SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
MARCH 31, 1998
(Date of Report (Date of earliest event reported)
GENERAL HOUSEWARES CORP.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 001-07117 41-0919772
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
1536 BEECH STREET
TERRE HAUTE, INDIANA 47804
(Address of Principal (Zip Code)
Executive Office)
812-232-1000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
ITEM 2. ACQUISITION OR DISPOSITION OF BUSINESS
On March 31, 1998, General Housewares Corp. (the Company) completed the sale
of its enamelware cookware business (Enamelware Division). In exchange for
the sale of certain assets related to the Enamelware Division, including
property, plant and equipment and inventories, as well as associated brand
names and trademarks. Consideration received by the Company consisted of a
cash payment of $4,900,000 and a Promissory Note in the principal amount of
$1.3 million. The cash portion of the consideration is subject to adjustment
for certain conditions set forth in the Asset Purchase Agreement. The Company
anticipates that it will receive approximately an additional $200,000 by April
30, 1998 pursuant to said adjustments. The payments under the Promissory Note
will be offset against the payments due from the Company under a seven-year
lease entered into by the Company and the Buyer for office and warehouse
space. Proceeds in excess of net, tangible assets as a result of the
transaction are expected to be approximately $2 million. Non-cash charges in
the form of a defined benefit pension plan curtailment and goodwill write-off
are expected to be approximately $3.5 million. The anticipated pre-tax loss
on sale of $1.5 million will be recorded as a component of selling, general
and administrative expense in the first quarter of 1998. This charge will
increase the anticipated first quarter loss per common share (basic and
diluted) by approximately $0.24.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
b. Pro Forma Financial Information
GENERAL HOUSEWARES CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
UNAUDITED
(in thousands)
The following unaudited pro forma balance sheet presents the financial
position of General Housewares Corp. and its subsidiaries at December
31, 1997, assuming the sale of certain assets of the Enamelware Division
including property, plant and equipment and inventories had occurred on
December 31, 1997. The unaudited pro forma balance sheet also assumes
liquidation of assets related to the Enamelware Division (accounts
receivable, accounts payable and accruals) that were not sold as part of
the transaction but will be liquidated in the normal course of business.
Assets
As Reported Adjustments Pro Forma
Total current assets $42,929 $(4,254)(1) $38,675
Notes receivable, net 2,364 1,300 (2) 3,664
Property, plant and
equipment, net 12,483 (3,170)(1) 9,313
Other assets 6,181 - 6,181
Cost in excess of net
assets acquired 26,807 (2,892)(3) 23,915
$90,764 $(9,016) $81,748
Liabilities and Stockholders' Equity
Total current
liabilities $10,872 $(1,644)(4) $10,428
Long-term debt 29,761 (7,114)(5) 22,731
Deferred liabilities 1,860 642 (6) 1,218
Stockholders' equity 48,271 (900)(7) 47,371
$90,764 $(9,016) $81,748
Note (1) - Reflects the sale of inventory and property, plant and
equipment and the liquidation of accounts receivable.
Note (2) - Reflects the issuance of a note receivable to the purchaser
of the Enamelware Division.
Note (3) - Reflects the write-off of goodwill specifically associated
with the Enamelware Division.
Note (4) - Reflects the payment of Enamelware Division specific accounts
payable and accruals as well as the tax impact of anticipated loss on
sale.
Note (5) - Reflects the anticipated debt pay-down resulting from the
transaction.
Note (6) - Reflects pension curtailment expense incurred as a result of
the transaction.
Note (7) - Reflects the equity impact of the loss on sale.
GENERAL HOUSEWARES CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(in thousands)
The following unaudited statement presents the results of operations of
General Housewares Corp. and its subsidiaries for the year ended December 31,
1997 assuming the sale of certain assets of the Enamelware Division had
occurred on January 1, 1997 at net book value.
As Reported Adjustments Pro Forma
Net sales $104,523 $(14,145)(1) $90,378
Cost of sales 62,081 (10,465)(1) 51,616
Gross profit 42,442 (3,680) 38,762
Selling, general
and administra-
tive expense 37,966 (1,710)(1) 36,256
Operating income 4,476 (1,970) 2,506
Interest expense,
net 2,749 (739) (2) 2,010
Income from
operations before
income taxes 1,727 (1,231) 496
Income taxes 1,065 (759)(3) 306
Net income $ 662 $ (472) $ 190
Net income per
common share
(basic and
diluted) $ 0.17 $ (0.12) $ 0.05
Note (1) - Represents reductions in revenue and expense directly related
to Enamelware Division.
Note (2) - Represents reduction in annual interest expense due to
repayment of long-term debt with proceeds from sale.
Note (3) - Represents decrease in income taxes related due to foregoing
adjustments.
c. Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
GENERAL HOUSEWARES CORP.
(Registrant)
April 13, 1998
By: /s/Paul A. Saxton
Paul A. Saxton
Chairman of the Board, President
and Chief Executive Officer
INDEX TO EXHIBITS
Exhibit 2 (a) Asset Purchase Agreement, dated as of March 31, 1998
by and between General Housewares Corp. and Columbian Home Products,
LLP.
Exhibit 2 (b) Lease Agreement, dated as of March 31, 1998 by and
between General Housewares Corp. and Columbian Home Products, LLP.
Exhibit 2 (c ) Promissory Note, dated as of March 31, 1998 by and
between General Housewares Corp. and Columbian Home Products, LLP.
EXHIBIT 2A
ASSET PURCHASE AGREEMENT
by and between
COLUMBIAN HOME PRODUCTS, LLC
and
GENERAL HOUSEWARES CORP.
March 19, 1998
TABLE OF CONTENTS
ARTICLE 1
PURCHASE AND SALE OF ASSETS 1
1.1 Purchased Assets 1
1.2 Excluded Assets 3
1.3 Assumption of Liabilities 4
1.4 Excluded Liabilities 4
ARTICLE 2
CONSIDERATION FOR THE PURCHASED ASSETS 5
2.1 Purchase Price 5
2.2 Purchase Price Adjustment 5
2.3 Procedures for Final Determination of Gross Margin
and Inventory 6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER 7
3.1 Organization and Power 7
3.2 Subsidiaries 7
3.3 Authorization; No Breach 7
3.4 Financial Statements 8
3.5 Absence of Certain Developments 8
3.6 Title and Condition of Properties 9
3.7 Inventories 10
3.8 Tax Matters 10
3.9 Contracts and Commitments 11
3.10 Proprietary Rights 13
3.11 Litigation; Proceedings 14
3.12 Brokerage 14
3.13 Governmental Consent, etc. 14
3.14 Employees 14
3.15 Employee Benefit Plans 15
3.16 Insurance 15
3.17 Affiliated Transactions 15
3.18 Compliance with Laws; Permits; Certain Operations 16
3.19 Environmental Matters 16
3.20 Product and Warranty Claims; Warranties 18
3.21 Closing Date 19
3.22 Representations and Warranties 19
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER 19
4.1 Corporate Organization and Power 19
4.2 Authorization 19
4.3 No Violation 20
4.4 Litigation 20
4.5 Brokerage 20
4.6 Closing Date 20
ARTICLE 5
COVENANTS PRIOR TO CLOSING 20
5.1 Affirmative Covenants 20
5.2 Negative Covenants 21
5.3 Supplements to Disclosure Schedule 21
ARTICLE 6
CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE 22
6.1 Conditions to Purchaser's Obligation 22
ARTICLE 7
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE 24
ARTICLE 8
CLOSING TRANSACTIONS 25
8.1 The Closing 25
8.2 Action to Be Taken at the Closing 25
8.3 Closing Documents 25
8.4 Possession 27
8.5 Nonassignable Contracts 27
ARTICLE 9
INDEMNIFICATION 27
9.1 Indemnification by Seller 27
9.2 Indemnification by Purchaser 29
9.3 Method of Asserting Claims 29
9.4 Limitation on Indemnities 30
9.5 Adjustment for Insurance and Taxes 30
9.6 Seller's Agreement to Close Frit Lagoon under RCRA 30
9.7 Seller's Responsibility for Asbestos 31
ARTICLE 10
TERMINATION 31
10.1 Termination 31
10.2 Effect of Termination 32
10.3 Effect of Closing 32
ARTICLE 11
ADDITIONAL AGREEMENTS 32
11.1 Survival 32
11.2 Mutual Assistance 32
11.3 Press Release and Announcements 32
11.4 Expenses 32
11.5 Further Transfers 33
11.6 Transition Assistance 33
11.7 Confidentiality 33
11.8 Non-Compete; Non-Solicitation 33
11.9 Specific Performance 34
11.10 Remittances 34
11.11 Reasonable Efforts To Consummate Closing Transactions 34
11.12 Employees and Agents of Seller 35
11.13 Transition Period License 35
11.14 Access to Records 35
ARTICLE 12
MISCELLANEOUS 35
12.1 Amendment and Waiver 35
12.2 Notices 36
12.3 Assignment 37
12.4 Severability 37
12.5 No Third Party Beneficiaries 37
12.6 No Strict Construction 37
12.7 Captions 37
12.8 Complete Agreement 37
12.9 Counterparts 37
12.10 Governing Law 37
12.11 Remedies Cumulative 37
12.12 Best Knowledge of Seller 38
EXHIBITS
Exhibit A -- Form of Promissory Note
Exhibit B -- Allocation of Purchase Price
Exhibit C -- Opinion of Seller's Counsel
Exhibit D -- Form of Lease Agreement
Exhibit E -- Form of GHC Transitional Services Agreement
Exhibit F -- Form of Acquisition Company Transitional Services Agreement
Exhibit G -- Opinion of Purchaser's Counsel
Exhibit H -- Officer's Certificate of Seller
Exhibit I -- Officer's Certificate of Purchaser
DISCLOSURE SCHEDULES
Schedule 1.1(a) -- Inventory Schedule
Schedule 1.1(b) -- Terre Haute Real Estate
Schedule 1.1(c) -- Equipment Schedule
Schedule 1.1(e) -- Office Furnishings Schedule
Schedule 1.1(f) -- Intellectual Property Schedule
Schedule 1.1(j) -- Excluded Computer Program Schedule
Schedule 1.3(a) -- Assumed Liabilities Schedule
Schedule 1.3(b) -- Outstanding Purchase Order Obligations
Schedule 1.4 -- Excluded Liabilities Schedule
Schedule 2.2 -- Calculation of Gross Margin
Schedule 3.1 -- Qualifications Schedule
Schedule 3.3 -- No Conflict Schedule
Schedule 3.5 -- Developments Schedule
Schedule 3.6(a) -- Permitted Encumbrances Schedule
Schedule 3.6(d) -- Permitted Liens Schedule
Schedule 3.6(f) -- Regulatory Compliance Schedule
Schedule 3.8 -- Tax Matters Schedule
Schedule 3.9(a) -- Contracts Schedule
Schedule 3.9(d) -- Customer Contracts Schedule
Schedule 3.10 -- Proprietary Rights Schedule
Schedule 3.11 -- Litigation Schedule
Schedule 3.13 -- Consents Schedule
Schedule 3.14 -- Employees Schedule
Schedule 3.15 -- Employee Benefits Schedule
Schedule 3.16 -- Insurance Schedule
Schedule 3.17 -- Affiliated Transactions Schedule
Schedule 3.18(a) -- Compliance Schedule
Schedule 3.18(b) -- Permits Schedule
Schedule 3.19 -- Environmental Matters Schedule
Schedule 3.20(a) -- Claims Schedule
Schedule 3.20(b) -- Warranties Schedule
Schedule 9.12 -- Continued Employee Benefit Plans Schedule
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT made as of March 19, 1998 (this "Agreement")by and
between COLUMBIAN HOME PRODUCTS, LLC, an Illinois limited liability company
("Purchaser"), and GENERAL HOUSEWARES CORP., a Delaware corporation
("Seller").
W I T N E S S E T H
WHEREAS, Seller is engaged in the business of manufacturing, distributing and
selling Porcelain on Steel Cookware (the "Business"); and
WHEREAS, on the terms and subject to the conditions of this Agreement,
Purchaser desires to acquire from Seller and Seller desires to sell to
Purchaser, substantially all of the assets and properties of the Seller
related to the Business, both tangible and intangible, as described herein on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchased Assets. On the terms and subject to the conditions of this
Agreement, on the Closing Date (as defined in Section 8.1), Purchaser shall
purchase from Seller, and Seller shall sell, convey, assign, transfer and
deliver to Purchaser, all properties, assets, rights and interests of every
kind and nature, whether real or personal, tangible or intangible, and
wherever located and by whomever possessed, owned by Seller as of the Closing
Date and primarily related to or primarily used in the Business, including,
without limitation, all of the following assets:
(a) all inventories (including raw materials, work in process, samples,
service parts, purchased parts and goods and finished goods) and related
supplies which relate primarily to the Business located at the Seller's
facilities, in transit to or from the Seller's facilities, held by Seller or
customers on consignment or which otherwise relate primarily to the Business
(the "Inventory"), including but not limited to, the Inventory listed on
Schedule 1.1(a);
(b) all interests in real estate (including, without limitation, land,
buildings and improvements), whether owned in fee, leased or otherwise,
related primarily to the Business, including but not limited to, the real
estate commonly known as 1536 Beech Street, Terre Haute, Indiana 47804 and all
buildings and other improvements located thereon which is legally described in
Schedule 1.1(b) (collectively, the "Terre Haute Real Estate") and all
licenses, permits, approvals and qualifications relating to the Terre Haute
Real Estate;
(c) all interests in plant, machinery and equipment, fixtures, fittings,
furniture, automobiles, trucks, tractors, trailers and other vehicles, tools,
dies, jigs, molds, fixtures, spare parts and supplies and other tangible
personal property, whether owned, leased or otherwise (including, without
limitation, items which have been fully depreciated or expensed), which relate
primarily to the Business, including, without limitation, such items as set
forth on Schedule 1.1(c);
(d) all rights in and to products sold or leased (including, but not limited
to, products hereafter returned or repossessed and unpaid seller's rights of
recession, replevin, reclamation and rights to stop-age in transit) to the
extent of any credit that is given by the Purchaser related to such products
and to the extent Purchaser is not indemnified hereunder with respect to any
such credit;
(e) all office furnishings, display racks, shelves, decorations and related
assets used primarily in the Business, including, without limitation, such
items as set forth on Schedule 1.1(e);
(f) all intangible assets and intellectual property (including, without
limitation, registered and unregistered trademarks, service marks and trade
names, trade dress and other names, marks and slogans, including the names
Granite Ware, Boutique, FanciPans, Desco Ware, Classic, Normandy, Magnawave
Perfection, Spectra, Magnawave, Classic Coordinates, Frontier and Good Cooking
and all variations and permutations thereof), all publishing and distribution
rights, and all associated goodwill; all statutory, common law and registered
copyrights; all patents, inventions, shop rights, know-how, trade secrets and
confidential information, all of which are or have been primarily used in the
Business; all registration applications for any of the foregoing; together
with all rights to use all of the foregoing forever and all other rights in,
to, and under the foregoing in all countries, including, without limitation,
such items as are set forth on Schedule 1.1(f), except that if any trademarks,
service marks and trade dress include the words "General Housewares", such
trademarks, service marks and trade dress will be modified to exclude the
words "General Housewares" following the date which the license referred to in
Section 11.13 expires;
(g) all discoveries, improvements, processes, formulae (secret or
otherwise), data, confidential information, engineering, technical and shop
drawings, specifications and ideas, whether patentable or not, all licenses
and other similar agreements, and all drawings, records, books or other
indicia, however evidenced, of the foregoing; all rights in and to any
products or other intellectual property rights under research or development
prior to or on the Closing Date, all of which are primarily related to the
Business;
(h) all rights existing under contracts, leases, licenses, permits, supply
and distribution arrangements, sales and purchase agreements and orders,
warranties, consents, orders, registrations, privileges, franchises,
memberships, certificates, approvals or other similar rights and all other
agreements, arrangements and understandings;
(i) the right to receive all mail and other communications addressed to
Seller (including, without limitation, mail and communications from customers,
suppliers, distributors, agents and others and accounts receivable payments)
related primarily to the Business;
(j) all lists, records and files, or copies thereof, pertaining to
customers, suppliers, distributors, personnel and agents and all other books,
ledgers, files, documents, correspondence, plats, architectural plans,
drawings and specifications, computer programs, to the extent legally
transferable, other than those listed on Schedule 1.1(j), and business records
of every kind and nature which relate primarily to the Business;
(k) all creative materials (including, without limitation, photographs,
films, art work, color separations and the like), catalogues, electronic data
for catalogues, price lists, sell sheets, labels, cartons, advertising and
promotional materials and all other printed or written materials; and
(l) all goodwill as a going concern and all other intangible property. For
purposes of the Agreement, the term "Purchased Assets" means all properties,
assets and rights which Seller shall convey to Purchaser or shall be obligated
to convey to Purchaser under this Agreement.
