calendar month. Within five (5) business days there-
after, the parties shall reconcile their respective lists of Returns to
make: (i) a list of Returns made during the preceding Calendar month to
which they both agree ("Agreement List"); and (ii) a list of Returns as
to which there is no agreement as to whether such are Returns hereunder
("Disagreement List"). The purchase price associated with the Returns
itemized on the Agreement List shall be equal to 72.5% of the standard
cost value thereof, and this amount shall be forthwith withdrawn from the
Returns Escrow Account and paid to Seller and delivery and title thereto
shall pass to Purchaser at the time of such payment. If a Disagreement
List results from the above-described process, then the parties shall,
within five (5) days after communication of the Disagreement List to both
of them, agree upon a single independent accountant to decide what items
on the Disagreement List are Returns for which Seller is entitled to pay-
ment from the Returns Escrow Account. If the parties are unable to agree
on an independent accountant to resolve the controversy, they shall each
advise the other in writing within five (5) days thereafter, of the identi-
ty of an acceptable independent accountant, and the two accountants so
chosen shall resolve the issue among themselves and if unable to do so,
they shall chose a third accountant who will resolve the controversy.
If either party fails to chose an accountant, the accountant chosen by
the other party shall decide the dispute. Upon resolution of the
<PAGE>
dispute, Seller shall be entitled to withdraw the purchase price associated
with any items on the Disagreement List that are determined to be valid
Returns and title thereto shall pass to Purchaser at the time of such pay-
ment. Risk of loss of Returns shall repose in Seller until payment is
received therefor. The process specified in Section 1.3.5, as implement-
ed through this Section 2.3, shall continue through and including close of
business (EST), August 31, 1998. Any monies remaining in the Returns
Escrow Account at that time shall be remitted to Purchaser and any Returns
not actually received and paid for by that time shall be considered to
remain the property of Seller. The Returns that remain the property of
Seller may be disposed of by Seller in any manner it may chose, except
that Seller may not sell to a group of customers (not to exceed 20)
identified by Purchaser, provided, however, that Purchaser shall have
the right of first refusal to purchase such Returns from Seller on the
same terms and conditions that Seller would otherwise have disposed of
same.
2.4 Cash - Tangible and Intangible Assets:
-------------------------------------
Immediately prior to the Closing, all Schedules specified or referred to
in Sections 1.1.1 through 1.1.10 relating to Tangible and Intangible Assets
shall be updated, finalized and attached hereto. The total purchase
price of the Tangible and Intangible Assets shall be $200,000 and will be
payable by Purchaser to Seller by wire transfer, at Closing.
2.5 Reconciliation After Closing:
----------------------------
The parties understand, acknowledge and agree that there may well be
discrepancies between the actual physical inventory listings for the
Warehoused Raw Material Inventory, Work-In-Process Inventory and Finished
Goods Inventory and the Perpetual Book Inventory listings therefor as
carried at Closing on the books of LIG, together with the values associated
therewith. It is agreed that a reconciliation ("Reconciliation") between
the Perpetual Book Inventory listing and values at Closing and the actual
inventory listing and values will occur within seven (7) business days
after Closing through the cooperation of Purchaser and Seller using the
Seller's existing computer and record keeping systems. If, after applying
the formula specified in Section 2.1, the Reconciliation shows that the
amount of cash to be paid pursuant to Section 2.1 should have been greater
than that actually paid, then within five (5) business days after receipt
of such Reconciliation, Purchaser shall remit to Seller the full amount
of the shortfall. Conversely, if the Reconciliation shows that the
purchase price paid by Purchaser to Seller pursuant to Section 2.1 was
more than should have been paid, then, within five (5) business days after
receipt of the Reconciliation, Seller shall remit an amount equal to the
excess to Purchaser. In conjunction with the Reconciliation, Schedules
1.1.11(i), 1.1.11(iii) and 1.1.11(iv) shall be updated and modified to
reflect the actual items and values therefor, and the revised Schedules
shall replace and supersede the corresponding Schedules attached to this
Agreement at Closing.
2.6 Allocation of Purchase Price:
----------------------------
The Total Purchase Price shall be allocated for tax purposes as set forth
in the immediate preceding Sections 2.1, 2.2, 2.3, 2.4 and 2.5. Each of
the Parties agrees to report this transaction for federal tax purposes in
accordance with such allocations.
2.7 Definition of Verifiable Book Value:
-----------------------------------
As used herein "Verifiable Book Value" shall mean the cost basis for any
asset being sold hereunder as carried on the books of LIG and which are
<PAGE>
established and maintained through generally accepted accounting
principles.
3. ASSUMPTION OF CONTRACTS AND OBLIGATIONS:
---------------------------------------
Purchaser agrees to assume only those contracts and obligations of Seller listed
in Schedule 3. It is expressly understood and agreed that Purchaser shall not
be liable for any of the obligations or liabilities of Seller of any nature,
kind or character other than those specifically assumed by Purchaser under this
Section 3.
3.1 Payment of Outstanding Purchase Orders:
--------------------------------------
Relative to Cook Bates purchase orders which relate to goods, supplies
and materials to be received by the Cook Bates business and are outstand-
ing as of Closing ("Outstanding Purchase Orders"), the following process
will be applicable:
3.1.1 Review of Purchase Records:
--------------------------
At Pre-Closing, Purchaser shall review the Cook Bates purchase
records in order to determine: (i) the identity of the vendors
associated with each Outstanding Purchase Order; (ii) the method
committed to by Seller for payment thereof; (iii) the segregation
of goods meant to be received and utilized by Cook Bates [in those
instances where Outstanding Purchase Orders commingle the ordering
of goods for Cook Bates and other business divisions or entities];
and (iv) the status relative to the delivery of those supplies and
goods to be received by Cook Bates under the Outstanding Purchase
Orders [e.g. not shipped, shipped but not received, received but
not processed, etc.]. An itemization of such materials, supplies
and goods ("Outstanding Purchase Order Items") shall be compiled
indicating for each item the identity of the vendor, purchase order
number, description of the goods, quantity, unit of measure, date
shipped, terms of sale, bank, expiration debit date, and the amount.
The compiled listing of Outstanding Purchase Order Items will be
attached hereto at Pre-Closing as Schedule 3.1.1.
3.1.2 Purchaser's Payment of Outstanding Purchase Order Items:
-------------------------------------------------------
Purchaser will assume and pay for all amounts owing under the Out-
standing Purchase Order Items and will coordinate payment, or make
new arrangements for payment, thereof with each vendor involved.
3.2 Outstanding Letters of Credit:
------------------------------
Within ten (10) business days after Closing, Purchaser shall replace the
outstanding amounts of any of Seller's open letters of credit which are
in place to cover any open purchase orders for items which are not
considered "in transit" as set forth in Schedule 3.2. For items which
are considered "in transit" at Closing, Seller understands, acknowledges
and agrees that its letters of credit covering same shall remain in full
force and effect to be drawn against by the applicable vendors in accord-
ance with the terms thereof.
3.3 Existing Promotion Programs:
---------------------------
Pacer will assume the liabilities and costs associated with the sales
promotion programs itemized in the attached Schedule 3.3. Relative to any
other promotion programs, the parties will resolve the benefit and lia-
bility issues by good faith negotiations utilizing the basic premise
<PAGE>
that pre-Closing benefits inure to Seller and post-Closing benefits
inure to Purchaser.