1.2 Excluded Assets. Notwithstanding the foregoing, the following assets
(the "Excluded Assets") are expressly excluded from the purchase and sale
contemplated hereby and, as such, are not included in the Purchased Assets:
(a) all accounts receivables;
(b) cash, cash equivalents and marketable securities;
(c) refunds, tax credits and tax attributes of any kind;
(d) the right to receive mail and other communications addressed to Seller
relating to businesses of the Seller which are unrelated to the Business;
(e) the minute books, capital stock records, articles of incorporation, by-
laws and corporate seal of Seller, together with annual and other corporate
reports filed with the State of Delaware and other states in which Seller is
qualified to do business, other documents and correspondence that relate to
Seller's corporate organization and maintenance thereof; and
(f) all books, records and other business information other than that which is
primarily related to the Business.
1.3 Assumption of Liabilities. Subject to the conditions specified in this
Agreement, on the Closing Date, Purchaser shall assume and agree to pay,
defend, discharge and perform as and when due only the following liabilities
and obligations of Seller (the "Assumed Liabilities"):
(a) Seller's obligations as of the Closing Date to fill orders for
Inventory as set forth on Schedule 1.3(a);
(b) Seller's outstanding commitments as of the Closing Date to
purchase fixed assets, raw materials and supplies as set forth on Schedule
1.3(b);
(c) Seller's obligations and liabilities under the contracts listed on
the Contracts Schedule (Schedule 3.9(a)) and on the Customer Contract Schedule
(Schedule 3.9(d)) for any activity following the Closing Date;
(d) any liabilities or obligations arising out of or in connection
with charge backs or customer adjustments relating to products sold by the
Purchaser;
(e) any liabilities or obligations relating to accrued vacation for
employees primarily related to the Business in an amount not to exceed the
Accrued Payment (as hereinafter defined); and
(f) any liabilities or obligations arising out of or in connection with
charge backs or customer adjustments following a date six (6) months from the
Closing Date.
1.4 Excluded Liabilities. Notwithstanding anything to the contrary contained
in this Agreement, Purchaser shall not assume or be liable for any liabilities
or obligations of Seller other than the Assumed Liabilities and all such other
liabilities or obligations shall be the responsibility of the Seller,
including, but not limited to the following liabilities and obligations (the
"Excluded Liabilities"):
(a) those liabilities listed on Schedule 1.4;
(b) any liabilities or obligations arising out of or in connection
with charge backs or customer adjustments made during the period beginning
upon the Closing Date and ending six (6) months from the Closing Date relating
to products sold by the Seller; and
(c) any accrued liabilities or obligations relating to the operations of
the Business prior to the Closing Date, including, but not limited to,
liabilities related to accrued vacation, accrued bonuses and incentives,
accrued commissions, accrued rebates, accrued returns and any coop advertising
responsibilities.
ARTICLE 2
CONSIDERATION FOR THE PURCHASED ASSETS
2.1 Purchase Price. The aggregate purchase price for the Purchased Assets
shall be an amount equal to Six Million Two Hundred Thousand and no/100
Dollars ($6,200,000) as adjusted pursuant to Section 2.2 hereof (the "Purchase
Price") which shall be payable to Seller on the Closing Date as set forth
below:
(a) by wire transfer of immediately available funds to such account or
accounts as shall have been designated in writing by Seller not less than
three (3) days prior to the Closing Date in an amount equal to Four Million
Nine Hundred Thousand and no/100 Dollars ($4,900,000), as adjusted pursuant to
Section 2.2 hereof; and
(b) by a promissory note in an amount equal to One Million Three
Hundred Thousand and no/100 Dollars ($1,300,000) substantially in the form
attached hereto as Exhibit A (the "Promissory Note"), to be issued by
Purchaser to Seller which shall be paid by Purchaser in accordance with the
terms thereof.
The Purchase Price shall be allocated among the Purchased Assets as set forth
in Exhibit B attached hereto. The parties agree that the allocation set forth
in Exhibit B shall be used by them and respected for all purposes, including
income tax purposes if in conformance with the rules and regulations of the
Internal Revenue Code of 1986, as amended (the "Code"), and that the parties
shall follow such allocation for all reporting purposes, including, without
limitation, Internal Revenue Service ("IRS") Form 8594.
2.2 Purchase Price Adjustment. As set forth below, the cash portion of the
Purchase Price shall be adjusted by: (i) (a) adding to the Purchase Price the
amount by which the Current Inventory (as hereinafter defined) as of the
Closing Date is greater than Two Million Dollars ($2,000,000) or (b)
subtracting the amount by which the Current Inventory as of the Closing Date
is less than Two Million Dollars ($2,000,000), and (ii) (a) adding $2.86 to
the Purchase Price for each $1.00 by which the Gross Margin (as hereinafter
defined) for 1997 exceeds $3,500,000 or (b) subtracting $2.86 from the
Purchase Price for each $1.00 by which the Gross Margin for 1997 is less than
$3,500,000; provided, however, as a precondition to the Purchase Price
adjustment provided for in this Section 2.2(ii), the difference between the
1997 Gross Margin and $3,500,000 must be equal to or greater than $250,000. An
increase in the Purchase Price as a result of the adjustment contemplated in
Section 2.2(ii) shall not exceed $500,000 and a decrease in the Purchase Price
as a result of the adjustment contemplated in Section 2.2(ii) shall not exceed
$1,000,000. For purposes hereof "Current Inventory" shall mean (i) finished
goods Inventory which shall be valued at 1997 standard cost consistently
applied as determined in accordance with generally accepted accounting
principles and which does not include obsolete or discontinued items nor does
such Inventory exceed six (6) months supply based on average sales per month
for 1997, plus (ii) work-in-process Inventory which shall be valued at 1997
standard cost consistently applied as determined in accordance with generally
accepted accounting principles and which does not include obsolete or
discontinued items nor does such Inventory exceed six (6) months supply based
on average sales per month for 1997, plus (iii) raw materials Inventory which
shall be valued at 1997 standard cost consistently applied as determined in
accordance with generally accepted accounting principles. For purposes hereof
"Gross Margin" shall mean the difference between net sales and the cost of
goods sold (which shall include material costs, direct labor and overhead
costs) all as determined in accordance with generally accepted accounting
principles for the Business on a stand alone basis consistently applied
(excluding the application of LIFO for Inventory accounting purposes) and as
further described on Schedule 2.2. The Gross Margin and Current Inventory for
purposes of the calculations provided for in this Section 2.2 shall be based
upon a Closing Income Statement (as hereinafter defined) and a Current
Inventory Report as provided for in Section 2.3 hereof.
2.3 Procedures for Final Determination of Gross Margin and Inventory.
(a) Within 30 days after the Closing Date, Seller shall prepare and
deliver to Purchaser at Seller's sole cost and expense a Preliminary Income
Statement for 1997 for the Business (the "Closing Income Statement"), a
statement setting forth Purchaser's determination of the Current Inventory for
the Business as of the Closing Date (the "Current Inventory Report") and the
Gross Margin for fiscal year 1997. The Current Inventory Report shall be based
upon a complete physical inventory count (to be taken on the Closing Date by
the Seller and with Purchaser's certified public accountant present) and
valued at 1997 standard cost.
(b) Within 30 days after receipt of such items, Purchaser shall
deliver to Seller a detailed written statement describing its objections, if
any, to such determination of the Current Inventory and Gross Margin. If
Purchaser does not raise any objections within the 30-day period, the Seller's
determination of the Current Inventory and Gross Margin shall become final and
binding upon all parties. Upon request by Purchaser at any time after receipt
of the Closing Income Statement and calculation of Current Inventory and Gross
Margin, Seller shall make available to Purchaser and its accountants and other
representatives the work papers used in preparing the Closing Income Statement
and in determining Seller's calculation of the Current Inventory and Gross
Margin and such other documents as Purchaser may reasonably request in
connection with its review of the Current Inventory and Gross Margin. If
Purchaser does raise any objections, Purchaser and Seller shall use reasonable
efforts to resolve any such disputes. If a final resolution is not obtained
within 30 days after Purchaser shall have submitted its objections to Seller,
any remaining disputes shall be resolved by an accounting firm mutually
agreeable to Purchaser and Seller. If Purchaser and Seller are unable to
mutually agree on such an accounting firm within five (5) days after the
expiration of said 30-day period, a "big-six" accounting firm shall be
selected by lot after elimination of one firm designated as objectionable by
each of Purchaser and Seller (the "Neutral Auditor"). The determination of the
Neutral Auditor shall be set forth in writing and shall be conclusive and
binding upon the parties, and the fees and expenses of such accounting firm
shall be paid one-half by Purchaser and one-half by Seller.
(c) Any increase to or reduction of the Purchase Price pursuant to
this section 2.3 shall be paid by wire transfer in immediately available funds
to accounts designated by the recipient or recipients thereof within five (5)
business days after the date that the final Gross Inventory and Current
Inventory is agreed to by the Seller and Purchaser or as determined by the
Neutral Auditor.
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
As an inducement to Purchaser to enter into this Agreement, Seller hereby
represents and warrants to Purchaser as of the date hereof and as of the
Closing Date that:
3.1 Organization and Power. Seller is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, and Seller is
qualified to do business as a foreign corporation and is in good standing in
the jurisdictions specified on the "Qualifications Schedule" attached hereto
as Schedule 3.1, which are all jurisdictions in which ownership of its
properties or the conduct of its business requires it to be so qualified,
except where failure to be so qualified would not have a Material Adverse
Effect (as hereinafter defined). Seller has all requisite power and authority
and all material licenses, permits and other authorizations necessary to own
and operate its properties relating to the Business and to carry on its
businesses as now conducted as it relates to the Business. The copies of the
certificate of incorporation and by-laws of Seller which have been previously
furnished to Purchaser reflect all amendments made thereto at any time prior
to the date of this Agreement and are correct and complete in all material
respects. For purposes of this Agreement, "Material Adverse Effect" shall mean
any material and adverse effect on the financial condition, results of
operations, assets, properties or business of the Business.
3.2 Subsidiaries. Seller owns no stock, partnership interest, joint venture
interest or other security or interest in any other corporation, organization
or entity related to the Business.
3.3 Authorization; No Breach. The execution, delivery and performance of
this Agreement and the other agreements contemplated hereby and the
transactions contemplated hereby and thereby have been duly and validly
authorized by Seller. No other corporate act or proceeding on the part of
Seller, its Board of Directors or its shareholders is necessary to authorize
the execution, delivery or performance of this Agreement, any other agreement
contemplated hereby or the consummation of the transactions contemplated
hereby or thereby. This Agreement has been duly executed and delivered by
Seller, and this Agreement constitutes and the other agreements contemplated
hereby upon execution and delivery by Seller shall each constitute, a valid
and binding obligation of Seller, and, assuming this Agreement has been
validly executed by the Purchaser, is enforceable in accordance with its
terms. Except as set forth on Schedule 3.3, the execution, delivery and
performance of this Agreement and the other agreements contemplated hereby by
Seller and the consummation of the transactions contemplated hereby and
thereby do not and shall not (a) conflict with or result in any breach of any
of the provisions of, (b) constitute a default under, result in a violation
of, or cause the acceleration of any obligation under, (c) result in the
creation of any lien, security interest, charge or encumbrance upon any of the
Purchased Assets under, or (d) require any authorization, consent, approval,
exemption or other action by or notice to any court or other governmental body
under the provisions of Seller's certificate of incorporation or by-laws or
any indenture, mortgage, loan agreement or other material lease or agreement
or instrument to which Seller is bound or affected or any law, statute, rule,
regulation, judgement, order or decree to which Seller is subject or by which
any of the Purchased Assets is bound.
3.4 Financial Statements. Seller has furnished Purchaser with a copy of its
unaudited income statement for the year ended as of December 31, 1997 ("Latest
Income Statement"). The Latest Income Statement has been based upon the
information contained in Seller's books and records (which are accurate and
complete in all material respects) and fairly presents in all material
respects the results of operations of Seller as of the times and for the
periods referred to therein, and such income statement has been prepared in
accordance with generally accepted accounting principles, consistently
applied.
3.5 Absence of Certain Developments. Except as set forth in the
"Developments Schedule" attached hereto as Schedule 3.5, since December 31,
1997, Seller has not, with respect to the Business:
(a) mortgaged, pledged or subjected to any lien, charge or any other
encumbrance, any portion of the Purchased Assets, except liens for current
property taxes not yet due and payable;
(b) sold, assigned or transferred, or agreed to do so, any of the
Purchased Assets, except in the ordinary course of business or cancelled
without fair consideration any material debts or claims owing to or held by
it;
(c) sold, assigned, transferred, abandoned or permitted to lapse any
patents, trademarks, trade names, copyrights, trade secrets or other
intangible assets, or disclosed any material proprietary confidential
information to any person related to the Business;
(d) made or granted, or agreed to make or grant, any bonus or any wage
or salary increase to any employee or group of employees or made or granted
any increase in any employee benefit plan or arrangement (except in accordance
with past custom and practice), or amended or terminated, or agreed to
terminate or amend, any existing employee benefit plan or arrangement or
adopted any new employee benefit plan or arrangement as it relates to the
Business;
(e) made, or agreed to make, any capital expenditures or commitments
therefore that aggregate in excess of $1,000 related to the Business;
(f) suffered any extraordinary losses or waived any rights of material
value, whether or not in the ordinary course of business or consistent with
past practice related to the Business;
(g) entered into, or agreed to enter into, any other material
transaction related to the Business, other than in the ordinary course of
business;
(h) make any change adverse to the Business in its selling, pricing,
advertising or personnel practice inconsistent with its prior practice and
prudent business practices prevailing in the industry; or
(i) suffered any material damage, destruction or casualty loss to the
Purchased Assets, whether or not covered by insurance.
3.6 Title and Condition of Properties.
(a) The Seller owns no real estate other than the Terre Haute Real
Estate related to the Business. Seller holds fee title to the Terre Haute Real
Estate, and such title is subject only to (i) liens and encumbrances disclosed
on the "Permitted Encumbrances Schedule" attached hereto as Schedule 3.6(a),
(ii) liens for taxes not yet due and payable (which shall be prorated), (iii)
installments of special assessments not yet due and payable (which shall be
prorated) (the foregoing are collectively referred to herein as "Permitted
Encumbrances"). At the Closing, Seller shall convey to Purchaser by special
warranty deed title to the Terre Haute Real Estate, free and clear of all
liens, security interests, charges and other encumbrances other than Permitted
Encumbrances. Seller shall pay at Closing any amounts that are owed or due
through the Closing Date with respect to any taxes, special assessments,
rents, utilities and any other amount owed with respect to the Terre Haute
Real Estate or any leased premises relating to periods ending on or before the
Closing Date.
(b) The Seller is not a party to any real property leases which are
related to the Business.
(c) The Terre Haute Real Estate constitutes all of the real estate
owned, used or occupied by Seller and which is used primarily in the Business,
and no other real estate is necessary for the conduct of the Business as
currently conducted.
(d) Seller owns good and marketable title, free and clear of all
liens, charges, security interests, encumbrances, encroachments and claims of
others, to all of the Purchased Assets, except for (i) liens of current taxes
not yet due and payable (which shall be pro-rated), (ii) liens disclosed on
Schedule 3.6(d) hereof, and (iii) zoning laws and other land use restrictions
that do not materially impair the present or anticipated use or occupancy of
the property subject thereto. At the Closing, Seller shall sell, assign,
transfer and convey to Purchaser by customary Bill of Sale good and marketable
title to all of the personal property included within the Purchased Assets,
free and clear of all liens, security interests, charges, encumbrances and
claims of others, other than liens for current taxes not yet due and payable.
(e) Seller's buildings, machinery, equipment and other tangible assets
related to the Business have been maintained in accordance with normal
industry standards and are usable in the ordinary course of business. Seller
owns or leases under valid leases all buildings, machinery, equipment and
other tangible assets necessary for the conduct of the Business.
(f) Except as disclosed in Schedule 3.6(f) hereto, Seller is not in
violation of any applicable zoning, building, fire or other ordinance or other
law, regulation or requirement relating to the operation of owned or leased
properties, including, without limitation, applicable occupational health and
safety laws and regulations except where such violation is not reasonably
likely to have a Material Adverse Effect. Within the three (3) years prior to
the date of this Agreement, Seller has received no notice of any such
violation or any condemnation proceeding with respect to any properties owned,
used or leased by Seller in the Business.
(g) The Purchased Assets, together with the services and arrangements
described on the Contracts Schedule or in the Service Agreement (as
hereinafter defined), comprise all assets and services required for the
continued conduct of the Business by the Purchaser as now being conducted.
The Purchased Assets, taken as a whole, constitute all the properties and
assets relating to or used or held for use in connection with the Business
during the past twelve months (except Inventory sold, cash disposed of,
accounts receivable collected, prepaid expenses realized, Contracts fully
performed, properties or assets replaced or disposed of in each case in the
ordinary course of business). There are no assets or properties which are
primarily used in the operation of the Business and owned by any Person other
than the Seller that will not be leased or licensed to the Purchaser under
valid, current leases or license arrangements. The Purchased Assets are in all
material respects adequate for the purposes for which such assets are
currently used (or are held for use) and there are no facts or conditions
affecting the Purchased Assets which are reasonably likely to, individually or
in the aggregate, interfere in any material respect with the use, occupancy or
operation of the Business as currently used, occupied or operated, or their
adequacy for such use.
3.7 Inventories. Seller's inventories reflected on the Current Inventory
Report and as of the Closing Date was and will be valued at 1997 standard cost
in accordance with generally accepted accounting principles, and consisted and
will consist of items which are of merchantable quality, in good, salable and
usable condition and will not be obsolete or damaged. All such inventory was
and will be located on the Seller's owned premises.
3.8 Tax Matters.
(a) Seller has timely filed all federal, foreign, state and local
information and tax returns (the "Returns") (all such Returns being accurate
and complete in all material respects) required to be filed with respect to
Taxes (as defined below) pertaining to the Purchased Assets or the Business.
All such Taxes shown to be due on any such Return have been paid. Seller has
timely paid or caused to be paid (or will pay or cause to be paid) all Taxes
which relate to all Pre-Closing Tax Periods (as defined below), the non-
payment of which would result in an encumbrance on any Purchased Asset, would
otherwise adversely affect the Business or would result in Purchaser or any
equity owner of Purchaser becoming liable or responsible therefor.
(b) Except as disclosed in Schedule 3.8, Seller has not received from
any governmental or regulatory authority any written notice of a proposed
adjustment, deficiency or underpayment of Taxes pertaining to the Purchased
Assets or the Business, which notice has not been satisfied by payment or been
withdrawn.
(c) Except as disclosed in Schedule 3.8, Seller has not been required
to give any currently effective waivers extending the statutory period of
limitation applicable to such Taxes for any period or agreed to an extension
of time with respect to any proposed adjustment, deficiency or underpayment of
such Taxes.
(d) Except as disclosed in Schedule 3.8, all monies required to be
withheld from employees, independent contractors, shareholders or creditors of
Seller for such Taxes has been withheld and paid when due to the appropriate
governmental authority.
(e) Tax Definitions. The following terms, as used herein, have the
following meanings:
(i) "Pre-Closing Tax Period" means (x) any Tax period ending on
or before the Closing Date and (y) with respect to a Tax period that
commences before but ends after the Closing Date, the portion of such
period up to and including the Closing Date.
(ii) "Tax" means any net income, alternative or add-on minimum
tax, gross income, gross receipts, sales, use, ad valorem, franchise,
capital, paid-up capital, profits, greenmail, license, withholding (on
amounts paid by or to the relevant Person), payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or
other like assessment or charge or any kind whatsoever, imposed by any
governmental authority (domestic or foreign) responsible for the
imposition of any such tax.
3.9 Contracts and Commitments.
(a) Except as set forth in Section 3.15 or in the "Contracts Schedule"
attached hereto as Schedule 3.9(a), Seller is not a party to any of the
following with respect to the Business:
(i) bonus, pension, profit sharing, retirement or deferred
compensation plan or stock purchase, stock option, hospitalization
insurance or similar plan or practice, whether formal or informal, or
severance agreements or arrangements;
(ii) contract with any labor union or contract for the employment
of any officer, individual employee or other person on a full-time,
part-time or consulting basis;
(iii) agreement or indenture relating to the borrowing of money or
to mortgaging, pledging or otherwise placing a lien on any of the
Purchased Assets;
(iv) guarantee of any obligation for borrowed money or otherwise,
other than endorsements made for collection in the ordinary course of
business;
(v) agreement or commitment with respect to the lending or
investing of funds to or in other persons or entities;
(vi) license or royalty agreement related to the Business;
(vii) lease or agreement related to the Business under which it is
lessee of or holds or operates any personal property owned by any other
party;
(viii) lease or agreement related to the Business under which it
is lessor of or permits any third party to hold or operate any property,
real or personal, owned or controlled by it;
(ix) contract or group of related contracts related to the
Business with the same party for the purchase or sale of products or
services other than the Customer Contracts (as defined in Section 3.9(d)
hereof);
(x) other contract related to the Business with any party
continuing over a period of more than six months from the date or dates
thereof, not terminable by it on thirty (30) days' or less notice
without penalties;
(xi) contract which prohibits it from freely engaging in business
anywhere in the world; or
(xii) contract relating to the distribution of its products as it
relates to the Business.
(b) Except as specifically disclosed in the Contracts Schedule, (i) no
contract or commitment related to the Business has been breached in any
respect that is material to the Business or cancelled by the other party, (ii)
since June 30, 1996, no material supplier of the Business has notified Seller
that it shall stop or decrease in any material respect the rate of business
done with Seller, (iii) Seller has in all material respects performed all the
obligations required to be performed by it to the date of this Agreement and
is not in receipt of any claim of default under any material lease, contract,
commitment or other agreement related to the Business to which it is a party;
and (iv) no event has occurred which with the passage of time or the giving of
notice or both would result in a breach or default under any material lease,
contract, instrument or other agreement related to the Business to which
Seller is a party and which is related to the Business.
(c) Purchaser has been supplied with a true and correct copy of all
written contracts which are referred to on the Contract Schedule, together
with all amendments, waivers or other changes thereto.
(d) Except as set forth on Schedule 3.9(d) hereto, Seller has no
knowledge of any (i) pending or threatened termination, cancellation,
limitation, modification or change in Seller's business relationship with any
customer or group of customers related to the Business or (ii) changes or
pending changes in any law, rule, regulation, technology, or business
relationship or other circumstance that is reasonably likely to result in the
loss of any customers related to the Business after the date hereof except as
would not result in a Material Adverse Effect. Each contract, agreement or
lease with customers of Seller relating to the Business ("Customer Contracts")
are in one of the forms attached to the "Customer Contract Schedule" attached
hereto as Schedule 3.9(d) (provided, however, each form of purchase order is
not attached hereto), except for completion of blanks and have not been
modified with respect to the limitations on liability or service charge
increase provisions, whether in writing, orally, by course of dealings or
otherwise, and Seller is not providing or obligated to provide goods or
services to others except pursuant to a written contract in such form in each
case. Except as indicated on the Customer Contract Schedule, (A) each of the
Customer Contracts is valid, enforceable and in full force and effect in
accordance with the terms thereof, (B) there is no existing default or event
or condition which, with notice or lapse of time or both, would constitute an
event of default under any Customer Contract, (C) no Customer Contract has
been amended, modified, supplemented or otherwise altered orally, in writing
or by course of conduct other than in the ordinary course of business, (D) no
Customer Contract requires the consent of the Customer or any other party to
affect a valid assignment thereof to Purchaser without causing a default or
giving rise to a right of termination thereunder and (E) each Customer
Contract complies with all applicable laws, rules and regulations, except
where failure to comply is not reasonably likely to have a Material Adverse
Effect.
3.10 Proprietary Rights. Set forth on the "Proprietary Rights Schedule"
attached hereto as Schedule 3.10 is a list and summary description of all
patents, patent applications, trademarks, service marks, trade names,
corporate names and copyrights owned by Seller which is primarily related to
the Business or used by Seller primarily in the conduct of the Business.
Seller owns and possesses all right, title and interest in and to the
proprietary rights necessary to conduct the Business as currently conducted.
Seller has taken all necessary action to protect the proprietary rights
necessary to conduct the Business as currently conducted. The proprietary
rights listed on Schedule 3.10 and included in the Purchased Assets have been
duly registered with, filed in or issued by, as the case may be, the United
States Patent and Trademark Office, United States Copyright Office or such
other filing offices as necessary. Seller has not received any notices of
infringement, misappropriation, invalidity or conflict from any third party
with respect to such proprietary rights.
As related to the Business, to the knowledge of Seller, Seller has not
infringed, misappropriated or otherwise conflicted with any proprietary rights
of any third parties and, to the best of Seller's knowledge, Seller's
proprietary rights have not been infringed by any third parties.
3.11 Litigation; Proceedings. Except as set forth on Schedule 3.11 hereto,
there are no actions, suits, proceedings, orders or investigations pending or,
to the best of Seller's knowledge, threatened against Seller at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, and there is no basis known to Seller for any of the foregoing. As
related to the Business, to the knowledge of Seller, no officer, director,
employee or agent of Seller has been or is authorized to make or receive any
bribe, kickback or other illegal payment at any time. Within the two (2) years
preceding the date hereof, Seller has received no legal opinion or legal
advice in writing to the effect that Seller is exposed from a legal standpoint
to any liability which is reasonably likely to be material to the Business as
previously or presently conducted.
3.12 Brokerage. There are no claims for brokerage commissions, finders fees
or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Seller.
3.13 Governmental Consent, etc.
(a) No permit, consent, approval or authorization of, or declaration
to or filing with, any governmental or regulatory authority is required in
connection with the execution, delivery or performance of this Agreement by
Seller, or the consummation by Seller of any of the transactions contemplated
hereby and thereby, except as disclosed on the "Consents Schedule" attached
hereto as Schedule 3.13.
(b) The Consents Schedule attached hereto as Schedule 3.13 sets forth
all governmental approvals or consents necessary for, or otherwise material
to, the conduct of the Business as currently conducted. All such governmental
approvals and consents have been duly obtained and are in full force and
effect, and Seller is in material compliance with each of such governmental
approvals and consents held by it with respect to the Purchased Assets and the
Business.
3.14 Employees. To the best of Seller's knowledge, no key employee, nor
group of Seller's employees related to the Business, has specifically
indicated to Seller that they have any plans to terminate employment with
Seller. Seller has complied in all material respects with all applicable laws
relating to the employment of labor and independent contractors related to the
Business, including provisions thereof relating to wages, hours, equal
opportunity, immigration, collective bargaining, disabilities, family leave
and the payment of social security and other taxes. Except as disclosed on the
"Employees Schedule" attached hereto as Schedule 3.14, Seller has no existing
relationships with any union or employee representative or any labor relations
problems, and, to the knowledge of Seller, there have been no union
organization efforts with respect to the Business within the last five (5)
years.
3.15 Employee Benefit Plans.
(a) The "Employee Benefits Schedule" attached hereto as Schedule 3.15
contains a list of all employee benefit plans (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended, ("ERISA"),
and any other arrangement, program or plan providing medical, life,
disability, severance, deferred compensation, education, dependent care, or
other retirement or welfare benefits, maintained by Seller and/or any entity
to which Seller is required to be aggregated pursuant to Code Section
414(b)(c)(m) or (o)) in which any employee of the Business, or any beneficiary
thereof, participates or to which Seller is or was obligated to contribute
(the "benefit plans"). Seller has provided true and correct copies of the
benefit plans to Purchaser.
(b) All benefit plans have been administered in compliance with all
applicable requirements of ERISA and the Code, and Seller has not incurred,
and as of the Closing Date will not incur, any liability with respect to any
benefit plan which creates a lien upon, or can be collected from, the
Purchased Assets, nor which may impose, directly or indirectly, any obligation
or liability on Purchaser, as a successor employer or otherwise, including
without limitation any liabilities with respect to the health care
continuation requirements of Code Section 4980B. It is expressly understood
and agreed that Purchaser is not assuming any of the benefit plans and that
Seller shall retain all liabilities with respect to the benefit plans.
(c) All rights pursuant to the pension plans of employees primarily
related to the Business who will be terminated by Seller as of the Closing
Date shall vest as of the Closing Date.
3.16 Insurance. The "Insurance Schedule" attached hereto as Schedule 3.16
lists and briefly describes each insurance policy maintained by Seller with
respect to the Purchased Assets and such policies with respect to the
Business.
The Seller has made available to the Purchaser complete and correct copies of
all such policies together with all riders and amendments thereto.
3.17 Affiliated Transactions. Except as set forth on the "Affiliated
Transaction Schedule" attached hereto as Schedule 3.17, no officer, director,
shareholder or Affiliate (as hereinafter defined) of Seller or any person
related by blood or marriage to any such person or any entity in which any
such person owns any beneficial interest is a party to any agreement,
contract, commitment or transaction related to the Business with Seller or has
any interest in any property used by Seller in the Business. For purposes of
this Agreement, "Affiliate" shall mean any Person (as hereinafter defined)
that directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with such Person. For purposes of
this Agreement, "Person" shall mean and include an individual, a company, a
joint venture, a corporation, a limited liability company, a limited liability
partnership, a trust, an unincorporated organization and a government or other
department or agency thereof.
3.18 Compliance with Laws; Permits; Certain Operations.
(a) Except with respect to Environmental Matters described on Schedule
3.19 hereto, Seller and its officers, directors, agents and employees have
complied in all material respects with all applicable laws and regulations of
foreign, federal, state and local governments and all agencies thereof which
affect the Business or the Purchased Assets or to which Seller may otherwise
be subject, and no claims have been filed against Seller alleging a violation
of any such law or regulation, except as set forth on the "Compliance
Schedule" attached hereto as Schedule 3.18(a). In particular, but without
limiting the generality of the foregoing, Seller has not violated, or received
a notice or charge asserting any violation of the Immigration Reform and
Control Act of 1986, the Occupational Safety and Health Act of 1970, the
Americans With Disabilities Act, or any other state or federal act (including
rules and regulations thereunder) regulating or otherwise affecting the
employment of aliens, employee health and safety, the environment, zoning,
building, fire or other ordinances or any other aspect of the Business except
where such violation is not reasonably likely to have a Material Adverse
Effect.
(b) Seller holds all of the permits, licenses, certificates and other
authorizations of foreign, federal, state and local governmental agencies
required for the conduct of the Business all of which are set forth in the
"Permits Schedule" attached hereto as Schedule 3.18(b). Seller has not
received any notice (and Seller has no reason to believe) that revocation is
being considered with respect to any of such licenses, permits, certificates
or authorizations, or that Seller is in material violation of any such
license, permit, certificate or authorization.
3.19 Environmental Matters.
(a) As used in this Section 3.19, the following terms shall have the
following meanings:
(i) "Hazardous Materials "means any material or substance: (a)
which is defined as a "hazardous substance", "pollutant" or
"contaminant" pursuant to CERCLA, or other Environmental Laws, and
amendments thereto and regulations promulgated thereunder; (b)
containing gasoline, oil, diesel fuel or other petroleum products, or
fractions thereof; (c) which is defined as a "hazardous waste" pursuant
to RCRA and amendments thereto and regulations promulgated thereunder;
(d) containing polychlorinated biphenyls; (e) containing asbestos; (f)
which is radioactive; (g) which is biologically hazardous; (h) the
presence of which requires investigation or remediation under any
federal, state, or local statute, regulation, ordinance, policy or other
Environmental Laws; or (i) which is defined as a "hazardous waste",
"hazardous substance", "pollutant" or "contaminant" or other such term
used to defined a substance having an adverse effect on the environment
under Environmental Laws.
(ii) "Environmental Laws" means any and all federal, state and
local statutes, laws, regulations, ordinances or orders, as presently in
effect, relating to public health or safety, worker health or safety,
pollution or protection of human health or the environment, including
natural resources, including but not limited to the Clean Air Act, 42
U.S.C. section 7401 et seq., the Clean Water Act, 33 U.S.C. section 1251
et seq., the Resource Conservation Recovery Act ("RCRA"), 42 U.S.C.
section 6901 et seq., the Toxic Substances Control Act, 15 U.S.C.
section 2601 et seq., and the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. section 9601 et
seq. and any similar or implementing state or local law, which governs:
(a) the existence, clean-up, removal and/or remedy of contamination or
threat of contamination on or about real property; (b) the emission or
discharge of Hazardous Materials or contaminants into the environment;
(c) the control of Hazardous Materials or contaminants; or (d) the use,
generation, or transport, treatment, storage, disposal, removal,
recycling, handling, or recovery of Hazardous Materials.