4. TRANSACTION RELATED TAXES:
-------------------------
Seller shall pay all sales and use taxes arising out of the transfer of the
Assets and shall pay its portion, prorated as of the Closing Date, of any state
and local real and personal property taxes associated with the business of
Seller's Cook Bates. Purchaser shall not be responsible for any business,
occupation, withholding, or similar tax, or any taxes of any kind related to any
period prior to the Closing.
5. CLOSING:
-------
If the Pre-Closing specified in Section 5.3 occurs (which will be evidenced by
the execution of this Agreement by all parties), Closing of the transactions
contemplated by the within agreement ("Closing") shall automatically, without
further action of any nature, be deemed to take place at the office of LIG's
counsel in this transaction, Geralyn G. Humphrey, HANNOCH WEISMAN, 4 Becker
Farm Road, Roseland, New Jersey 07068-3788 at 12:01 a.m. on March 4, 1998
("Closing Date"). Between the time of Pre-Closing on March 2, 1998 and the time
of Closing, the Business shall not be operated in any manner by Seller except
for emergency situations and the taking of usual routine contacts from vendors
and customers of the Business. From the time of Pre-Closing to Closing, Seller
will not deal with any other persons, firms or entities relative to the sale
of the Business. The Pre-Closing shall be considered to be the same as a "Sit
Down" closing in all respects except for the automatic Closing as set forth
above, and shall be conducted by the parties and, if present, their respective
legal counsel. Seller and Purchaser do hereby agree to act in conformity with
the following:
5.1 Pre-Closing Deliveries of Seller:
--------------------------------
At the Pre-Closing (as that term is defined in Section 5.3), Seller shall
deliver the following:
5.1.1 Agreement: Four (4) copies of the within Agreement originally
executed by Seller.
5.1.2 Schedules: Copies of all Schedules to the within Agreement with a
written statement that Seller has approved same for attachment hereto
or, in lieu of any particular Schedule required herein for the
benefit of Seller, a written statement of waiver of the requirement
thereof.
5.1.3 Certifications and Resolutions: Resolutions of Seller's board of
Directors, certified by a duly authorized officer of LIG, in form
satisfactory to counsel for Purchaser, authorizing the execution and
performance of this Agreement and all actions to be taken by Seller
under this Agreement. Seller shall deliver the following certifi-
cations and Resolutions, each dated as of Closing and indicating that
they are valid as of that date:
(a) A certification that, assuming the transactions contemplated by
the within Agreement Close, there are no agreements to which
Seller is a party or of which Seller is aware, whether oral or
written, under which there would exist any rights of any third
party to purchase all or any portion of the Assets.
<PAGE>
(b) A certification identifying all officers and members of the board
of directors of Seller.
(c) A certification executed by a duly authorized officer of Seller
certifying that all shareholders action necessary to effect the
sale of Assets as contemplated herein has been obtained, or, if
not obtained, none was required.
5.1.4 Instruments of Transfer: Instruments of assignment and transfer for
all assets being sold hereunder including, but not limited to, bills
of sale, assignments of intellectual property rights and licenses
(or replacements therefore which specify Purchaser as being the owner
thereof), rights under agreements, trademarks, tradenames, patents,
patent applications, patent licenses, shop rights, and other
property, tangible or intangible, except as may be expressly provided
in Section 1.2 as an Excluded Asset.
5.1.5 Opinion Letter of Seller's Counsel: The opinion of Seller's counsel
dated as of the Closing Date, in form and substance satisfactory to
Purchaser and its counsel.
5.1.6 Certificate of Products Liability Insurance: The certificate of
products liability insurance as required pursuant to Section 10.3.
5.1.7 Further Documents: Seller, at any time on or after Closing, will
execute, acknowledge, and deliver any further deeds, assignments,
conveyances, and other assurances, documents, and instruments of
transfer, reasonably requested by Purchaser, and will take any other
action consistent with the terms of this Agreement that may reason-
ably be requested by Purchaser for the purpose of assigning, trans-
ferring, granting, conveying, and confirming to Purchaser, or
reducing to possession, any or all property to be conveyed and trans-
ferred under this Agreement. If requested by Purchaser, Seller
further agrees to prosecute or otherwise enforce in its own name
for the benefit of Purchaser any claims, rights, or benefits that
are transferred to Purchaser under this Agreement and that require
prosecution or enforcement in Seller's name. Any prosecution or
enforcement of claims, rights, or benefits under this paragraph
shall be solely at Purchaser's expense, unless the prosecution or
enforcement is made necessary by a breach of this Agreement by
Seller.
5.2 Pre-Closing Deliveries of Purchaser:
-----------------------------------
At the Pre-Closing, Purchaser shall deliver the following:
5.2.1 Agreement: Four (4) copies of the within Agreement originally
executed by Purchaser.
5.2.2 Payment to Seller: Arrangement for the wire transfer of funds to
the trust account of Seller's Counsel (pursuant to instruction
provided by said Counsel) in an amount equal to the cash required
to be paid to Seller pursuant to the provisions of Sections 2.1, 2.2,
2.3 and 2.4.
<PAGE>
5.2.3 Schedules: Copies of all Schedules to the within Agreement with a
written statement that Purchaser has approved same for attachment
hereto or, in lieu of any particular Schedule required herein for
the benefit of Purchaser, a written statement of waiver of the
requirement thereof.
5.2.4 Certifications and Resolutions: Certified resolutions by Purchaser's
Board of Directors, in form satisfactory to counsel for Seller,
authorizing the execution and performance of this Agreement and all
actions to be taken by Purchaser under this Agreement. Purchaser
shall deliver the following certifications and resolutions, each
dated as of Closing and indicating that they are valid as of that
date:
(a) A certification executed by a duly authorized officer of
Purchaser certifying that all of Purchaser's representations
and warranties under this Agreement are true as of the Closing
Date, as though each of those representations and warranties
had been made on that date.
5.2.5 Instruments of Assumption: Any instruments of assumption of liabi-
lities of Purchaser in form and substance satisfactory to Seller's
counsel and fully executed by Purchaser.
5.2.6 Opinion Letter of Purchaser's Counsel: The opinion letter of
Purchaser's counsel dated as of the Closing Date, in form and
substance satisfactory to Seller and its counsel.
5.2.7 Further Documents: Purchaser, at any time before or after the
Closing Date, will execute, acknowledge, and deliver any further
documents, assurances, and instruments, reasonably requested by
Seller, and will take any other action consistent with the terms of
this Agreement that may reasonably be requested by Seller to carry
out the terms hereof.
5.3 The Pre-Closing and Delayed Closing:
------------------------------------
The Pre-Closing and Closing shall occur through the parties and their
counsel doing the following:
5.3.1 At the Pre-Closing, attach copies of required Schedules to the within
Agreement to the duplicate originals thereof and distribute one copy
each to the Purchaser and Purchaser's attorney and one copy each
to Seller and Seller's attorney.
5.3.2 At the Pre-Closing Purchaser will wire transfer (pursuant to wiring
instructions provided by Seller's Counsel to Purchaser) to said
Counsel's trust account, an amount equal to that required to be paid
by Purchaser to Seller at Closing pursuant to Section 2.1. 2.2, 2.3
and 2.4.