(iii) "Release" shall mean the spilling, leaking, disposing,
discharging, migrating, emitting, depositing, ejecting, leaching,
escaping or any other release or threatened release, however defined,
whether intentional or unintentional, of any Hazardous Material.
(b) Except as disclosed on the "Environmental Matters Schedule"
attached hereto on Schedule 3.19, the Terre Haute Real Estate and all real
estate owned, leased or operated by Seller related to the Business and
Seller's operation of the Business at or from such real estate and its
operation of the Purchased Assets are in compliance with all applicable
Environmental Laws.
(c) Seller has obtained and maintained in full force and effect, all
environmental permits, licenses, certificates of compliance, approvals and
other authorizations required under applicable Environmental Laws to own or
operate the Purchased Assets and the Terre Haute Real Estate (collectively,
the "Environmental Permits") all of which are disclosed in Schedule 3.19.
Except as disclosed on Schedule 3.19, Seller has conducted its Business and
operated the Purchased Assets and the Terre Haute Real Estate and all leased
premises and any other property owned, operated, or leased by Seller related
to the Business at any time, in compliance in all material respects with all
terms and conditions of the Environmental Permits and the Environmental Laws.
Seller has filed all material reports and notifications required to be filed
under and pursuant to all applicable Environmental Laws with respect to the
operation of the Business and the operation of the Purchased Assets and the
Terre Haute Real Estate.
(d) Except as set forth in the "Environmental Matters Schedule": (i)
no Hazardous Materials have been generated, treated, contained, handled,
located, used, manufactured, processed, buried, incinerated, deposited,
stored, or released on, under or about the Terre Haute Real Estate or any part
of any real property owned, leased or operated by Seller related to the
Business in violation of any Environmental Law, and (ii) no real property
owned, leased or operated by Seller or any of the other Purchased Assets
contain any urea, formaldehyde, radon, polychlorinated biphenyls (PCBs) or
pesticides at levels or amounts, or in a condition, that violate any
Environmental Law.
(e) Except as set forth in the "Environmental Matters Schedule",
Seller has received no notice alleging in any manner that Seller is, or might
be potentially, responsible for any Release of Hazardous Materials, or any
costs arising under or in violation of Environmental Laws with respect to the
Purchased Assets, the Terre Haute Real Estate, or any other property owned,
operated or leased by Seller related to the Business, at any time, or the
operation of the Business.
(f) Except as disclosed in Schedule 3.19, neither the Terre Haute Real
Estate nor any other property owned, operated or leased by Seller is or has
been listed on the United States Environmental Protection Agency National
Priorities List of Hazardous Waste Sites, or any other list, schedule, law,
inventory or record of hazardous or solid waste sites maintained by any
federal, state or local agency.
(g) No condition exists at the Terre Haute Real Estate nor with
respect to any other property which Seller owns, operates or leases related to
the Business, and to the best of Seller's knowledge, any property related to
the Business which Seller formerly owned, operated, or leased, or any other
property where any wastes generated, owned, treated or transported at any time
by Seller or on behalf of Seller may have been stored, treated, released or
disposed, which constitutes or which with the passage of time, is reasonably
likely to constitute a violation of or give rise to liability under any
Environmental law.
(h) Except as disclosed on the Environmental Matters Schedule to
Seller's knowledge, there are no underground storage tanks, active or
abandoned, on or under the Terre Haute Real Estate. Any such underground
storage tanks, previously active or abandoned, have been removed together with
any associated Hazardous Materials in compliance in all material respects with
Environmental Laws.
(i) Seller has disclosed and delivered to Purchaser all environmental
reports and investigations which Seller has obtained or ordered with respect
to the Purchased Assets, the Terre Haute Real Estate, the leased premises or
the Business and which are in Seller's possession.
(j) No lien has been attached or filed against Seller with respect to
the Purchased Assets or the Terre Haute Real Estate in favor of any
governmental or private entity for (i) any liability or imposition of costs
under or in violation of any applicable Environmental Law; or (ii) any Release
of Hazardous Materials.
3.20 Product and Warranty Claims; Warranties. Except as disclosed in the
"Claims Schedule" attached hereto as Schedule 3.20(a), Seller has no knowledge
of and has not received during the past two (2) years any claim or notice with
respect to any occurrences arising out of the use or operation of products
engineered, designed, manufactured, sold, installed, monitored or serviced by
or on behalf of Seller related to the Business, which has resulted in any
injury or death to person or damage to property, or any claim or notice that
any such products do not conform to any agreement, representation or warranty
made by Seller (or implied by law) with respect to such products unless such
claim has resulted or may result in liability to the Seller which is less than
$100.00 per claim. Seller is covered against all damages, liability and
expenses for any claims based upon products engineered, designed,
manufactured, sold, installed, monitored or serviced by or on behalf of Seller
(including, but not limited to, costs of investigation and attorneys' fees and
expenses) under policies of insurance described on the Insurance Schedule,
except as to claims for breach of any agreement, representation or warranty
made with respect to such products against which Seller has established good
and sufficient reserves therefor on its books and records. Except as disclosed
in the "Warranty Schedule" attached hereto as Schedule 3.20(b) and for
warranties under applicable law, there are no warranties, express or implied,
written or oral, with respect to the products of the Business.
3.21 Closing Date. All of the representations and warranties of Seller in
this Article 3 and elsewhere in this Agreement and all information delivered
in any schedule, attachment or exhibit hereto or in any certificate delivered
to Purchaser are true and correct in all respects on the date of this
Agreement and shall be true and correct in all respects on the Closing Date.
3.22 Representations and Warranties. Except as specifically set forth in
this agreement, Seller makes no representations or warranties to Purchaser as
to warranties of merchantability, fitness for a particular purpose or other
implied warranties under the Uniform Commercial Code.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the date hereof and
as of the Closing Date that:
4.1 Corporate Organization and Power. Purchaser is a limited liability
company duly organized and validly existing under the laws of the State of
Illinois with full corporate power and authority to enter into this Agreement
and the other agreements contemplated hereby and perform its obligations
hereunder and thereunder.
4.2 Authorization. The execution, delivery and performance by Purchaser of
this Agreement and the other agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all requisite corporate action, and no other
corporate proceedings on the part of Purchaser are necessary to authorize the
execution, delivery or performance of this Agreement or the other agreements
contemplated hereby. This Agreement constitutes and, upon execution and
delivery by Purchaser, the other agreements contemplated hereby shall each
constitute a valid and binding obligation of Purchaser enforceable against
Purchaser in accordance with their respective terms.
4.3 No Violation. Purchaser is not subject to or obligated under its
articles of organization or operating agreement, any applicable law, rule or
regulation of any governmental authority, or any agreement or instrument, or
any license, franchise or permit, or subject to any order, writ, injunction or
decree which would materially, adversely affect its ability to perform this
Agreement or the other agreements contemplated hereby.
4.4 Litigation. There are no actions, suits, proceedings, orders or
investigations pending or, to the best of Purchaser's knowledge, threatened
against or affecting Purchaser, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which would materially
adversely affect Purchaser's performance under this Agreement or the
consummation of the transactions contemplated hereby.
4.5 Brokerage. There are no brokerage commissions, finders fees or similar
compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of
Purchaser.
4.6 Closing Date. All of the representations and warranties of Purchaser
contained in this Article 4 and elsewhere in this Agreement and all
information delivered in any schedule, attachment or exhibit hereto or in any
certificate delivered to Seller are true and correct in all respects as of the
date of this Agreement and shall be true and correct in all respects as of the
Closing Date.
ARTICLE 5
COVENANTS PRIOR TO CLOSING
5.1 Affirmative Covenants. Prior to the Closing, Seller shall:
(a) conduct the Business only in the usual and ordinary course of
business in accordance with past custom and practice (including placing
purchase orders only for reasonable quantities and at reasonable prices and
accepting customer orders only for reasonable quantities on reasonable terms);
(b) keep in full force and effect its corporate existence and all
material rights, franchises and intellectual property relating to or
pertaining to the Business;
(c) use all reasonable efforts to retain its employees and sales
agents and preserve its present business relationships related to the
Business, and continue to compensate such employees and sales agents in
accordance with past custom and practice;
(d) maintain the Terre Haute Real Estate and the Purchased Assets in
accordance with normal industry standards and maintain insurance reasonably
comparable to that in effect on the date of this Agreement; in the event of
any casualty, loss or damage to the Terre Haute Real Estate or any of the
Purchased Assets prior to Closing, either repair or replace such assets with
assets of comparable quality or, if Purchaser agrees, transfer to Purchaser at
Closing the proceeds of any insurance recovery with respect thereto;
(e) maintain its books, accounts and records in accordance with past
custom and practice as used in the preparation of the income statement
described in Section 3.4 hereof and file with the appropriate taxing
authorities any and all returns required to be filed by it for the periods
covered thereby;
(f) permit Purchaser and its employees, agents, accounting and legal
representatives and potential lenders and their representatives reasonable
access to its books, records, invoices, contracts, leases, key personnel,
independent accountants, property, facilities, equipment and other things
reasonably related to the Business or the Purchased Assets upon reasonable
notice, during normal business hours and without disruption to the Seller's
business;
(g) use all reasonable efforts to obtain all consents and approvals
necessary or to consummate the transactions contemplated hereby and to cause
the other conditions to Purchaser's obligation to close to be satisfied;
(h) pay accounts payable and other obligations of the Business when
they become due and payable in the ordinary course of business consistent with
prior practice; and
(i) promptly inform Purchaser in writing of any variances from the
representations and warranties contained in Article 3 hereof.
5.2 Negative Covenants. Prior to the Closing, without the prior written
consent of Purchaser, Seller shall not:
(a) directly or indirectly (including through any agent, broker,
finder or other third party), offer to sell or otherwise dispose of, negotiate
for the sale or other disposition of, initiate or continue discussions
concerning the sale or other disposition of the Purchased Assets (other than
inventory in the ordinary course of business); or
(b) take or omit to take any action, or permit its affiliates to take
or omit to take any action, which would reasonably be anticipated to have a
Material Adverse Effect upon the Business or the Purchased Assets.
5.3 Supplements to Disclosure Schedule. From time to time prior to Closing,
Seller will supplement or amend the Disclosure Schedule with respect to any
matter hereafter arising which, if existing at the date of this Agreement,
would have been required to be set forth in the Disclosure Schedule. Such
supplement or amendment shall be deemed to qualify or amend any representation
or warranty or cure any breach of any representation or warranty made in this
Agreement.
ARTICLE 6
CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE
6.1 Conditions to Purchaser's Obligation. The obligation of Purchaser to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) the representations and warranties set forth in Article 3 hereof
shall be true and correct in all material respects at and as of the Closing as
though then made and as though the Closing Date was substituted for the date
of this Agreement throughout such representations and warranties;
(b) Seller shall have performed in all material respects all of the
covenants and agreements required to be performed by it under this Agreement
prior to the Closing;
(c) there shall have been no material adverse change in the
operations, financial condition, operating results, assets or business of the
Business, and there shall have been no material casualty loss or damage to the
Terre Haute Real Estate or the Purchased Assets, taken as a whole, whether or
not covered by insurance;
(d) all consents by third parties that are required for the transfer
of the Purchased Assets and the Business to Purchaser as contemplated hereby,
that are required for the consummation of the transactions contemplated hereby
or that are required to prevent a breach of, or a material default under or a
termination or modification of any instrument, contract, license, lease or
other agreement to which Seller is a party or to which any of the Purchased
Assets is subject, and, other than Permitted Encumbrances, releases of all
liens, charges, security interests, encumbrances and claims of others on or
with respect to the Purchased Assets shall have been obtained on terms and
conditions reasonably satisfactory to Purchaser;
(e) no action or proceeding before any court or government body shall
be pending or threatened which, in the judgment of Purchaser, made in good
faith and upon the written advice of counsel, makes it inadvisable or
undesirable to consummate the transactions contemplated hereby by reason of
the probability that the action or proceeding shall result in a judgment,
decree or order which would prevent the carrying out of this Agreement or any
of the transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement, cause such transactions to be rescinded or
affect the value or use of the Purchased Assets or Business;
(f) Purchaser shall have received from Seller's counsel, Raymond J.
Kulla, an opinion with respect to the matters set forth in Exhibit C attached
hereto, addressed to Purchaser and dated the Closing Date, in form and
substance satisfactory to Purchaser;
(g) not less than five (5) business days prior to the Closing Date,
Seller shall have provided Purchaser, at the expense of Seller and Purchaser
equally, with the following:
(i) commitments for title insurance from Commonwealth Land Title
Insurance Company ("Title Commitments") committing to insure Purchaser's title
in the Terre Haute Real Estate in an amount equal to the fair value thereof,
subject only to Permitted Encumbrances, which Title Commitments shall be for
ALTA Form Owners Policies containing the following endorsements: extended
coverage, a 3.1 zoning, parking access, contiguity, survey and location no. 1,
and shall be converted to title insurance policies on the Closing Date; and
(ii) surveys of the Terre Haute Real Estate certified to Purchaser by
licensed surveyors as having been prepared in conformance with conforming
ALTA/ASCM standards, disclosing the location of all improvements, easements,
party walls, sidewalks, roadways, utility lines and access to public streets
and roads (the "Surveys"), which Surveys shall disclose the location of the
improvements thereon to be within the lot lines, the location of the buildings
to be within all building and setback lines, no encroachments of buildings or
other improvements on to or from adjoining properties or other survey defects
other than Permitted Encumbrances.
If the Title Commitments or Surveys disclose any title encumbrances,
defects, liens, encumbrances or matters other than Permitted Encumbrances (the
"Unpermitted Encumbrances"), Seller shall have caused the same to be removed
from the Title Commitments or insured over at Seller's and Purchaser's expense
shared equally prior to the Closing (provided, however, that Seller shall have
no obligation to cause the removal of any Unpermitted Encumbrances), with
respect only to Unpermitted Encumbrances of a definite or ascertainable
amount, Seller may grant Purchaser a credit against the Purchase Price payable
at the Closing equal to the aggregate amount of such Unpermitted Encumbrances;
(h) all proceedings to be taken by Seller in connection with the
consummation of the Closing and the other transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby requested by Purchaser shall be
reasonably satisfactory in form and substance to Purchaser and its counsel;
(i) Purchaser and Seller shall have entered into that certain Lease
Agreement substantially in the form set forth in Exhibit D hereto (the "Lease
Agreement") pursuant to which Seller shall lease approximately 30,000 square
feet of office space and 23,000 square feet of storage space from Purchaser;
(j) Purchaser and Seller shall have entered into that certain GHC
Transitional Services Agreement substantially in the form set forth in Exhibit
E hereto (the "GHC Services Agreement") and that certain Acquisition Company
Transitional Services Agreement substantially in the form set forth in Exhibit
F hereto (the "Acquisition Company Services Agreement");
(k) Purchaser and The United Steelworkers of America Amalgamated Local
7441-Unit 3 (the "Union") shall have entered into an agreement dated as of the
Closing Date pursuant to which the Union shall adopt, and agree to the terms
of, the existing Labor Agreement dated as of March 11, 1996 between the Union
and the Seller;
(l) Purchaser shall have obtained financing for the transaction in
amounts and on terms satisfactory to Purchaser in its sole discretion;
(m) Purchaser shall have received a check payable to Purchaser from
Seller which shall represent an estimate of the accrued vacation for the
Seller's employees primarily related to the Business who will be terminated as
of the Closing Date (the "Accrued Payment"); and
(n) Purchaser shall have received all Schedules to this Agreement
which shall be reasonably satisfactory in form and substance to Purchaser and
its counsel.
Any conditions specified in this Section 6.1 may be waived by Purchaser;
provided that no such waiver shall be effective unless it is set forth in a
writing executed by Purchaser.