5.3.3 At the Pre-Closing, deliver instructions to Seller's Counsel as to
disbursement of the funds deposited by Purchaser as of Closing,
specifying the amount to be released to Seller at Closing, and the
identity of the financial institution accounts and amounts to be
deposited therein at Closing relative to the In Transit Inventory
<PAGE>
escrow Account and Returns Escrow Account (Sections 2.2 and 2.3).
5.3.4 On the date of Closing, deliver all instruments of transfer
(Section 5.1.4) from Seller in favor of Purchaser to Purchaser.
5.3.5 On the date of Closing, deliver all instruments of assumption
(Section 5.2.6) to Seller.
5.3.6 On the date of Closing, deliver the written certifications and
resolutions required of Seller to Purchaser.
5.3.7 On the date of Closing, deliver the written certifications and
resolutions required of Purchaser to Seller.
5.3.8 On the date of Closing, deliver the opinion letter of Seller's
counsel to Purchaser.
5.3.9 On the date of Closing, deliver the opinion letter of Purchaser's
counsel to Seller.
If, through the good faith efforts of both Seller and Purchaser, the
Pre-Closing contemplated herein cannot be accomplished on Monday , March
2, 1998, and if the time for the Pre-Closing and/or Closing is not further
extended through the mutual agreement of Purchaser and Seller, then none
of the deliveries of Seller or Purchaser shall be deemed to have occurred,
and the within agreement shall be of no further force or effect
whatsoever as between the parties.
6. SELLER'S REPRESENTATIONS AND WARRANTIES:
---------------------------------------
For purposes of making the within representations and warranties, the term
"Seller" shall refer to LIG and LRC North America, Inc. (which is selling here-
by certain intellectual properties as described under Section 1.1.1 and Schedule
1.1.1 but only gives such representations and warranties to the extent requir-
ed by the context hereof). Seller covenants and warrants to Purchaser that
at the time it executes the within Agreement and continuously thereafter
through and including the Closing:
6.1 Organization:
------------
LIG is a corporation duly organized, validly existing and in good standing
under the laws of the State of New Jersey, has all necessary corporate
powers to own its properties and to carry on its business as now owned
and operated by it, and is duly qualified to do interstate and intrastate
business and is in good standing in all other jurisdictions in which it
is required to be qualified to conduct business therein.
<PAGE>
LRC is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, has all necessary corporate powers
to own its properties and to carry on its business as now owned and
operated by it, and is duly qualified to do interstate and intrastate
business and is in good standing in all other jurisdictions in which it
is required to be qualified to conduct business therein.
6.2 Structure:
---------
LIG is a wholly owned subsidiary of LRC North America, Inc., a Delaware
Corporation, which in turn is a wholly owned subsidiary of New Bridge Hold-
ings (BV), a Dutch Corporation, which in turn is a wholly owned subsidiary
of Dakin Brothers, LTD, a United Kingdom Corporation, which in turn is a
wholly owned subsidiary of London International Group plc, a United Kingdom
Corporation which is the ultimate parent entity ("LIGplc").
6.3 Cook Bates:
----------
Cook Bates (assets of which are being purchased pursuant to the terms
hereof) is a division (as opposed to a subsidiary) of LIG and "Cook Bates"
is, in essence, a fictitious business name through which LIG conducts the
business.
6.4 Power and Authority:
--------------------
Seller and LRC North America, Inc. each has the corporate power and autho-
rity to execute, deliver and perform this Agreement and to execute,
deliver and perform any other instruments required to be delivered to
Purchaser at or prior to Closing (collectively "Seller's Transaction
Documents").
6.5 Authorization:
-------------
The execution and delivery by each Seller of this Agreement and Seller's
Transaction Documents, and the performance by Seller of any of their
obligations under this Agreement and Seller's Transaction Documents have
been duly and validly authorized through appropriate corporate action
necessary in connection therewith.
6.6 Enforceability:
---------------
This Agreement is, and when executed and delivery at or prior to Closing,
each of Seller's Transaction Documents will be, the legal, valid and bind-
ing obligations of the respective Sellers, enforceable against them in
accordance with their respective terms, except as may be limited by bank-
ruptcy and other similar laws affecting the rights of creditors generally.
6.7 Validity of Contemplated Transactions:
-------------------------------------
Neither the execution nor delivery of this Agreement or any of the Seller's
Transaction Documents by Seller, nor the performance or consummation of
the transactions contemplated by this Agreement and Seller's Transaction
Documents, conflicts with, or constitutes a breach of, or a default under:
(i) the Charter, Articles of Incorporation or Bylaws of any Seller; (ii)
any applicable law, or any applicable judgment, order, writ, injunction
or decree of any court in effect as of the date hereof; or (iii) any
agreement, indenture, instrument or contract to which any Seller is now
a party or by which any Seller is bound which would have a material
adverse impact upon LIG's ability to transfer title to the assets being
purchased hereunder. Consummation of the transactions contemplated here-
by will not cause the creation or imposition of any lien, charge or encum-
brance on any of the properties of Seller's Cook Bates division being sold
hereunder.
6.8 Financial Statements:
--------------------
Sellers have presented to Purchaser, and Purchaser has reviewed,
unaudited financial statements ("Financial Statements") associated with
the Business. Such have been prepared in accordance with generally accep-
ted accounting principles consistently followed by Seller throughout the
periods indicated, and fairly present the financial position of Cook Bates
in all material respects as of the respective dates of the balance sheets
included in the Financial Statements, and the results of its operations for
the respective periods indicated. Purchaser is aware that allocations
for general LIG expenses and overhead to its Cook Bates Division were made
<PAGE>
and Seller represents that such allocations were believed to be reasonable.
6.9 Absence of Specified Changes:
-----------------------------
Since the effective date of the latest Financial Statements relative to
Cook Bates referred to in the immediate preceding Section 6.4, there has
not been any:
6.9.1 Transaction by Seller's Cook Bates business except in the ordinary
course of business as conducted on that date;
6.9.2 Change in accounting methods or practices (including, without limit-
ation, any change in depreciation or amortization policies or rates)
by Seller relative to its Cook Bates business;
6.9.3 Commencement or notice or threat of commencement of any civil liti-
gation or any governmental proceeding against or investigation of
the affairs of Seller relative to its Cook Bates business;
6.10 Assets of Cook Bates:
---------------------
The following specifies the assets of Cook Bates being sold hereunder to
Purchaser:
6.10.1 Inventory: All items included in the Inventory (Section 1.1.11) are
the property of Seller. No items included in the Inventory have
been pledged as collateral, are encumbered in any manner (unless
Purchaser has expressly assumed the encumbrance), or are held by
Seller on consignment from others.
6.10.2 Tangible and Intangible Personal Property: The tangible and intan-
gible property being sold hereunder (all Assets except Inventory)
constitutes all tangible and intangible personal property being used
by Seller for the conduct by Seller of its Cook Bates business as
now conducted.
6.10.3 Trade Names, Trademarks and Copyrights: Schedule 1.1.1 to this
Agreement is a schedule of all trade names, trademarks, servicemarks
and copyrights and their registrations, owned or used by Seller
relative to its Cook Bates operations, or in which it has any rights
or licenses, together with a brief description of and status of each.
To the knowledge of Seller, none of the items described in Schedule
1.1.1 infringes on any trade name, trademark, servicemark, or copy-
right belonging to any other person, firm or corporation. Seller
is not a party to any license, agreement, or arrangement, whether as
licensor, licensee, franchisor, franchisee, or otherwise, with
respect to any trademarks, servicemarks, trade names, or applications
for them, or any copyrights being sold hereunder and the use there-
of by Purchaser and/or its assigns does not, to the knowledge of
Seller, and will not, conflict with, infringe on, or otherwise
violate any rights of others. Seller has the right to sell or
assign to Purchaser all owned trademarks, trade names, servicemarks,
and all such licenses and other rights associated with its Cook Bates
business except the license under which Seller has the right to use
the Oleg Cassini brand name, the assignment of which requires the
<PAGE>
consent of Oleg Cassini, Inc. for its transfer and assignment to
Purchaser.
6.10.4 Patents and Patent Rights: The patents listed in Schedule 1.1.1 are
in full force and effect and are not subject to any taxes, main-
tenance fees, or actions. There have been no interference actions
or other judicial, arbitration, or other adversary proceedings con-
cerning the patents or applications for patents listed in Schedule
1.1.1. To the knowledge of Seller, the manufacture, use, or sale
of the inventions, models, designs and systems covered by the patents
listed in Schedule 1.1.1 do not violate or infringe on any patent
or any proprietary or personal right of any person, firm or corporat-
ion; and Seller has not infringed, or is it now infringing, on any
patent or other right belonging to any person, firm or corporation.
Relative to the patent rights being sold hereunder, Seller is not a
party to any license, agreement, or arrangement, whether as licensee,
licensor, or otherwise, with respect to any patent, application for
patent, invention, design, model, process, trade secret, or formula
relative to its Cook Bates business.
6.10.5 Trade Secrets and Similar Items: Seller has the right and authority
to use and to transfer to Purchaser such inventions, trade secrets,
processes, models, designs and formulas used by Seller to enable it
to conduct, and to continue to conduct, all phases of the Business
in the manner presently conducted by it, and such use, to Seller's
knowledge, does not, and will not, conflict with, infringe on, or
violate any patent or other rights of others.
6.10.6 Business Name: Seller represents, warrants, and covenants that
Seller has the right to use the Cook Bates name for and in connection
with the Business and that Seller has not granted and will not grant
to any other person, firm, or for Seller, the right to use, and that
Seller will not itself use the Cook Bates name in any capacity what-
soever after the Closing; it being specifically acknowledged, under-
stood and agreed that such is one of the Assets being sold by Seller
to Purchaser hereunder. As to other trade or business names (e.g.
"Gem" and "Cosmetco") used or available to be used by the Business,
Seller represents, warrants, and covenants that Seller has the right
to use such names for and in connection with the Business and such
is within the Assets being sold by Seller to Purchaser hereunder.
6.10.7 Title and Status of Assets: Seller has good and marketable title
to all the respective Assets and interests in Assets, whether
personal, mixed, tangible or intangible, which constitute all the
assets and interests in assets that are used in the business asso-
ciated with Seller's Cook Bates Division, and which are being sold
pursuant to the terms of this Agreement. All these Assets are free
and clear of restrictions on or conditions to transfer or assign-
ment, and free and clear of mortgages, liens, pledges, charges,
encumbrances, equities, claims, easements, rights of way, covenants,
conditions or restrictions.
6.10.8 Customers and Sales: The list of customers of Cook Bates given by
Seller to Purchaser prior to Closing and associated sales information
<PAGE>
relative to each is true, correct and accurate to the best knowledge
of Seller. Seller has no information, or is it aware of any facts,
indicating that any of these customers intend to cease doing business
with Seller's Cook Bates Division or materially alter the amount of
the business they are presently doing with Seller's Cook Bates
Division.
6.10.9 Vendors: The list of vendors of Cook Bates given by Seller to
Purchaser prior to Closing and associated contact and historical
information relative to each is true, correct and accurate to the
best knowledge of Seller. Seller has no information, or is it aware
of any facts, indicating that any of these vendors intend to cease
doing business with Seller's Cook Bates Division or materially alter
their relationship with the Business.
6.10.10 Representative, Output, Requirements, and Other Contracts: Relative
to the Cook Bates business conducted by Seller, Seller is not a
party to, nor is any of its property bound by, any output or require-
ments agreement.
6.11 Compliance With Laws:
--------------------
Seller and Cook Bates hereby represent and warrant with regard to all
federal, state, and local laws that:
6.11.1 Export Administration Amendments: To Seller's knowledge, relative
to the Business, Seller is not in violation of any provision of the
Export Administration Amendments of 1977 or the Foreign Corrupt
Practices Act of 1977 as the same may have been amended from time
to time.
6.11.2 No Payments to Governmental Officials: To Seller's knowledge, Seller
has not directly or indirectly paid or delivered any fee, commis-
sion, or other money or property, however characterized, to any
finder, agent, governmental official, or other party, in the United
States or any other country, that is in any manner related to the
Business and that Seller knows or has reason to believe to have
been illegal under any federal, state, or local law of the United
States or any other country having jurisdiction. Seller has not
participated, directly or indirectly, in any boycott or similar
practice affecting any of its actual or potential customers with
respect to the Business.
6.12 Litigation:
----------
There is not pending, or, to the best knowledge of Seller, threatened, any
suit, action, arbitration, or legal, administrative, or other proceeding,
or governmental investigation against or affecting Seller's Cook Bates
business, assets, or financial condition.
6.13 Interest in Customers, Suppliers and Competitors:
------------------------------------------------
Seller has no direct or indirect interest in any competitor, supplier, or
customer of Cook Bates.
6.14 Full Disclosure:
---------------
None of the representations and warranties made by Seller, or made in
any certificate or memorandum furnished or to be furnished by any of them
or on their behalf, contains or will contain any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements made, in light of the circumstances under which they are made,
not misleading.
<PAGE>
6.15 Warranties Exclusive:
--------------------
Except for the express representations and warranties made by Seller in
this Agreement or in any of Seller's Transaction Documents, Seller
makes no warranties, express or implied, concerning the Assets. SELLER
SPECIFICALLY DISCLAIMS ANY WARRANTY OR MERCHANTABILITY OR SUITABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE WHETHER OR NOT SELLER HAS BEEN MADE
AWARE OF ANY SUCH PURPOSE. Seller further disclaims any warranty
whatsoever as to the creditworthiness of Seller's customers or the
condition of any of the Tangible or Inventory portion of the Assets.
Purchaser specifically acknowledges that, except for the express
representations and warranties made by Seller in this Agreement or in any
of Seller's Transaction Documents, the Assets are purchased "AS IS" in
all respects.
6.16 Limited Remedies:
----------------
Purchaser will have no right to rescind this Agreement as a remedy
for a breach of any representation or warranty made by Seller in this
Agreement or in any of Seller's Transaction Documents. Seller shall have
no liability for lost profit damages of Purchaser and consequential damages
to Purchaser shall be limited to an amount not to exceed $4,800,000.00.
7. PURCHASER'S REPRESENTATIONS AND WARRANTIES:
-------------------------------------------
Purchaser represents and warrants to Seller that:
7.1 Organization:
------------
Purchaser is a corporation duly organized, existing, and in good standing
under the laws of the State of California. The execution and delivery of
this Agreement and the consummation of this transaction by Purchaser has
been duly authorized, and no further corporate authorization is necessary
on the part of Purchaser.