ARTICLE 7
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
7.1 The obligation of Seller to consummate the transactions contemplated by
this Agreement are subject to the satisfaction of the following conditions on
or before the Closing Date:
(a) the representations and warranties set forth in Article 4 hereof
shall be true and correct in all material respects at and as of the Closing as
though then made and as though the Closing Date was substituted for the date
of this Agreement throughout such representations and warranties;
(b) Purchaser shall have performed in all material respects all the
covenants and agreements required to be performed by it under this Agreement
prior to the Closing;
(c) Seller shall have received from Purchaser's counsel, Vedder,
Price, Kaufman & Kammholz, an opinion with respect to the matters set forth in
Exhibit G attached hereto, addressed to Seller and dated the Closing Date, in
form and substance reasonably satisfactory to Seller;
(d) Purchaser and Seller shall have entered into the Lease Agreement;
(e) Purchaser and Seller shall have entered into the GHC Services
Agreement and the Acquisition Company Services Agreement; and
(f) all proceedings to be taken by Purchaser in connection with the
consummation of the Closing and the other transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby reasonably requested by Seller shall be
reasonably satisfactory in form and substance to Seller and its counsel.
Any condition specified in this Section 7.1 may be waived by Seller; provided
that no such waiver shall be effective against Seller unless it is set forth
in a writing executed by Seller.
ARTICLE 8
CLOSING TRANSACTIONS
8.1 The Closing. Subject to the conditions contained in this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Vedder, Price, Kaufman & Kammholz in
Chicago, Illinois at 10:00 a.m. local time on March 31, 1998, or at such other
place or on such other date as may be mutually agreeable to the parties. The
date and time of the Closing are referred to herein as the "Closing Date."
8.2 Action to Be Taken at the Closing. The sale, conveyance, assignment and
delivery of the Purchased Assets and the payment of the Purchase Price
pursuant to the terms of this Agreement shall take place at the Closing, and,
simultaneously, the other transactions contemplated by this Agreement shall
take place by the delivery of all of the closing documents set forth in
Section 8.3.
8.3 Closing Documents.
(a) Seller shall deliver to Purchaser at the Closing the following
documents, duly executed by Seller where necessary to make them effective:
(i) an officer's certificate substantially in the form set forth
in Exhibit H attached hereto, stating that the preconditions specified
in Section 6.1 (a) through (h), and (n), have been satisfied;
(ii) copies of all necessary third party and governmental
consents, approvals, releases and filings required in order to effect
the transactions contemplated by this Agreement;
(iii) such stamped special warranty deeds, instruments of sale,
transfer, assignment, conveyance and delivery (including all vehicle
titles), as are required in order to transfer to Purchaser good and
marketable title to the Purchased Assets, free and clear of all liens,
charges, security interests and other encumbrances, except for Permitted
Encumbrances;
(iv) certified copies of the resolutions duly adopted by the
Board of Directors of Seller authorizing the execution, delivery and
performance of this Agreement and each of the other agreements
contemplated hereby, and the consummation of all other transactions
contemplated by this Agreement;
(v) all of Seller's contracts and commitments, files, books,
records and other data relating to the Business and the Purchased
Assets;
(vi) copies of good standing certificates in all jurisdictions
where the Seller is qualified to do business in which ownership of the
Purchased Assets or the conduct of the Business requires Seller to be so
qualified;
(vii) a certificate of the Secretary of the Seller, certifying as
to the correctness and completeness of the Articles of Incorporation and
Bylaws of the Seller, and all amendments thereto;
(viii)the Lease Agreement;
(ix) the GHC Services Agreement;
(x) the Acquisition Company Services Agreement; and
(xi) such other documents or instruments as Purchaser or the
Title Insurer may reasonably request to effect the transactions
contemplated hereby.
All of the foregoing documents in this Section 8.3(a) shall be reasonably
satisfactory in form and substance to Purchaser and shall be dated the Closing
Date.
(b) Purchaser shall deliver to Seller at the Closing the following
items, duly executed by Purchaser where necessary to make them effective:
(i) the amount of the Purchase Price payable at Closing as
provided in Section 2.2;
(ii) the Promissory Note;
(iii) an officer's certificate substantially in the form set forth
as Exhibit I attached hereto, stating that the preconditions specified
in Section 7.1 (a), (b), (d), (e) and (f) have been satisfied;
(iv) copies of all necessary third party and governmental
consents, approvals, releases and filings required in order for
Purchaser to effect the transactions contemplated by this Agreement; and
(v) the Lease Agreement;
(vi) the GHC Services Agreement;
(vii) the Acquisition Company Services Agreement; and
(viii) such other documents or instruments as Seller
reasonably may request to effect the transactions contemplated hereby.
All of the foregoing documents in this Section 8.3(b) shall be reasonably
satisfactory in form and substance to Seller and shall be dated as of the
Closing Date.
8.4 Possession. Simultaneously with the Closing, Seller shall take such
reasonable steps as may be requisite to put Purchaser in actual possession and
operating control of the Business and the Purchased Assets.
8.5 Nonassignable Contracts. To the extent that the assignment hereunder by
Seller to Purchaser of the Contracts or any other rights is not permitted or
is not permitted without the consent of any other party to the Contract, this
Agreement shall not be deemed to constitute an assignment of any such Contract
if such consent is not given or if such assignment otherwise would constitute
a breach of, or cause a loss of contractual benefits under, any such Contract,
and Purchaser shall assume no obligations or liabilities thereunder. Seller
shall advise Purchaser promptly in writing with respect to any Contract which
it knows, or has reason to know that it will not receive any required consent.
Without in any way limiting Seller's obligation to obtain all consents
necessary for the sale, transfer, assignment and delivery of the Contracts and
the Purchased Assets to Purchaser hereunder, if any such consent is not
obtained or if such assignment is not permitted irrespective of consent and
the Closing hereunder is consummated, Seller shall cooperate with Purchaser in
any reasonable arrangement designed by Purchaser to provide Purchaser with the
rights and benefits, subject to the obligations, under the Contract, including
reasonable enforcement for the benefit of Purchaser of any and all rights of
Seller against any other person arising out of breach or cancellation by such
other person.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification by Seller. (a) Seller agrees to and shall indemnify in
full Purchaser and its officers, directors, employees, agents, shareholders
and partners (collectively, the "Purchaser Indemnified Parties") and defend
and hold them harmless against any loss, liability, deficiency, damage,
expense or cost (including reasonable legal expenses) (collectively,
"Losses"), that Purchaser Indemnified Parties may suffer, sustain or become
subject to, as a result of (i) any misrepresentation in any of the
representations or breach of any of the warranties of Seller contained in this
Agreement or in any exhibits, schedules, certificates or other agreements or
documents delivered or to be delivered pursuant to the terms of this Agreement
or otherwise incorporated in this Agreement (collectively, the "Related
Documents"), (ii) any breach of, or failure to perform, any agreement or
covenant of Seller contained in this Agreement or any of the Related
Documents, (iii) any claims, losses, costs or expenses related to any products
of Seller sold on or prior to the Closing Date (other than warranties, charge
backs or customer adjustments which are Excluded Liabilities as provided for
in Section 1.4 hereof), (iv) any Excluded Liabilities, other than any
liabilities relating to environmental matters which shall be subject to
Section 9.1(b) below, (v) any claims, losses, costs or related expenses
(including the reasonable attorneys' fees) resulting from or arising from the
rights of any creditors of Seller pursuant to any bulk sales laws which may
apply as a result of the sale of the Purchased Assets to Purchaser, or (vi)
any claim, liability or contingent liability arising out of the operations of
the Seller prior to the Closing Date disclosed on any schedule hereto,
including, but not limited to, any amounts owed with respect to litigation,
employment disputes or severance obligations (collectively, "Purchaser
Losses"). Notwithstanding the foregoing, the parties agree that Seller shall
not have any liability to Purchaser as a result of the breach of any
representation or warranty to the extent that Purchaser knew the
representation or warranty was untrue or incorrect prior to the Closing Date.
(b) Notwithstanding the foregoing, any indemnification by Seller with
respect to any misrepresentation or breach of any of the warranties of Seller
contained in Section 3.19 of this Agreement shall be enforceable only with
respect to any loss, liability, deficiency, damage, expense or cost (including
reasonable legal expenses) incurred by Purchaser as a result of Purchaser
being ordered or requested, either by an agency, branch, division or
department of the State of Indiana, the United States, or any local or
municipal government entity, to investigate, clean-up, remove, remediate,
reduce or secure Hazardous Substances on, under, released from, removed from
or disposed of with respect to the Terre Haute Real Estate or pay any damages
in connection therewith, including where such order or request arises from or
is related to a condition or conditions on, under or in relation to the Terre
Haute Real Estate discovered by or on behalf of Purchaser, or brought to
Purchaser's attention, other than solely as a result of any voluntary or
independent investigation by Purchaser where no law or regulation requires
such investigation or no perceived threat or actual threat of imminent harm
gave rise thereto, and which condition or conditions are required by law to be
reported by Purchaser to any agency, branch, division or department of the
State of Indiana, the United States, or any local or municipal government
entity pursuant to Environmental Laws ("Government Order"), and Seller shall
not be required to indemnify Purchaser for any expenditures for any
remediation or clean-up or partial remediation or clean-up conducted other
than pursuant to a Government Order, and provided further, that any such
remediation or clean-up or partial remediation or clean-up for which Purchaser
is entitled to be indemnified hereunder shall be conducted in a manner
consistent with any such Governmental Order or requirement. Purchaser shall
give Seller written notice of receipt of any Government Order, or any written
threat or proposal to issue a Government Order as soon as practicable but in
any event within thirty (30) days of Purchaser's receipt of such Government
Order or threat or proposal for such Government Order. Seller's obligation to
indemnify Purchaser under this Section 9.1 with respect to any
misrepresentation or breach of any of the warranties of Seller contained in
Section 3.19 of this Agreement shall terminate and be unenforceable from and
after the fifth anniversary of the Closing.
9.2 Indemnification by Purchaser. Purchaser agrees to indemnify in full
Seller (the "Seller Indemnified Parties") and hold it harmless against any
Losses which the Seller Indemnified Parties may suffer, sustain or become
subject to as a result of (i) any misrepresentation in any of the
representations or breaches of any of the warranties of Purchaser contained in
this Agreement or in any of the Related Documents; (ii) any breach of, or
failure to perform, any agreement of Purchaser contained in this Agreement or
any of the Related Documents; or (iii) the Assumed Liabilities (collectively,
"Seller Losses"). The parties agree that Purchaser shall not have any
liability to Seller as a result of the breach of any representation or
warranty to the extent that Seller knew the representation or warranty was
untrue or incorrect prior to the Closing Date.
9.3 Method of Asserting Claims. As used herein, an "Indemnified Party" shall
refer to a "Purchaser Indemnified Party" or "Seller Indemnified Party," as
applicable, the "Notifying Party" shall refer to the party hereto whose
Indemnified Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party hereto obligated to indemnify
such Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or administrative,
instituted by any third party for the liability or the costs or expenses of
which are Seller Losses or Purchaser Losses, as the case may be (any such
third party action or proceeding being referred to as a "Claim"), the
Notifying Party shall give the Indemnifying Party prompt notice thereof. The
failure to give such notice shall not affect any Indemnified Party's ability
to seek reimbursement unless such failure has materially and adversely
affected the Indemnifying Party's ability to defend successfully a Claim. The
Indemnifying Party shall be entitled to contest and defend such Claim;
provided, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently contests
and defends such Claim. Notice of the intention so to contest and defend shall
be given by the Indemnifying Party to the Notifying Party within twenty (20)
business days after the Notifying Party's notice of such Claim (but, in all
events, at least five (5) business days prior to the date that an answer to
such Claim is due to be filed). Such contest and defense shall be conducted by
reputable attorneys employed by the Indemnifying Party. The Notifying Party
shall be entitled at any time, at its own cost and expense (which expense
shall not constitute a Loss unless the Notifying Party reasonably determines
that the Indemnifying Party is not adequately representing or, because of a
conflict of interest, may not adequately represent, any interests of the
Indemnified Parties), to participate in such contest and defense and to be
represented by attorneys of its or their own choosing. If the Notifying Party
elects to participate in such defense, the Notifying Party shall cooperate
with the Indemnifying Party in the conduct of such defense. Neither the
Notifying Party nor the Indemnifying Party may concede, settle or compromise
any Claim without the consent of the other party, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, in the event
the Indemnifying Party fails or is not entitled to contest and defend a claim,
the Notifying Party shall be entitled to contest, defend and settle such
Claim.
(b) In the event any Indemnified Party should have a claim against any
Indemnifying Party that does not involve a Claim, the Notifying Party shall
deliver a notice of such claim with reasonable promptness to the Indemnifying
Party. If the Indemnifying Party notifies the Notifying Party that it does not
dispute the claim described in such notice or fails to notify the Notifying
Party within thirty (30) days after delivery of such notice by the Notifying
Party whether the Indemnifying Party disputes the claim described in such
notice, the Loss in the amount specified in the Notifying Party's notice shall
be conclusively deemed a liability of the Indemnifying Party and the
Indemnifying Party shall pay the amount of such Loss to the Indemnified Party
on demand. If the Indemnifying Party has timely disputed its liability with
respect to such claim, a representative of each of the Indemnifying Party and
the Notifying Party (or their respective designees) shall proceed in good
faith to negotiate a resolution of such dispute, and if not resolved through
the negotiations of such presidents or designees within sixty (60) days after
the delivery of the Notifying Party's notice of such claim, such dispute
(except for any such dispute which gives rise or could give rise to equitable
relief under this Agreement) shall be resolved fully and finally in Chicago,
Illinois by an arbitrator selected pursuant to, and an arbitration governed
by, the Commercial Arbitration Rules of the American Arbitration Association.
The arbitrator shall resolve the dispute within thirty (30) days after
selection and judgment upon the award rendered by such arbitrator may be
entered in any court of competent jurisdiction.
9.4 Limitation on Indemnities. Any provision of this Agreement to the
contrary notwithstanding, no Claim for indemnification by any Party against
another Party shall be valid and assertible unless and until the aggregate
amount of all Claims exceeds Thirty Thousand Dollars ($30,000) (the "Basket
Amount"), and then only for the amount by which such claims for indemnity or
damages exceed the Basket Amount; provided, however, that any provision of
this Agreement to the contrary notwithstanding, the dollar limitations set
forth in this Section 9.4 shall not apply to any Claim relating to Seller's
obligations with respect to Taxes or with respect to any Purchase Price
Adjustment provided for in Section 2.2 hereof. The obligations of Seller to
indemnify Purchaser under this Agreement shall not exceed $6,200,000.
9.5 Adjustment for Insurance and Taxes. The amount which an Indemnifying
Party is required to pay to, for or on behalf of any Indemnified Party
pursuant to this Article 9 shall be adjusted (a) by any insurance proceeds
actually recovered by or on behalf of such Indemnified Party reduction of the
related Losses and (b) to take account of any tax benefit realized as a result
of any Losses. Amounts required to be paid, as so reduced, are hereinafter
sometimes called an "Indemnity Payment". If an Indemnified Party shall have
received or shall have had paid on its behalf an Indemnity Payment in respect
of any Losses and shall subsequently receive insurance proceeds in respect of
such Losses, or realize any tax benefit as a result of such Losses, then the
Indemnified Party shall pay to the Indemnifying Party the amount of such
insurance proceeds or tax benefit or, if lesser, the amount of the Indemnity
Payment.
9.6 Seller's Agreement to Close Frit Lagoon under RCRA. In addition to and
without limiting its obligations under Section 9.3 of this Agreement, Seller
agrees at its sole cost and expense to undertake any and all closure
activities required by IDEM, EPA, or any other governmental agency or body
with jurisdiction sufficient or required to obtain a closure letter or
certificate, no further action letter, or equivalent indication that the
relevant government authority presently intends not to require further
remedial activity, with respect to RCRA closure of the frit lagoon and
associated groundwater or other associated contamination described in part on
page 12 of the Keramida Report as set forth on the Environmental Matters
Schedule. Purchaser agrees to provide Seller and its contractors and
consultants reasonable access to the Terre Haute Real Estate for the purpose
of Seller conducting its activities under this Section 9.6. Seller agrees to
conduct its activities under this Section 9.6 in a manner that (a) minimizes
interference with Purchaser's use and operation of the Purchased Assets and
(b) complies with applicable Environmental Laws; Seller otherwise shall
conduct its activities under this Section under Seller's sole direction and
control.
9.7 Seller's Responsibility for Asbestos. In addition to and without
limiting its obligations under Section 9.3 of this Agreement, Seller agrees at
its sole cost and expense to maintain the existing asbestos remediation
program (the "Asbestos Program") which shall include removal, replacement and
repair of existing asbestos located on the Terre Haute Real Estate. The
parties agree that the Seller's financial responsibility for the Asbestos
Program shall not exceed $5,000 per year for a period of four (4) years
beginning as of the Closing Date.