7.2 Power and Authority:
-------------------
Purchaser has the corporate power and authority to execute, deliver, and
perform this Agreement and to execute, deliver and perform the other
instruments required to be delivered to Seller at or prior to Closing
(collectively "Purchaser's Transaction Documents").
7.3 Authorization:
-------------
The execution and delivery by Purchaser of this Agreement and the
Purchaser's Transaction Documents and the performance by Purchaser of its
obligations under this Agreement and the Purchaser's Transaction Documents,
have been duly and validly authorized by the Directors of Purchaser, and
Purchaser has taken all other corporate action necessary in connection
with the foregoing.
7.4 Enforceability:
--------------
This Agreement is, and when executed and delivered at Closing each of
Purchaser's Transaction Documents to which Purchaser is a party will be,
the legal, valid and binding obligations of Purchaser, enforceable against
Purchaser in accordance with their terms except as may be limited by bank-
ruptcy and other similar laws affecting the rights of creditors generally.
7.5 Validity of Contemplated Transactions:
-------------------------------------
Neither the execution nor delivery of this Agreement nor any of Purchaser's
Transaction Documents by Purchaser nor the performance by Purchaser of the
transactions contemplated by this Agreement and the Purchaser's Transaction
Documents conflicts with, or constitutes a breach of, or default under:
(i) the Charter, Articles of Incorporation or Bylaws of Purchaser; (ii) any
<PAGE>
applicable law, or any applicable judgment, order, writ, injunction or
decree of any court in effect at the date of this Agreement; or (iii) any
agreement, indenture, instrument or contract to which Purchaser is now a
party or by which any Seller is bound which would have a material adverse
impact upon Purchaser's ability to perform its obligations under this
Agreement and the other Purchaser's Transaction Documents.
7.6 Ability to Consummate Transaction:
---------------------------------
Purchaser has the present financial and other ability to consummate the
transaction to which Purchaser is a party contemplated by this Agreement
and the other Purchaser's Transaction Documents.
7.7 Further Consents and Approvals:
-------------------------------
No consent, approval, or authorization of, or declaration, filing, or
registration with, any United States federal or state government regulatory
authority is required to be made or obtained by Purchaser in connection
with the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated by this Agreement. It is
acknowledged that disclosure of the within acquisition and the terms
associated therewith to the SEC within the appropriate time period after
closing will be required.
8. BULK SALES ACT MATTERS:
----------------------
Purchaser waives compliance with the provision of any state's Uniform Commercial
Code relating to bulk transfers in connection with the sale of the Assets.
However, such waiver shall in no way be construed to operate as a release of
Seller of its obligation to pay all debts associated with any of its businesses
which arose prior to Closing, and Buyer shall have no liability on account
thereof. Seller agrees to indemnify and hold Buyer free and harmless from any
claims made by creditors of Seller relative to debts of Seller which arose
prior to Closing. Nothing in this Section shall estop or prevent either
Purchaser or Seller from asserting as a bar or defense to any action or
proceeding brought under any applicable Bulk Sales Act that it does not apply
to the sale contemplated under this Agreement. The indemnification procedures
set forth in Section 10.1, and only the procedures, shall be used in dealing
with any indemnification required hereunder.
8.1 Indemnification and Guarantee Required of LIGplc:
------------------------------------------------
In consideration of the waiver given by Purchaser in this Section, Seller
has obtained, and a condition to Closing is, the written agreement (in
form and substance satisfactory to Purchaser's counsel) of London Inter-
national Group plc, the ultimate parent entity of Seller, to indemnify
and guarantee the payment of any creditor that might raise a claim against
Purchaser under any Bulk Sales Act. The period for such guaranty shall
be the same as the statute of limitations under any applicable Bulk Sales
Act for the bringing of a creditors action thereunder.
9. PURCHASER'S OBLIGATIONS BEFORE CLOSING:
--------------------------------------
Purchaser agrees that, unless and until the Closing has been consummated,
Purchaser and its officers, directors, and other representatives will hold in
strict confidence, and will not use to the detriment of Seller, any data and/or
information with respect to the Cook Bates business of Seller obtained in
connection with this transaction or Agreement, except insofar as that data and
information may be required by law to be included in Purchaser's proxy statement
in connection with a meeting of its shareholders if the same be required by the
Securities Exchange Act of 1934, as amended, and the general rules and
regulations issued under that Act. If the transactions contemplated by this
Agreement are not consummated, Purchaser will return to Seller all data and
information that Seller may reasonably request, including, but not limited to,
worksheets, test reports, manuals, lists, memoranda and other documents prepared
<PAGE>
by or made available to Purchaser in connection with this transaction.
9.1 Purchaser's Assistance:
----------------------
Purchaser will use its best efforts to assist Seller in obtaining
the consent of all necessary persons and agencies to the assignment and
transfer to Purchaser of any and all properties, assets, and agreements,
including agreements with the United States government or any of its agen-
cies, to be assigned and transferred under the terms of this Agreement.
9.2 Resale Certificate:
------------------
Purchaser agrees to furnish any necessary resale certificate or other
documents reasonably requested by Seller to comply with the provisions of
any applicable sales and use tax laws, but, if sales and/or use tax is
applicable to any of the Assets being sold hereunder, Seller shall pay
same.
10. SELLER'S OBLIGATIONS AFTER CLOSING:
----------------------------------
After Closing, Seller shall have the following obligations:
10.1 Seller's Indemnification:
------------------------
Seller shall protect, indemnify, defend, and hold harmless Purchaser, its
parents and subsidiaries, and their respective officers, directors,
employees, successors and assigns from and against and in respect of any
and all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries, and deficiencies, including, without limitation,
consequential damages (subject to the limitations set forth in Section
6.16), interest, penalties, and expenses (including without limitation,
reasonable attorney fees, costs and expenses incurred and defending against
the assertion of such liabilities) that Purchaser, its parents and subsi-
diaries, and their respective officers, directors, employees, successors
and assigns shall or may sustain, incur or suffer, with or without the
commencement of legal action), which arise, result from, are based upon,
or relate to: (i) any breach by Seller of any of Seller's representations,
warranties, covenants, or agreements in this Agreement, or in any schedule,
certificate, exhibit, or other instrument furnished or to be furnished by
Seller under this Agreement; (ii) liabilities claimed or established by
third parties relative to the placement into the stream of commerce of any
Cook Bates product prior to Closing ["Prior Products"]; and/or (iii) debts,
liabilities and claims that may be asserted by third parties under any
applicable Bulk Sales Act. Purchaser shall promptly notify Seller of
the existence of any claim, demand, or other matter to which Seller's
indemnification obligations would apply and shall give Seller a reasonable
opportunity to defend the same at Seller's own expense and with counsel
of Seller's own selection; provided that Purchaser shall at all times also
have the right to fully participate in the defense at its own expense.
If Seller shall, within a reasonable time after such notice, fail to
defend, Purchaser shall have the right, but not the obligation, to under-
take the defense of, and to compromise or settle (exercising reasonable
business judgment) the claim or other matter on behalf, for the account,
and at the risk, of Seller. If the claim is one that cannot by its nature
be defended solely by Seller (including, without limitation, any federal
or state tax proceeding), then Purchaser shall make available all infor-
mation and assistance that Seller may reasonably request.
10.2 Seller's Non-Competition:
------------------------
In consideration of the Purchaser Closing the transactions contemplated by
the within Agreement, LIG agrees that it will not, at any time within
<PAGE>
the five (5) year period immediately following the Closing Date, directly
or indirectly, engage in, or have any interest in, any person, firm, cor-
poration or business (whether as an employee, officer, director, agent,
security holder, creditor, consultant, or otherwise) that engages in any
activity throughout the world, which activity is the same as, similar to,
or competitive with any activity now engaged in by Seller's Cook Bates
business. The provisions of this non-competition covenant shall be assign-
able to any successor in interest of all or any portion of the Cook Bates
business as it may be conducted by Purchaser after Closing and may be
enforced by any such successor in interest against Seller. The sale, use,
or exploitation of U.S. Patent No. 4,943,462 (Section 1.2.5) by Seller
shall not be a violation or breach of Seller's non-competitions covenant
set forth immediately above.
10.2.1 Indemnification from Related Entities Competition: If any entity
controlling, controlled by, or under common control with Seller
(including, but not limited to, all intervening parents and the
ultimate parent of Seller) would be deemed to be in violation of the
above non-competition covenant if it were the Seller, then LIG shall
fully indemnify and hold Purchaser free and harmless from all damages
of any nature, kind or character, on account thereof, including the
recovery of reasonable attorney fees whether or not litigation or
arbitration is commenced or prosecuted by Purchaser. This indemnifi-
cation provision shall control over any inconsistent provision
contained elsewhere in this Agreement or in any document related
thereto. The indemnification procedures set forth in Section 10.1,
and only the procedures, shall be used in dealing with any indemni-
fication required hereunder. The indemnification provided for here-
under will survive Closing for so long as the non-competition
covenant of Seller set forth above remains in effect and as to issues
of indemnification outstanding at the end of such period, the indem-
nification requirement hereunder will continue for as long as the
issue is unresolved.
10.2.2 Construction of Covenant Not to Compete: The parties intend that the
non-competition covenant contained immediately above shall be
construed as a series of separate covenants, one for each county in
all of the States of the United States of America, and any govern-
mental subdivision of any other country within the world. Except
for geographic coverage, each such separate non-competition covenant
shall be deemed identical in terms to the non-competition covenant
contained immediately above. If, in any judicial proceeding, a court
shall refuse to enforce any of the separate covenants deemed included
in this section, then such unenforceable covenant shall be deemed
eliminated from these provisions for the purpose of those proceedings
to the extent necessary to permit the remaining separate non-
competition covenants to be enforced.
10.2.3 Confidential Information: Seller further agrees not to divulge,
communicate, use to the detriment of Purchaser or for the benefit
of any other person or persons, or misuse in any way, any confident-
ial information or trade secrets of Purchaser, including personnel
information, secret processes, know-how, customer lists, recipes,
formulas, or other technical data. Seller acknowledges and agrees
that any information or data that Seller may have acquired on any
<PAGE>
of these matters or items was received in confidence and as a fiduci-
ary of Purchaser.
10.2.4 Change of Name: Seller [broadly defined as set forth in Section 6]
agrees that immediately after the Closing Date it will take all
action required to change any name under which it does business so
that such do not include the words Cook Bates or a name similar
thereto and from and after the Closing Date, Seller [broadly defined
as set forth in Section 6] will not engage in any business or
activity which it previously conducted under the Cook Bates division
of LIG.
10.3 Products Liability Insurance:
-----------------------------
For a period of four (4) years after Closing, Seller shall keep and main-
tain in full force and effect an occurrence (as opposed to claims made)
form of products liability insurance to cover any and all claims of liab-
ility from the existence and/or use of Prior Products (products placed
into the stream of commerce by the Business prior to Closing) in an amount
equal to a minimum of $5,000,000.00 per occurrence/$10,000,000 in the
aggregate, naming Purchaser as an additional insured thereunder, with
cancellation thereof being allowed only upon at least thirty (30) day
notice to Purchaser, and a certificate of such insurance shall be delivered
to Purchaser through Escrow at Closing. If cancelled, Seller shall insure
that a replacement policy is obtained so that uninterrupted coverage to
the required limits is kept in full force and effect during the four (4)
year period. From and after Closing, Purchaser will maintain, for a period
of four (4) years, products liability insurance covering products which it
places into the stream of commerce from its operation of the Business with
limits customarily maintained by it.
10.4 Transition Facilitation by Seller:
---------------------------------
Commencing upon Closing, Seller agrees to provide the following transition
facilitations to Purchaser for up to one hundred twenty (120) days after
Closing ("Transition Period"):
10.4.1 General Administration Support Services: During the Transition
Period, Seller shall, to the extent reasonably requested by Purchaser
to facilitate the business transition from Seller's management to
Purchaser's management, provide invoicing, check writing (except
payroll), purchasing, and related reports, and the like under the
supervision and ultimate control of Purchaser.
10.4.2 Production Facility Support: The Production Facility will be made
available to, and may be used by, Purchaser by Seller during the
Transition Period, and, in addition to providing such physical plant,
Seller shall provide sufficient personnel and labor so that the manu-
facturing and production operations associated with the Business,
as carried on under Purchaser after Closing, will be able to
continue.
10.4.3 Distribution Center Support: In order to facilitate the transition
of Purchaser into its own warehouse and shipping facilities, Seller
agrees that for a period commencing with Closing and continuing for
up to one hundred twenty (120) days thereafter, it will provide
product warehousing and shipping at the Distribution Center for those
Cook Bates products produced by Purchaser during that period of time.
During the Transition Period, the amount to be paid by Purchaser for
<PAGE>
Distribution Center support under this Section 10.4.3 shall be
$15,000.00 per month excluding freight charges, the amount of which
will be reimbursed by Purchaser to Seller in the same manner as the
direct expense reimbursements set forth in Section 10.4.4 below.
10.4.4 Cooperation - Reimbursement of Costs by Purchaser to Seller: Seller
and Purchaser will make reasonable accommodations, one to the other,
relative to the providing and using of facilities and services during
the Transition Period, including without limitation the continuation
of product manufacturing and packaging at the same or higher levels
than exist at Closing. Purchaser has requested, and Seller agrees,
that Seller initially after Closing retain all employees associated
with the Business except for Andrew Mann. On the Closing Date,
Purchaser will wire transfer to Seller (pursuant to instructions
given by Seller) an amount equal to 50% of the agreed estimated costs
to be incurred by Seller under Sections 10.4.1 and 10.4.2 for March
1998. Thereafter, around the first day of each calendar month during
the remainder of the Transition Period, Seller shall present an
invoice to Purchaser itemizing the actual costs incurred by it under
Sections 10.4.1 and 10.4.2, for the immediate preceding month, shall
credit the estimated amount paid by Purchaser for such preceding
calendar month, add the amount owing for the preceding calendar month
under Section 10.4.3, and the amount of the result shall be wire
transferred by Purchaser to Seller within one business day after
receipt of such invoice. By way of example and not by way of
limitation, direct cost reimbursement will include, direct labor
costs, direct facilities costs (rent, utilities, taxes, etc.), but
will not include any of Seller's allocations for corporate expenses
and costs. The pro rata portion of any facility or service shared
between Seller and Purchaser during the transition period will be
considered a direct cost, reimbursable to Seller hereunder. Seller
will have no liability to Purchaser, or otherwise, with respect to
the facilitations provided under Section 10.4.1, 10.4.2, 10.4.3, and
10.4.4. Commencing with Closing, all risk of loss arising relative
to the Assets shall pass to Purchaser except as to any Assets for
which title passes at a later point in time, in which instances,
risk of loss shall pass to Purchaser at the time title thereto
passes to it.