ARTICLE 10
TERMINATION
10.1 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written consent of Purchaser and Seller;
(b) by either Purchaser or Seller if there has been a material
misrepresentation or breach of warranty or breach of covenant on the part of
the other party in the representations and warranties or covenants set forth
in this Agreement and any such misrepresentation or breach, if capable of
cure, is not cured within fifteen (15) days after written notice thereof to
such other party, or if events have occurred which have made it impossible to
satisfy a condition precedent to the terminating party's obligations to
consummate the transactions contemplated hereby (other than as a result of any
willful act or omission by the terminating party);
(c) by either Purchaser or Seller if the transactions contemplated
hereby have not been consummated by April 15, 1998; provided, that neither
Purchaser nor Seller shall be entitled to terminate this Agreement pursuant to
this subsection (c) if such party's willful breach of this Agreement,
respectively, has prevented the consummation of the transactions contemplated
hereby; or
(d) by either Purchaser or Seller in the event that any final court
order or decree enjoins the consummation of the transaction contemplated
hereunder.
10.2 Effect of Termination. In the event of termination of this Agreement as
provided above, this Agreement shall forthwith become void, and there shall be
no liability on the part of Seller or Purchaser, except for willful breaches
of this Agreement prior to the time of such termination and except for the
provisions of Section 11.7.
10.3 Effect of Closing. Seller and Purchaser shall be deemed to have waived
their respective rights to terminate this Agreement upon the completion of the
Closing. No such waiver shall constitute a waiver of any other rights arising
from the non-fulfillment of any condition precedent set forth in Article 6 or
7 unless such waiver is made in writing.
ARTICLE 11
ADDITIONAL AGREEMENTS
11.1 Survival. The representations, warranties, covenants and agreements set
forth in this Agreement or in any writing delivered to Purchaser or Seller in
connection with this Agreement shall survive the Closing Date and the
consummation of the transactions contemplated hereby for a period of three (3)
years and shall not be affected by any examination made for or on behalf of
Purchaser or Seller, the knowledge of any of Purchaser's or Seller's officers,
directors, shareholders, employees or agents, or the acceptance by Purchaser
or Seller of any certificate or opinion; provided, however, that the
representations, warranties, covenants and agreements made with respect to
Sections 3.6, 3.8 and 3.15 hereof shall survive until the applicable statute
of limitations has expired and the representations, warranties, covenants and
agreements made with respect to Section 3.19 hereof shall survive for a period
of five (5) years from the date hereof.
11.2 Mutual Assistance. Subsequent to the Closing, Seller on the one hand and
Purchaser on the other, at their own cost, shall assist each other (including
making records available) in the preparation of their respective tax returns
and the filing and execution of tax elections, if required, as well as any
audits or litigation that may ensue as a result of the filing thereof, to the
extent that such assistance is reasonably requested.
11.3 Press Release and Announcements. No press release related to this
Agreement or the transactions contemplated hereby, or other announcements to
the employees, customers or suppliers of Seller, shall be issued without the
joint approval of Purchaser and Seller. No other public announcement related
to this Agreement or the transactions contemplated hereby shall be made by
either party, except as required by law, in which event the parties shall
consult as to the form and substance of any such announcement required by law.
11.4 Expenses. Each party shall pay all of its expenses in connection with
the negotiation of this Agreement, the performance of its obligations
hereunder and the consummation of the transactions contemplated by this
Agreement. Seller shall pay the cost of recording all documents necessary to
place record title to the Purchased Assets in the condition warranted by or
required of Seller by this Agreement.
11.5 Further Transfers. After the Closing, Seller shall, and shall cause its
affiliates to, execute and deliver such further instruments of conveyance and
transfer and take such additional action as Purchaser may reasonably request
to effect, consummate, confirm or evidence the transfer to Purchaser of the
Purchased Assets. Seller shall execute such documents as may be necessary to
assist Purchaser (or its designees) in preserving or perfecting its rights in
the Purchased Assets.
11.6 Transition Assistance. From the date hereof and until five (5) years
after the Closing, Seller shall not in any manner take any action which is
designed, intended or might be reasonably anticipated to have the effect of
discouraging customers, suppliers, lessors, employees, sales agents and other
business associates from maintaining the same business relationships with
Purchaser after the date of this Agreement as were maintained with Seller
prior to the date of this Agreement.
11.7 Confidentiality. If the transactions contemplated by this Agreement are
not consummated, Purchaser shall maintain the confidentiality of all non-
public information and materials received by it, and Purchaser shall return to
Seller or destroy any materials (and copies thereof) obtained from Seller in
connection with the transactions contemplated hereby. Whether or not the
transactions contemplated hereby are consummated, Seller shall maintain the
confidentiality of all information and materials regarding Purchaser and its
affiliates, reasonably designated as confidential by Purchaser. If the
transactions contemplated by this Agreement are consummated, Seller shall
maintain the confidentiality of all proprietary and other non-public
information regarding the Business and the Purchased Assets and shall turn
over to Purchaser all such materials in their possession.
11.8 Non-Compete; Non-Solicitation.
(a) Although it is understood among the parties that Seller desires to
no longer engage in business operations similar to that of the Business, as an
additional inducement to Purchaser to enter into and to perform its
obligations under this Agreement, Seller and each officer and director of the
Seller agrees that, for a period of five (5) years after the Closing Date (the
"Non-Competition Period"), Seller shall not in the United States or in any
foreign country in which Seller currently does business, directly or
indirectly, either for itself or any other person or entity, own, manage,
control, participate in, permit its name to be used by, consult with, render
services for or otherwise assist in any manner any entity that owns, manages,
controls or engages in the business of manufacturing, selling or distributing
porcelain on steel products or products that perform a similar function at
similar price points to products of the Business; provided, however, Seller
may (i) manufacture, sell or distribute porcelain on steel tea kettles; (ii)
sell porcelain on steel products or products that perform a similar function
at similar price points to products of the Business through the Seller's own
retail stores located at outlet malls throughout the United States; or (iii)
inventory not purchased by Purchaser.
(b) Seller agrees that for a period of two (2) years after the
Closing, it shall not directly or indirectly offer employment to or hire any
current or future employee or sales agent of the Business without the prior
written consent of Purchaser.
(c) Purchaser agrees that for a period of two (2) years after the
Closing, it shall not directly or indirectly offer employment to or hire any
current employee or sales agent of the Seller, who does not work in or provide
services for or related to the Business without the prior written consent of
Seller.
(d) If, at the time of enforcement of this Section 11.8, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area.
(e) Seller recognizes and affirms that in the event of breach of it of
any of the provisions of this Section 11.8 money damages would be inadequate
and neither Purchaser nor Seller would have any adequate remedy at law.
Accordingly, Seller and Purchaser agree that the other party shall have the
right, in addition to any other rights and remedies existing in its favor, to
enforce its rights and the obligations under this Section 11.8 by an action or
actions for specific performance, injunction and/or other equitable relief
without posting any bond or security to enforce or prevent any violations,
whether anticipatory, continuing or future, of the provisions of this Section
11.8, including, without limitation, the extension of the Non-Competition
Period by a period equal to (i) the length of the violation of this Section
11.8 plus (ii) the length of any court proceedings necessary to stop such
violation. In the event of a breach or violation by Seller of any of the
provisions of this Section 11.8, the running of the Non-Competition Period,
but not of Seller's obligations under this Section 11.8, shall be tolled
during the period during which the occurrence of any such breach or violation
is investigated and during the continuance of any such breach or violation.
11.9 Specific Performance. Seller acknowledges that the Business and the
Purchased Assets are unique and recognizes and affirms that in the event of a
breach of this Agreement by Seller, money damages would be inadequate and
Purchaser would have no adequate remedy at law. Accordingly, Seller agrees
that Purchaser shall have the right, in addition to any other rights and
remedies existing in its favor, to enforce its rights and Seller's obligations
hereunder by an action or actions for specific performance, injunction and/or
other equitable relief, without posting any bond or security.
11.10 Remittances. All remittances, mail and other communications relating to
the Purchased Assets or the Business received by Seller or the officers and
directors of the Seller, at any time after the Closing Date shall be
immediately turned over to Purchaser by such parties. Seller shall cooperate
with Purchaser, and take such actions as Purchaser reasonably requests, to
assure that customers of the Business send their remittances directly to
Purchaser, and to assure that remittances from customers of the Business which
are improperly sent to Seller are not commingled with Seller's assets and are
turned over to Purchaser.
11.11 Reasonable Efforts To Consummate Closing Transactions. On the terms and
subject to the conditions contained in this Agreement, Seller and Purchaser
each agrees to use all reasonable efforts to take, or to cause to be taken,
all reasonable actions, and to do, or to cause to be done, all reasonable
things, necessary, proper or advisable under applicable laws and regulations
to consummate, as soon as reasonably practicable, the Closing, including the
satisfaction of all conditions thereto set forth herein.
11.12 Employees and Agents of Seller. Purchaser is under no legal obligation
to employ any personnel presently employed by Seller. Prior to the Closing
Date, Purchaser may, but shall not be required to, offer employment to such
persons currently employed by Seller as Purchaser in its sole discretion shall
determine. Purchaser shall have the absolute right to establish all terms and
conditions of employment, including wages, benefits and benefit plans, for any
employees of Seller to whom it chooses to make an offer of employment to be
employed by Purchaser. Except for as described on Schedule 11.12 hereto, it is
expressly agreed that Purchaser is not bound to assume, implement or continue
any wages, terms and conditions of employment, benefits or benefit plans which
may currently exist for Seller's employees. All such offers of employment
shall be on the terms and conditions established by Purchaser and shall be
contingent upon employment commencing with Purchaser only following the
Closing Date. Seller agrees not to discourage any individuals who are offered
employment or an agency relationship with Purchaser from accepting such
employment or agency relationship with Purchaser.
11.13 Transition Period License. To the extent any of Seller's trade names
(not transferred to Purchaser pursuant to this Agreement) appear on any
document, product or other materials used in the operation of the Business,
including, without limitation, inventories, sales material, invoices and
letterhead in existence on the Closing Date, Seller hereby grants to Purchaser
royalty-free licenses to use such trade names on such documents, products or
other materials for a reasonable term to allow an orderly transition of
registered products and customers, not to exceed twelve (12) months.
11.14 Access to Records. Subsequent to Closing, Seller shall maintain in its
possession and in tact all records not delivered to Purchaser pursuant hereto
and relating to the Business at or prior to the Closing for a period of five
(5) years. After the Closing and during such five (5) year period, Purchaser
shall have reasonable access during normal business hours to all such records
as Purchaser sees fit. Seller may, at its option, during such five (5) period,
deliver any such records to Purchaser.
ARTICLE 12
MISCELLANEOUS
12.1 Amendment and Waiver. This Agreement may be amended, and any provision
of this Agreement may be waived; provided that any such amendment or waiver
shall be binding on Seller only if such amendment or waiver is set forth in a
writing executed by Seller and that any such amendment or waiver shall be
binding upon Purchaser only if such amendment or waiver is set forth in a
writing executed by Purchaser. No course of dealing between or among any
persons having any interest in this Agreement shall be deemed effective to
modify, amend or discharge any part of this Agreement or any rights or
obligations of any person under or by reason of this Agreement.
12.2 Notices. All notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when personally delivered,
mailed by first class mail, return receipt requested or delivered by a
nationally recognized courier service. Notices, demands and communications to
Seller or Purchaser shall, unless another address is specified in writing in
accordance herewith, be sent to the address indicated below:
Notices to Seller
General Housewares Corp.
1536 Beech Street
Terre Haute, Indiana 47804
Attention: Paul Saxton
Chairman and CEO
Phone: (812) 232-1000
Fax: (812) 232-7016
with a copy to:
General Housewares Corp.
1536 Beech Street
Terre Haute, Indiana 47804
Attention: Raymond J. Kulla
General Counsel
Phone: (812) 232-1000
Fax: (812) 232-7016
Notices to Purchaser
D.R. Ryan, Jr.
21435 Prestwick
Barrington, Illinois 60010
Phone: (847) 304-1335
Fax: (847) 304-1337
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
Attention: Lane R. Moyer, Esq.
Phone: (312) 609-7586
Fax: (312) 609-5005
12.3 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, legatees, personal representatives, successors and permitted
assigns (including all successors and assignees in the event of Seller's
liquidation) as the case may be, but neither this Agreement nor any of the
rights, interests or obligations hereunder of Seller shall be assignable by
Seller without the prior written consent of Purchaser. Purchaser may assign
this Agreement without restriction to any of its affiliates, existing as of
the date hereof or in the future.
12.4 Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
12.5 No Third Party Beneficiaries. 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 other persons other than the parties hereto and their
respective successors, permitted assigns, heirs, legatees and personal
representatives, as the case may be, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
persons to any party, nor shall any provision give any third parties any right
of subrogation or action over or against any party. This Agreement is not
intended to and does not create any third party beneficiary rights whatsoever.
12.6 No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any
person.
12.7 Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.
12.8 Complete Agreement. This document and the documents referred to herein
contain the complete agreement between the parties and supersede any prior
understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any
way.
12.9 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
instrument.
12.10 Governing Law. The internal law, not the law of conflicts, of the State
of Illinois shall govern all questions concerning the construction, validity
and interpretation of this Agreement and the performance of the obligations
imposed by this Agreement.
12.11 Remedies Cumulative. Except as set forth in Section 9.3(b), all remedies
of the parties provided herein shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any thereof or of any other remedies
available to the parties, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained herein,
and every remedy given herein or by law to any party hereto may be exercised
from time to time, and as often as shall be deemed expedient, by such party.
12.12 Best Knowledge of Seller. The term "best knowledge of Seller" means the
actual knowledge, without independent investigation, of the directors,
officers and salaried employees of Seller.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
COLUMBIAN HOME PRODUCTS, LLC
By: D.R. Ryan, Jr.
Its: President
GENERAL HOUSEWARES CORP.
By: Raymond J. Kulla
Its: Vice President
EXHIBIT 2B
LEASE
between
COLUMBIAN HOME PRODUCTS, L.L.C.,
as Landlord
and
GENERAL HOUSEWARES CORP.,
as Tenant
1536 Beech Street
Terre Haute, Indiana
Dated as of March 31, 1998
LEASE
This Lease ("Lease") is made and entered into as of this 31st day of March,
1998, by and between COLUMBIAN HOME PRODUCTS, L.L.C., an Illinois limited
liability company ("Landlord", and sometimes referred to herein as
"Columbian"), and GENERAL HOUSEWARES CORP., a Delaware corporation ("Tenant",
and sometimes referred to herein as "General Housewares"). Landlord and Tenant
mutually covenant and agree as follows:
W I T N E S S E T H
WHEREAS, pursuant to that certain Asset Purchase Agreement dated March 31,
1998 (the Asset Purchase Agreement), Landlord acquired from Tenant
substantially all of the assets and properties of Tenant related to Tenant's
business of manufacturing, distributing and selling Porcelain on Steel
Cookware including, but not limited to, that certain real property more
particularly described on Exhibit A attached hereto and made a part hereof
(the "Premises");
WHEREAS, Landlord desires to lease to Tenant and Tenant desires to lease from
Landlord approximately 25,597 square feet of front office space and
approximately 22,852 square feet of warehouse space in the building commonly
known as 1536 Beech Street, Terre Haute, Indiana (the "Building"), as depicted
on the plan attached hereto at Exhibit B and made a part hereof, together with
all rights, privileges and appurtenances thereto (collectively, the "Demised
Premises");
WHEREAS, as of the date hereof and in connection with this Lease, Landlord and
Tenant have entered into that certain GHC Transitional Services Agreement (the
"Services Agreement") pursuant to which Landlord shall pay to Tenant certain
amounts for the performance of certain services as set forth in the Services
Agreement, which payments shall be made to Tenant quarterly as set forth in
the Services Agreement Payment Schedule attached hereto as Schedule I; and
WHEREAS, as of the date hereof and in connection with this Lease, Landlord has
made that certain Promissory Note in the principal amount of $1.3 Million
payable to the order of Tenant (the "Promissory Note"), which payments shall
be made annually as set forth in the Note Payment Schedule attached hereto as
Schedule II.
ARTICLE I
GRANT
1.01 Landlord, for and in consideration of the rents herein reserved and the
covenants and agreements herein contained which are to be performed by Tenant,
hereby leases to Tenant, and Tenant hereby leases from Landlord the Demised
Premises.