10.4.5 Collections Received by Seller: The Parties acknowledge the like-
lihood that payments for invoicing by Purchaser in operating the
Cook Bates business from and after Closing may be received by Seller.
On a monthly basis, Seller is required to remit to Purchaser the
amount of any such payments then held by it with a complete account-
ing indicating all invoice numbers, customer identification numbers,
and any other reasonably required tracing information. Not more
often than once every month during the first six (6)
calendar months after Closing, and not more often than once every
three (3) calendar months thereafter, Purchaser, through its duly
authorized representatives, shall have the right to audit Sellers'
cash receipt records to verify the accuracy of the accountings for
payments received by Seller which are to be turned over to Purchaser
in accordance with the terms of this Section.
<PAGE>
10.4.6 Collections Received by Purchaser: In a like manner as set forth
under the immediate preceding Paragraph, Purchaser will remit, on
a monthly basis, any of Seller's monies coming into its hand.
10.4.7 Chargebacks and Other Adjustments from Pre-Closing Transactions: All
chargebacks from customers, other than Returns which will be dealt
with in the manner set forth in Section 2.3, pricing errors, ,
rebates, promotions, and the like, arising from Pre-Closing tran-
sactions and the Business as conducted by Seller, which result in
credits which may be invoked against Purchaser in the operation of
its Cook Bates business after Closing, shall be compiled and
periodically submitted by Purchaser to Seller for review. To the
extent that Seller does not object in writing to Purchaser within
ten (10) days after the receipt of such compilation. Seller shall
promptly remit the amount thereof to Purchaser. As to items to which
Seller objects, Seller and Purchaser will attempt in good faith to
negotiate a resolution of the dispute, and if unsuccessful, Purchaser
shall be left to any remedy at law or equity available to it.
11. PURCHASER'S OBLIGATIONS AFTER CLOSING:
-------------------------------------
After Closing, Purchaser shall have the following obligations:
11.1 Purchaser's Indemnity:
---------------------
Purchaser shall protect, indemnify, defend, and hold harmless Seller, its
parents and subsidiaries, and their respective officers, directors,
employees, successors and assigns, from and against and in respect of any
and all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries, and deficiencies, including, without limitation,
consequential damages (not to exceed $4,800,000.00), interest, penalties,
and expenses (including without limitation, reasonable attorney fees, costs
and expenses incurred and defending against the assertion of such liabi-
lities) that Seller, its parents and subsidiaries, and their respective
officers, directors, employees, successors and assigns shall or may
sustain, incur or suffer, with or without the commencement of legal
action), which arise, result from, are based upon, or relate to the
operation of the Business by Purchaser after Closing (including without
limitation the Transition Period), any breach of, or failure by, Purchaser
to perform any of its representations, warranties, covenants, or agree-
ments in this Agreement, or in any schedule, certificate, exhibit, or other
instrument furnished or to be furnished by Purchaser under this Agreement,
or which arise from Purchaser's operations from Sellers facilities during
the transition period. Seller shall promptly notify Purchaser of the
existence of any claim, demand, or other matter to which Purchaser's
indemnification obligations would apply and shall give them a reasonable
opportunity to defend the same at their own expense and with counsel of
their own selection; provided that Seller shall at all times also have the
right to fully participate in the defense at their own expense. If
Purchaser shall, within a reasonable time after such notice, fail to
defend, Seller shall have the right, but not the obligation, to undertake
the defense of, and to compromise or settle (exercising reasonable business
judgment) the claim or other matter on behalf, for the account, and at
the risk, of Purchaser. If the claim is one that cannot by its nature be
defended solely by Purchaser (including, without limitation, any federal
or state tax proceeding), then Seller shall make available all information
and assistance that Purchaser may reasonably request.
<PAGE>
12. PUBLICITY:
---------
All notices to third parties and all other publicity concerning the transactions
contemplated by this Agreement shall be jointly planned and coordinated by and
between Purchaser and Seller. No party shall act unilaterally in this regard
without the prior written approval of the other; however this approval shall
not be unreasonably withheld.
13. COSTS:
-----
13.1 Finder's or Broker's Fees:
-------------------------
Purchaser represents and warrants that it has not agreed to pay any broker
and/or finder in connection with the purchase of the Assets as contemplated
by this Agreement, and, as far as Purchaser knows, no broker or other
person is entitled to any commission or finder's fee on its account
relative thereto. Seller has utilized the services of a broker and/or
finder and acknowledges that it is responsible to pay any commission or
finder's fee in connection with the Closing of the transactions contem-
plated by the within Agreement. Seller and Purchaser each agree to indem-
nify and hold harmless one another against any loss, liability, damage,
cost, claim or expense incurred by reason of any brokerage, commission,
or finder's fee alleged to be payable because of any act, omission, or
statement of the indemnifying party.
13.2 Non-Escrow Expenses:
-------------------
Each party shall pay all non-escrow costs and expenses incurred or to be
incurred by it or them in negotiating and preparing this Agreement and in
closing and carrying out the transactions contemplated by this Agreement.
Seller shall be liable for all fees and costs to produce and deliver to
Purchaser at Closing all assignment and transfer documents pursuant to
which the items set forth in Schedule 1.1.1 and Purchaser shall be liable
for all fees and costs associated with processing, filing and/or recording
same with the appropriate governmental agency.
14. MISCELLANEOUS PROVISIONS:
------------------------
The following general and miscellaneous provisions shall be applicable relative
to the within Agreement.
14.1 Parties in Interest - Assignment:
--------------------------------
Nothing in this Agreement, whether express 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, nor is anything in this Agreement
intended to relieve or discharge the obligation or liabilityof any third
persons to any party to this Agreement, nor shall any provision give any
third persons any right of subrogation or action over against any party
to this Agreement. No party hereto may assign its interest under the with-
in Agreement to any third person, firm or entity without the prior written
consent of the other party.
14.2 Successors in Interest:
----------------------
Subject to any prohibition against assignment contained herein, the within
Agreement shall be binding on, and shall enure to the benefit of, the
parties to it and their respective heirs, legal representatives,
successors, and assigns.
14.3 Entire Agreement - Modification - Waiver:
----------------------------------------
This Agreement constitutes the entire agreement between the parties per-
taining to the subject matter contained in it and supersedes and replaces
all prior and contemporaneous agreements, representations, and understand-
ings 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
<PAGE>
binding unless executed in writing by the party making the waiver.
14.4 Headings and References:
-----------------------
The subject headings of the paragraphs and subparagraphs of this Agree-
ment are included for convenience only and shall not affect the construct-
ion or interpretation of any of its provisions.
14.5 Interpretations and Definitions:
-------------------------------
The language in all parts of this Agreement shall in all cases be simply
construed according to its fair meaning and not strict before or against
any one party hereto. Unless otherwise provided for herein, or unless the
context otherwise requires, the following definition and rules of cons-
truction shall apply hereto:
14.5.1 Number and Gender: In this Agreement the neuter gender includes the
feminine and masculine and the singular number includes the plural,
and the word "Person" includes corporation, partnership, firm, or
association where ever the context so requires.