1.02 Tenant is hereby granted (i) the exclusive right to use, during the term
of this Lease the parking area designated on Exhibit C attached hereto (the
"Parking Area") to provide parking for Tenant and its employees, agents,
customers, licensees, invitees and/or guests subject to and in accordance with
Article XVI hereof, and (ii) the non-exclusive right to use any sidewalks,
walkways, driveways and/or private roads located on the Premises which provide
access to the Demised Premises.
1.03 "Tenant's Proportionate Share" shall mean the Demised Premises' allocable
share of the Taxes (as hereinafter defined) as reflected on Tenants books and
records for 1997.
ARTICLE II
TERM
2.01 The term of the Lease shall commence on April 1, 1998 (the "Commencement
Date") and terminate on March 31, 2005 (the "Termination Date"), unless sooner
terminated or extended as hereinafter provided.
2.02 From and after April 1, 2003, Landlord or Tenant may contact the other
concerning the possible extension of the term of this Lease. Nothing herein
shall obligate Landlord or Tenant to enter into an extension of the term of
this Lease.
2.03 So long as Tenant is not in default beyond the applicable notice and cure
periods under the covenants and agreements of this Lease, Tenant's quiet and
peaceable enjoyment of the Demised Premises shall not be disturbed or
interfered with by Landlord or by any person claiming by, through or under
Landlord.
ARTICLE III
RENT
3.01 Tenant shall pay to Landlord as base rent ("Rent") the following sums:
(a) for the period beginning on the Commencement Date and ending on March 31,
1999, Rent shall be calculated at a rate of $5.17 per square foot for the
front office space and $2.00 per square foot for the warehouse space for a
total of $186,487.50, payable in quarterly installments of $15,540.63 each;
(b) for the period beginning April 1, 1999 and ending on March 31, 2005, Rent
shall be calculated at a rate of $9.64 per square foot for the front office
space and $2.00 per square foot for the warehouse space for a total of
$292,464.88, payable annually;
(c) notwithstanding the foregoing, in no event shall Rent exceed (i) for the
period beginning on the Commencement Date and ending on March 31, 1999, the
amounts actually paid by Columbian to General Housewares pursuant to the
Services Agreement and (ii) for the period beginning April 1, 1999 and ending
on March 31, 2005, the amounts actually paid by Columbian to General
Housewares pursuant to the Promissory Note. To the extent the obligations of
Columbian under the Services Agreement or the Promissory Note are
restructured, cancelled, modified, rejected, discharged or otherwise altered
for any reason whatsoever including, but not limited to, a bankruptcy by
Columbian, the obligation of General Housewares to pay Rent under this Lease
shall be restructured, cancelled, modified, rejected, discharged or otherwise
altered in like manner, but in no event shall such restructuring,
cancellation, modification, rejection, discharge or alteration terminate or
otherwise modify the terms and conditions of this Lease or otherwise affect
any rights of General Housewares under this Lease.
3.02 The first quarterly installment, or a prorated portion thereof in the
event the Commencement Date is not on the first day of the quarter, shall be
paid to Landlord on the Commencement Date. Thereafter, (i) for the period
beginning on the Commencement Date and ending on March 31, 1999, each
quarterly installment shall be due and payable without notice or demand on the
first day of each successive quarter and (ii) for the period beginning April
1, 1999 and ending on March 31, 2005, each annual payment of Rent shall be due
and payable without notice or demand on the March 31 of each successive year.
All sums due Landlord hereunder (including Rent and additional rent as herein
provided) shall be paid to Landlord at 1536 Beech Street, Terre Haute,
Indiana, or at such other place as Landlord may hereafter designate in
writing. All sums due Landlord shall be paid without deduction, set-off,
discount or abatement, except as otherwise provided herein, in lawful money of
the United States.
3.03 Tenant shall also pay, as additional rent, all costs, expenses and other
payments which Tenant is required to pay in connection with the Demised
Premises in accordance with the applicable provisions of this Lease. All
amounts payable by Tenant as additional rent shall be payable as rent, without
deduction or offset (except as otherwise provided herein). If Tenant fails to
pay any amounts due according to this Section 3.03, Landlord will have all of
the rights and remedies available to it on account of Tenant's failure to pay
Rent pursuant to Article XIX hereof.
3.04 No security deposit shall be required of Tenant.
3.05 During the first twelve (12) months of the term of this Lease, Tenant
shall have the right to offset against Rent payable hereunder all amounts due
Tenant pursuant to the Services Agreement as set forth on Schedule I. From and
after April 1, 1999, Tenant shall have the right to offset against Rent
payable hereunder any sums due and payable to Tenant by Landlord under the
Promissory Note.
ARTICLE IV
CONDITION OF DEMISED PREMISES;
PURPOSE AND USE
4.01 Neither promise of the Landlord to alter, remodel or improve the Demised
Premises and/or the Building nor a representation respecting the condition of
the Demised Premises and/or the Building has been made by or on behalf of
Landlord to Tenant except to the extent expressly set forth herein or made a
part hereof.
4.02 Tenant may use and occupy the Demised Premises for the conduct of its
business as follows:
(a) the office portion of the Demised Premises for general office use and
retail sales; and
(b) the warehouse portion of the Demised Premises for storage purposes
including, but not limited to, the storage of inventory, office supplies,
sales and marketing supplies, product samples and business records.
Tenant agrees not to use or permit the use of the Demised Premises, or any
part thereof, in any manner inconsistent with the uses set forth in this
Section 4.2 without the prior written consent of Landlord.
4.03 Tenant shall not use or occupy the Demised Premises, or permit the
Demised Premises to be used or occupied, contrary in any material respects to
any governmental statute, order, ordinance or regulation applicable thereto,
or in any manner which would materially violate any certificate of occupancy
affecting the same. Tenant shall not store, use, release, discharge, generate,
manufacture, sell, treat, handle, transport, reuse, present, dispose of,
expose or recycle on, in or under all or any portion of the Premises or the
Demised Premises any hazardous substance, any highly flammable or explosive
oils or fluids or any other item which would make void or voidable any
insurance then in force with respect to the Premises or the Demised Premises.
Tenant shall be responsible for the continuing compliance of the Demised
Premises with respect to any governmental statute, order, ordinance or
regulation applicable thereto during the term of this Lease.
4.04 Tenant shall not permit smoking within the Demised Premises.
4.05 Tenant shall not block or obstruct (i) any entrance or exit of the
Demised Premises nor shall Tenant construct any structure which would impede
passage through the Demised Premises or (ii) any electrical or mechanical
equipment within the Demised Premises if blocking or obstructing such
equipment would cause a violation of any governmental code or regulation or
prohibit reasonable access to Landlord for servicing such equipment.
4.06 Tenant shall at all times abide by the structural floor loading limits of
the Building which is 200 pounds per square foot.
ARTICLE V
TENANT'S PERSONAL PROPERTY
5.01 Landlord hereby acknowledges that Tenant has and shall retain title to
all furniture, equipment, trade fixtures and all other personal property
located on and/or placed on the Demised Premises by Tenant prior to or during
the term of this Lease ("Tenant's Personal Property"). Tenant shall have the
right to remove Tenant's Personal Property prior to the expiration of the term
of this Lease or any renewal thereof, provided, however, Tenant shall repair
any damage caused by or arising from such removal.
ARTICLE VI
TAXES
6.01 During the term of the Lease, Tenant shall pay to Landlord as additional
rent Tenant's Proportionate Share of all real estate taxes and assessments
(but not including (i) income or franchise taxes or any other taxes imposed
upon or measured by Landlord's income or profits, unless the same shall be
imposed in lieu of real estate taxes or (ii) real and personal property, taxes
and assessments levied or assessed against or based on the value of any
manufacturing equipment, furniture, fixtures or personal property of Landlord
located on any portion of the Premises other than the Demised Premises), which
are levied or assessed against the Premises (collectively, "Taxes").
6.02 Landlord shall keep or cause to be kept records of such Taxes in
accordance with an appropriate system of accounts and accounting practices
consistently maintained. Upon receipt of any tax bill in connection with the
Demised Premises, Landlord shall promptly deliver to Tenant a statement or
account setting forth the amount of Taxes due and Tenant shall pay such amount
to Landlord within ten (10) days after Landlord delivers to Tenant such
statement or account (the "Tax Statement") therefor.
6.03 Landlord shall keep and make available to Tenant or its representative in
Landlord's office for a period of one (1) year after delivery of the Tax
Statement, records in reasonable detail of Taxes for the period covered by
such Tax Statement and shall permit Tenant's representative, at Tenant's cost
and expense, to examine such records as may reasonably be required to verify
such Tax Statement at reasonable times during business hours. Unless Tenant
takes written exception to Landlord's Statement within sixty (60) days after
Tenant's receipt of same, such Tax Statement shall be considered final and
accepted by Tenant. In the event Tenant has overpaid its proportionate share
of Taxes, Landlord shall credit any excess against Rent to be paid by Tenant
in the following month or, if this Lease has expired or terminated, Landlord
shall refund any excess to Tenant within thirty (30) days of Tenant's delivery
of notice of such overpayment. Landlord's obligation to refund any excess
shall survive the expiration or earlier termination of this Lease.
ARTICLE VII
UTILITIES AND SERVICES
7.01 Landlord shall cause the provider of electricity, water, sewer and any
other utility to separately meter and bill Tenant for all such utilities used
or consumed within the Demised Premises (the "Utilities"); any and all costs
and expenses incurred in connection with the installation of any such meters
in accordance with this Section 7.01 shall be shared by Landlord and Tenant
equally. During the term of this Lease, Tenant shall pay directly to the
applicable utility provider the cost of the Utilities separately metered and
billed to Tenant.
7.02 Landlord shall be responsible for providing gas services to the Demised
Premises and Tenant shall reimburse Landlord (such payment to be made as
additional rent) any and all costs incurred by Landlord in connection with
such gas services provided to the Demised Premises in accordance with this
Section 7.02, such costs to be measured by a formula mutually agreed upon by
Landlord and Tenant.
7.03 In the event any utility provider cannot separately meter and bill Tenant
for any Utilities provided to the Demised Premises, Landlord shall install a
sub-meter to measure such Utilities; any and all costs and expenses arising in
connection with the installation of any such sub-meter shall be shared by
Landlord and Tenant equally. Tenant shall pay to Landlord as additional rent
Tenant's portion of the Utilities which are measured by any sub-meters
installed by Landlord.
7.04 In the event any Utilities cannot be metered separately and such
Utilities cannot be measured by a sub-meter, Tenant shall reimburse Landlord
for the cost of any and all Utilities paid by Landlord, such cost to be
measured by a formula mutually agreed upon by Landlord and Tenant.
7.05 Tenant shall be responsible for obtaining or providing at its sole cost
and expense:
(a) janitor service and customary cleaning services to the Demised Premises;
(b) snow plowing services for the Parking Area and the sidewalks directly in
front of the Demised Premises; and
(c) landscaping and mowing services for the strip of lawn area directly in
front of the Parking Area.
Upon the request of Tenant, Landlord shall obtain or provide for Tenant the
services set forth in this Section 7.05(b) and 7.05(c) and Tenant shall
reimburse Landlord any and all costs and expenses incurred as a result
thereof, such amount to be paid by Tenant as additional rent in accordance
with Section 3.03 hereof.
7.06 Landlord shall be responsible for providing the following services to the
Demised Premises and/or Parking Area, sidewalks, walkways, driveways and
private roads, as applicable, located on the Premises:
(a) garbage pick-up;
(b) snow plowing, landscaping and mowing services (except as provided in
Section 7.05 hereof); and
(c) security services for all portions of the Premises, including the Demised
Premises.
Landlord shall provide, at its sole cost and expense, the services set forth
in this Section 7.06(b) and 7.06(c). Tenant shall reimburse Landlord a portion
of the cost and expense incurred by Landlord in connection with the provision
of the services set forth in this Section 7.06(a) to the Demised Premises,
such portion of the cost to be measured by a formula mutually agreed upon by
Landlord and Tenant and paid by Tenant as additional rent in accordance with
Section 3.03 hereof.
7.07 Landlord shall be responsible for providing heating, ventilation and air
conditioning services (the "HVAC") to the Demised Premises. Tenant shall
reimburse Landlord any and all costs incurred by Landlord for any services
provided to the Demised Premises in accordance with this Section 7.07, such
costs to be measured by a formula mutually agreed upon by Landlord and Tenant.
Notwithstanding the contrary contained herein, Landlord shall use its best
efforts to separate or cause the separation of the HVAC used or consumed in or
with regard to the office portion and/or the warehouse portion of the Demised
Premises such that any use of the HVAC shall be read by a separate meter or
meters. In the event Tenant's use of the HVAC can be separately read by
separate meter or sub-meter, Tenant shall reimburse Landlord in accordance
with such reading. Any and all costs and expenses incurred in connection with
the installation of a separate HVAC meter shall be shared by Landlord and
Tenant equally.
7.08 Landlord shall keep or cause to be kept records of (i) Utilities which
are not separately metered and billed to Tenant by the utility providers and
(ii) the services described in Section 7.05 hereof, in accordance with an
appropriate system of accounts and accounting practices consistently
maintained. Tenant shall reimburse Landlord within thirty (30) days after
Landlord renders a statement or account therefor to Tenant. Landlord's
records, accounts and accounting practices shall at all times be subject to
the review and audit by Tenant or its representatives or agents. In no event
shall Tenant be responsible for paying or reimbursing Landlord for any
overhead, management, recordkeeping, accounting or legal fees or expenses
incurred by Landlord in connection with the providing, billing or accounting
of the utilities or services provided by Landlord pursuant to this Article
VII.
ARTICLE VIII
INSURANCE
8.01 During the term of this Lease, Landlord shall procure and maintain
insurance for the buildings, structures and improvements at any time situated
upon the Demised Premises, the Parking Area and any sidewalks, walkways,
driveways and/or private roads located on the Premises against loss or damage
by fire, explosion, sprinkler leakage, windstorm, malicious mischief,
vandalism, and all other normally insurable casualties insured by a full and
complete extended coverage endorsement of not less than 100% of the full
replacement value of such buildings, structures and improvements, with all
proceeds of insurance to be payable to Landlord. During the term of this
Lease, Landlord shall procure and maintain insurance insuring Tenant and
Landlord from all claims, demands or actions for injury to or death of any
person in an amount of not less than $2,000,000; for injury to or death of
more than one person in any one accident to the limit of $2,000,000; and for
damage to property in an amount of not less than $2,000,000 made by, or on
behalf of, any person or persons, firm or corporation, arising from, related
to or connected with any portion of the Premises other than the Demised
Premises. The aforesaid insurance shall be in companies satisfactory to
Tenant. The aforesaid insurance shall not be subject to cancellation by
Landlord except after at least thirty (30) days' prior written notice to
Tenant. The original insurance policies (or forms of Evidence of Insurance),
together with satisfactory evidence of payment of the premiums thereon, shall
upon written request be deposited with Tenant at the commencement of this
Lease. If Landlord fails to obtain the aforesaid insurance in accordance with
this Article VIII, Tenant may obtain such insurance for the Demised Premises
in accordance with Article XX hereof.
8.02 During the term of this Lease, Tenant shall procure and maintain
insurance insuring Landlord and Tenant from all claims, demands or actions for
injury to or death of any person in an amount of not less than $2,000,000; for
injury to or death of more than one person in any one accident to the limit of
$2,000,000; and for damage to property in an amount of not less than
$2,000,000 made by, or on behalf of, any person or persons, firm or
corporation, arising from, related to or connected with the Demised Premises.
The aforesaid insurance shall be in companies satisfactory to both Landlord
and Tenant. The aforesaid insurance shall not be subject to cancellation by
Tenant except after at least thirty (30) days' prior written notice to
Landlord, and Landlord shall be named as an additional insured. The original
insurance policies (or certificates thereof satisfactory to Landlord),
together with satisfactory evidence of payment of the premiums thereon, shall
upon written request be deposited with Landlord at the commencement of this
Lease. If Tenant fails to obtain the aforesaid insurance in accordance with
this Article VIII, Landlord may obtain such insurance for the Demised Premises
in accordance with Article XX hereof.