14.5.2 Mandatory and Permissive: "Shall," "Will" and "Agree" are mandatory;
"May" is permissive.
14.5.3 Captions: Captions of the articles, sections and paragraphs hereof
are for convenience and reference only, and the words contained
therein shall in no way be held to explain, modify, amplify, or aid
in the interpretation, construction, or meaning thereof.
14.5.4 Parties: "Parties" shall refer to Seller and Purchaser above
identified and, if the context requires, the term "Seller" shall
refer to LIG, its intervening parents and ultimate parent and any
affiliates thereof.
14.6 Recovery of Litigation Costs:
----------------------------
If any legal action or any arbitration or other proceeding is brought for
the enforcement of this Agreement, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorneys' fees and other
costs incurred in that action or proceeding, in addition to any other
relief to which it or they may be entitled.
14.7 Further Assurances:
------------------
All of the Parties hereto agree to perform any and all acts and to
execute and deliver any and all documents which may be necessary and
convenient to carry out the provisions of this Agreement.
14.8 Unique Obligations:
------------------
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 result-
ing damages; accordingly, the non-defaulting party or parties, 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. Notwithstanding any breach or default
by any of the parties of any of their respective representations, warrant-
<PAGE>
ies, covenants, or agreements under this agreement, if the purchase and
sale contemplated by it shall be consummated at the Closing, each of the
parties waives any rights that it or they may have to rescind this Agree-
ment or the transaction consummated by it; provided, however, that this
waiver shall not affect any other rights or remedies available to the
parties under this Agreement or under the law.
14.9 Notices:
-------
All notices, requests, demands, and other communications under this
Agreement shall be in writing, properly addressed as set forth here-
after, and shall be deemed to have been duly given on: (i) the date of
service if served personally on the party to whom notice is to be given;
or (ii) on the day of actual delivery if mailed by first-class mail,
registered or certified, postage prepaid, return receipt requested, or sent
by recognized overnight delivery service (expedited courier e.g. Federal
Express), or (iii) the day of a facsimile transmission thereof provided
that a confirmation copy is mailed within one day thereafter:
To Seller: LONDON INTERNATIONAL GROUP, INC.
Mr. Robert Kaiser, Vice President and
General Counsel
3585 Engineering Drive, Second Floor
Norcross, Georgia 30092
(770) 582-2226 [Facsimile]
with a copy to: LONDON INTERNATIONAL GROUP, INC.
Mr. William L. Ginna, Jr., Vice President
-Finance
3585 Engineering Drive, Second Floor
Norcross, Georgia 30092
(770) 582-2235 (Facsimilie)
To Purchaser: PACER TECHNOLOGY
9420 Santa Anita Avenue
Rancho Cucamonga, California 91730
(909) 987-5298 (Facsimilie)
with a copy to: Larry K. Reynolds, Esq.
REYNOLDS & JENSEN, LLP
3233 Arlington Avenue, Suite 203
Riverside, California 92506
(909) 682-7312 (Facsimilie)
Any party may change its address for purposes of this ection by giving the
other parties written notice of the new adress in the manner set forth
above.
14.10 No Waiver of Breach:
-------------------
No failure by either of the parties hereto to insist upon the strict per-
formance by any of the other parties hereto of any covenant, agreement,
term, or condition hereof, or to exercise any right or remedy consequent
upon a breach thereof shall constitute a waiver of any such breach or of
such covenant, agreement, term, or condition. No waiver of any breach
shall affect or alter this Agreement, but each and every covenant,
condition, agreement and term of this Agreement shall continue in full
force and effect with respect to any other then existing or subsequent
breach.
<PAGE>
14.11 Counterparts:
------------
This Agreement and any amendments hereto may be executed in several count-
erparts, and all of such executed documents shall constitute one agreement
binding on all of the parties hereto, notwithstanding that all of the
parties are not signatory to the same original or the same counterpart.
14.12 Invalidity of Any Term:
----------------------
In the event that any term or provision of this Agreement shall be held by
a court of competent jurisdiction to be invalid, the remainder of the
terms and provisions of this Agreement shall not be affected thereby in
any respect.
14.13 Severability:
------------
If any provision of this Agreement is held invalid or unenforceable by any
court of final jurisdiction, it is the intent of the parties that all
other conditions of this Agreement be construed to remain fully valid,
enforceable, and binding on the parties.
15. NATURE AND SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS:
------------------------------------------------------
No representations or warranties whatever are made by any party, except as
specifically set forth in this Agreement, or in an instrument, certificate,
opinion, or other writing provided for in this Agreement. All statements
contained in any of these instruments, certificates, opinions, or other writings
shall be deemed to be represetations and warranties under this Agreement. The
representations, warranties, and indemninties made by the parties in this Agree-
ment or in instruments, certificates, opinions, or other writings provided for
in the covenants and agreements to be performed or complied with by the respect-
ive parties under it before the closing date shall be deemed to be continuing
and shall survive the Closing, and, except in those instances where a different
time period is specified, shall expire on the second (2nd) anniversary date fol-
lowing the Closing Date, unless a specific claim in writing with respect to
these matters shall have been made, or an action at law or in equity shall
have been commenced or filed, before this anniversary date. Nothing in this
section shall affect the obligations and indemnities of the parties with respect
to covenants and agreements contained in this Agreement that are permitted to
be performed, in whole or in part, after the Closing Date. Any limitation
period for the survival of the above-specified representations and warranties of
Seller shall not apply to any fraudulent breach, representation, or warranty, or
to any breach or inaccuracy in any representation or warranty known to Seller on
or before the Closing Date.
16. COUNSEL:
-------
Each of the parties hereto has been represented by independent legal counsel of
his or its own choosing relative to the subject matters of the within Agreement,
and none of the parties is relying on any advice or statements of counsel for
any other party hereto in entering into this Agreement. If any party executes
this Agreement and has not sought counsel relative thereto, that party affirm-
atively represents and warrants that he, she or it is not relying on counsel for
any other party hereto to protect his, her or its legal interests relative to
the subject matter hereof.
17. NO PRESUMPTIONS:
---------------
Each party acknowledges that such party has participated, with, at its option,
the advice of counsel, in the preparation of this Agreement. No party is enti-
tled to any presumption with respect to the interpretation of any provision
hereof or the resolution of any alleged ambiguity based on any claim that the
other party drafted, or controlled the drafting of this Agreement.
<PAGE>
Execution by Seller
Dated: March 2, 1998 LONDON INTERNATIONAL GROUP, INC.
By:__________________________________
WILLIAM L. GINNA, JR., V.P.-Finance
Joinder by LRC
LRC North America, Inc. hereby joins in the within Agreement to the extent re-
quired by the context thereof to ensure that any of the Assets owned by LRC are
agreed to be sold by LRC hereunder, and to signify the giving of any represent-
ations and warranties attributable to LRC in the Agreement or any related docu-
ment.
Dated: March 2, 1998 LRC NORTH AMERICA, INC.
By:_________________________________
WILLIAM L. GINNA, JR., V.P.-Finance
Execution by Purchaser
Dated: March 2, 1998 PACER TECHNOLOGY
By:_____________________________
JAMES T. MUNN, President
<PAGE>