8.03 Whenever any loss, cost, damage or expense resulting from fire, explosion
or any other casualty or occurrence is incurred by either of the parties to
this Lease in connection with the Demised Premises, and such party is then
covered in whole or in part by insurance with respect to such loss, cost,
damage or expense, then the party so insured hereby releases the other party
from any liability it may have on account of such loss, cost, damage or
expense to the extent of any amount recovered by reason of such insurance and
waives any right of subrogation which might otherwise exist in or accrue to
any person on account thereof; provided that such release of liability and
waiver of the right of subrogation shall not be operative in any case where
the effect thereof is to invalidate such insurance coverage or increase the
cost thereof (however, in the case of increased cost the other party shall
have the right, within thirty (30) days following written notice, to pay the
increased cost thereupon keeping such release and waiver in full force and
effect).
ARTICLE IX
MAINTENANCE AND REPAIR
9.01 Except as otherwise provided herein, Tenant shall keep the Demised
Premises in the same condition and state of repair, ordinary wear and tear
excepted, as existed at the time Tenant received possession. Tenant shall, at
its sole cost and expense, maintain and promptly make all necessary repairs
and replacements (other than structural or roof repairs) to the Demised
Premises.
9.02 Landlord shall repair and maintain in good condition and, where
appropriate, replace, at Landlord's sole cost and expense, the Parking Area,
sidewalks, walkways, driveways and/or private roads located on the Premises,
and all structural elements of the Demised Premises including, without
limitation, the roof of the Building and the air conditioning units servicing
the Demised Premises; provided, however, in the event the air conditioning
units including, but not limited to, the compressors must be replaced, Tenant
shall reimburse Landlord one half (1/2) of any cost or expense incurred by
Landlord in connection therewith, unless such replacement is caused by the
negligence of Landlord or Landlord's employee, agent or hired contractor, in
which case Landlord shall pay the entire cost of such replacement.
9.03 The necessity for and adequacy of maintenance and repairs to any
structures and improvements pursuant to this Article IX shall be measured by
the standard which is appropriate for buildings, structures and improvements
of similar construction and class.
ARTICLE X
MODIFICATIONS; SIGNS
10.01 Tenant, at its sole cost and expense, may make, without Landlord's
consent and with no obligation to return the Demised Premises to its original
condition, any alteration, modification or rearrangement (collectively,
"Modifications"), to the Demised Premises, not affecting the structural
integrity of the Building or any of the major systems of the Building
including, but not limited to, the electrical, heating, ventilating, air
conditioning, mechanical and plumbing systems, provided such Modification is
not in violation of any governmental building code or regulation.
10.02 Modifications affecting the structural integrity or major systems of the
Building shall not be made by Tenant without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. If Tenant desires
to make a structural or major systems Modification to the Demised Premises,
notice of the type of structural or major systems Modification shall be
delivered to Landlord at least sixty (60) days prior to the contemplated
commencement of such action. Within forty-five (45) days of receipt by
Landlord of the aforesaid notice from Tenant, Landlord shall by written notice
to Tenant notify Tenant as to (i) whether Landlord consents to such structural
or major systems Modification and (ii) if such structural or major systems
Modification is consented to by Landlord, whether Landlord will require
Tenant, with regard to the contemplated structural or major systems
Modification, to return the Demised Premises to its original condition, less
ordinary wear and tear, upon termination or expiration of the Lease. If Tenant
receives timely notice from Landlord that the Demised Premises must be
returned to its original condition, Tenant shall, at the termination or
expiration of the Lease, return the Demised Premises, with regard to such
structural or major systems Modification, to its original condition, less
ordinary wear and tear. In any event, Tenant shall have the right to remove
any structural or major systems Modification as it sees fit, provided Tenant
returns the Demised Premises to its original condition.
10.03 Tenant, at its sole cost, may place signs on the Demised Premises,
provided Tenant, at its sole cost, obtains all permits and approvals as may be
necessary from any governmental bodies.
ARTICLE XI
TITLE; MECHANICS' LIENS
11.01 Tenant shall not permit or suffer to be filed or claimed against the
interest of Landlord in the Demised Premises during the term of this Lease any
lien or claim of any kind for services or materials furnished in connection
with any Modification of the Demised Premises by Tenant, and if such lien be
claimed or filed it shall be the duty of Tenant, within thirty (30) days after
Tenant receives notice that a claim has been filed, or within thirty (30) days
after Landlord has been given written notice of such claim and has transmitted
written notice of the receipt of such claim to Tenant (whichever 30 day period
expires earlier) to cause the Demised Premises to be released from such claim,
either by payment or by the posting of a bond or by the payment into court of
the amount necessary to relieve and release the Demised Premises from such
claim or in any other manner which, as a matter of law, will result within the
said period of thirty (30) days, in releasing Landlord and the title of
Landlord from such claim.
ARTICLE XII
INDEMNIFICATION
12.01 Tenant agrees to protect, indemnify, defend and save Landlord and its
beneficiaries, and their agents, servants or employees harmless from and
against any and all liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) imposed upon or incurred by or
asserted against Landlord and its agents, servants or employees by reason of
(a) any accident, injury to or death to persons or loss of or damage to
property occurring on or about the Demised Premises or any part thereof or
occurring in or about the Building and alleged to be due to any act or failure
to act or any negligence or default under this Lease by Tenant, its
contractors, agents or employees; (b) any failure on the part of Tenant to
perform or comply with any of the terms of this Lease; (c) performance of any
labor or services or the furnishing of any materials or property in respect to
the Demised Premises or any part thereof by or at the direction of Tenant. In
case any action, suit or proceeding is brought against Landlord by reason of
any such occurrence, Tenant shall, at Tenant's expense, resist and defend such
action, suit or proceeding, or cause the same to be resisted or defended by
counsel approved by Landlord. This indemnity shall not apply to any
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses resulting from the actions or omissions of Landlord, its
employees or agents.
12.02 Landlord agrees to protect, indemnify, defend and save Tenant and its
beneficiaries, and their agents, servants or employees harmless from and
against any and all liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) imposed upon or incurred by or
asserted against Tenant and its agents, servants or employees by reason of (a)
any accident, injury to or death to persons or loss of or damage to property
occurring on or about the Demised Premises or any part thereof or occurring in
or about the Building and alleged to be due to any act or failure to act or
any negligence or default under this Lease by Landlord, its contractors,
agents or employees; (b) any failure on the part of Landlord to perform or
comply with any of the terms of this Lease; (c) performance of any labor or
services or the furnishing of any materials or property in respect to the
Demised Premises or any part thereof by or at the direction of Landlord. In
case any action, suit or proceeding is brought against Tenant by reason of any
such occurrence, Landlord shall, at Landlord's expense, resist and defend such
action, suit or proceeding, or cause the same to be resisted or defended by
counsel approved by Tenant. This indemnity shall not apply to any liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
resulting from the actions or omissions of Tenant, its employees or agents.
ARTICLE XIII
CASUALTY
13.01 In the event the Demised Premises are made untenantable by fire,
accident or other casualty (in any case, a "Casualty"), Landlord shall
commence to repair, reconstruct and rehabilitate the Demised Premises and all
buildings and improvements located thereon immediately prior to such Casualty
within thirty (30) days from the date of such Casualty and use reasonable
diligence to complete such repairs, reconstruction and rehabilitation.
13.02 Notwithstanding the provisions of Section 13.01 hereof, either party may
terminate this Lease given by notice not later than thirty (30) days from the
date of the Casualty if the Casualty affects more than fifty percent (50%) of
the front office space of the Demised Premises and:
(a) a registered architect selected by Landlord and Tenant and licensed to do
business in the State of Indiana should certify that such repairs and
rehabilitations cannot be completed so as to make the Demised Premises
tenantable within six (6) months from the date on which such repair and
rehabilitation is commenced;
(b) if such repairs and rehabilitation can be completed within six (6) months
as provided in (a) above and Landlord fails to use reasonable diligence to
complete the repairs and rehabilitation of the Demised Premises and all
buildings and improvements located thereon within the six (6) month period
after such Casualty; or
(c) the Casualty occurs within six (6) months of the Termination Date.
13.03 If neither party elects to terminate this Lease pursuant to this Article
XIII, Rent and all other sums payable by Tenant under this Lease shall be
equitably reduced based on the proportion by which the square footage of the
useable portion of the Demised Premises is reduced due to such Casualty as
compared to the square footage of the Demised Premises prior to such Casualty,
such rent reduction (i) to take into consideration the difference in the
rental rate for the office portion and the warehouse portion of the Demised
Premises and (ii) be effective as of the date of such Casualty until such time
as the repair, reconstruction or rehabilitation of the Demised Premises is
substantially complete.
13.04 In the event this Lease shall terminate pursuant to Sections 13.01 or
13.02 hereof, Tenant shall have the right to collect and receive any and all
insurance proceeds payable as a result of a Casualty under any insurance
policy or policies procured and maintained by Tenant.
ARTICLE XIV
EMINENT DOMAIN
14.01 If all of the Demised Premises are taken by eminent domain or by
conveyance in lieu thereof (in either case, a "Taking"), or if there is a
Taking of more than fifty percent (50%) of the front office space of the
Demised Premises and Tenant determines, in its sole discretion, that Tenant is
substantially unable to use the Demised Premises for its intended purposes,
this Lease shall terminate as of the date of such Taking.
14.02 In the event of a Taking of less than fifty percent (50%) of the front
office space of the Demised Premises, this Lease shall continue in full force
and effect and Rent shall be equitably reduced based on the proportion by
which the square footage of the Demised Premises is reduced as compared to the
floor area of the Demised Premises prior to such Taking, such rent reduction
(i) to take into consideration the difference in the rental rate for the
office portion and the warehouse portion of the Demised Premises and (ii) be
effective as of the date of the Taking.
14.03 Landlord reserves all rights to any and all awards and/or compensation
for any Taking, and Tenant hereby assigns to Landlord any right Tenant may
have to such award and/or compensation, and Tenant shall make no claim against
Landlord or the condemning authority for such award and/or compensation,
provided, however, Tenant shall have the right to claim and recover from the
condemning authority for the termination of Tenant's leasehold interest,
interference or interruption with Tenant's business, the Taking of Tenant's
Personal Property and Tenant's moving expenses, provided any recovery by
Tenant shall not reduce the award and/or compensation due Landlord in
connection with such Taking.
ARTICLE XV
ASSIGNMENT AND SUBLETTING
15.01 This Lease shall not be assigned by Tenant unless Landlord shall have
consented thereto in writing, which consent shall not be unreasonably
withheld.
15.02 At any time and from time to time, Tenant may, without the consent of
Landlord, sublet all or any portion of its interest in this Lease and the
Demised Premises. In addition, notwithstanding anything to the contrary in
Section 15.01 hereof, Tenant may, without the consent of Landlord, assign all
of its right, title and interest in and to this Lease and the Demised Premises
to (i) an entity which purchases all or substantially all of Tenant's assets
used in connection with Tenant's operations at the Demised Premises or (ii) an
entity which, directly or indirectly, controls or is under the control of
Tenant. Any assignment of this Lease by Tenant shall not release Tenant from
its obligations under this Lease.
ARTICLE XVI
PARKING
16.01 Tenant's right to use the Parking Area shall be subject to such
reasonable and non-discriminatory rules and regulations as Landlord may from
time to time impose upon all parking areas located on the Premises, provided,
however, such rules and regulations shall not (i) impose or create any cost or
expense for the use of the Parking Area by Tenant, (ii) reduce the number of
allotted parking spaces in the Parking Area, or (iii) interfere with Tenant's
intended use of the Demised Premises or Parking Area.
16.02 Landlord shall be responsible for and keep the Parking Area in the same
condition and state of repair, ordinary wear and tear excepted, as existed at
the Commencement Date and Landlord shall, at its sole cost and expense,
promptly make all necessary repairs and replacements to the Parking Area.
Landlord may, at any time, temporarily close any part of the Parking Area (i)
to make such repairs and replacements or (ii) to do such other acts in and to
the Parking Area as in its reasonable judgment may be necessary to improve the
convenience of the Parking Area, provided, however, (a) Landlord shall make
such repairs or improvements at reasonable times and upon reasonable notice
(except in the case of an emergency when Landlord shall endeavor to give such
notice, if any, as is possible under the circumstances), (b) Landlord shall
use reasonable efforts to prevent any interruption of or unreasonable
interference with Tenant's use of the Parking Area, and (c) such repairs or
improvements shall not result in a reduction in the number of parking spaces
allotted to Tenant in the Parking Area.
ARTICLE XVII
LANDLORD'S OBLIGATIONS
17.01 It shall be an obligation of Landlord under this Lease to make all
payments to Tenant which are due and payable under the Services Agreement in
accordance with Schedule I. Landlord hereby acknowledges that Landlord's
obligation, as set forth in this Section 17.01, shall constitute an
"obligation" within the meaning of Section 365(h)(ii) of the Bankruptcy Code.
17.02 It shall be an obligation of Landlord under this Lease to make all
payments to Tenant which are due and payable under the Promissory Note in
accordance with Schedule II. Landlord hereby acknowledges that Landlord's
obligation, as set forth in this Section 17.02, shall constitute an
"obligation" within the meaning of Section 365(h)(ii) of the Bankruptcy Code.
ARTICLE XVIII
RIGHTS RESERVED TO LANDLORD
18.01 Landlord shall have the following rights, exercisable without effecting
eviction, constructive or actual, or giving rise to claim for setoff or
abatement of Rent, and without liability to Tenant for damage or injury to
property, person or business unless such damage or injury is caused by the
negligence of Landlord or its employees or agents:
(i) To install, affix and maintain any and all signs on the Premises,
provided, however, Landlord shall not install, affix and/or maintain any sign
on the Demised Premises or the Parking Area without the prior written consent
of Tenant, which consent shall not be unreasonably withheld.
(ii) To show the Demised Premises to prospective tenants during reasonable
hours and upon oral or written prior notice to Tenant during the last twelve
months of the term of this Lease.
(iii) To grant to anyone the exclusive right and privilege to conduct any
business in the Building, and such exclusive right and privilege shall be
binding upon Tenant, provided such exclusive right shall not operate to
exclude Tenant from or otherwise interfere with or create a nuisance for
Tenant in connection with its use of the Demised Premises.
(iv) To close the Building after regular working hours (which shall be Monday
through Friday from 7:00 a.m. to 7:00 p.m. and Saturdays from 9:00 a.m. to
1:00 p.m.) and on Sundays and holidays subject, however, to Tenant's right to
admittance under such reasonable regulations as Landlord may prescribe from
time to time on all parties using the Building, including Landlord and its
officers, employees and agents. Notwithstanding the provisions of this Section
18.01(iv), Tenant and its officers, employees and agents shall have twenty-
four (24) hour access to the Demised Premises.
ARTICLE XIX
DEFAULT AND REMEDIES
19.01 In case any of the following events shall happen:
(a) Tenant shall at any time fail to pay Rent or any additional rent or other
monetary obligation under this Lease, and any such failure continues for five
(5) days after written notice thereof to Tenant; or
(b) Tenant shall fail, whether by action or inaction, to perform or observe or
be in default in any other of its covenants or agreements contained herein
(besides those specified in the immediately preceding clause (a) above), and
such failure shall continue for thirty (30) days after written notice thereof
to Tenant specifying the default; provided, however, in the case of failure or
default referred to in this clause (b) such that by its nature it cannot with
due diligence and in good faith be cured within the thirty (30) days, Tenant's
period of time to cure shall be extended for such period as shall be
reasonably necessary to remedy the same using all due diligence and good
faith, provided such period shall not exceed an additional thirty (30) days;
or
(c) Tenant shall file a voluntary petition in bankruptcy or shall file any
petition or answer seeking or acquiescing in any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief for
itself under any present or future federal, state or other statute, law or
regulation relating to bankruptcy, insolvency or other relief for debtors or
Tenant is adjudicated as bankrupt or insolvent; or shall seek or consent to or
acquiesce in the appointment of any trustee, receiver or liquidator of Tenant
or of all or any substantial part of its property, or of any or all of the
royalties, revenues, rents, issues or profits thereof, or shall make any
general assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due; or
(d) A court shall enter an order, judgment or decree approving a petition
filed by third parties against Tenant seeking any reorganization, dissolution
or similar relief under any present or future federal, state or other statute,
law or regulation relating to bankruptcy, insolvency or other relief for
debtors, and such order, judgment or decree shall remain unvacated and
unstayed for an aggregate of sixty (60) days from the first date of entry
thereof; or any trustee, receiver or liquidator of Tenant or of all or any
substantial part of its property, or of any or all of the royalties, revenues,
rents, issues or profits thereof shall be appointed without the consent or
acquiescence of Tenant and such appointment shall remain unvacated and
unstayed for an aggregate of sixty (60) days; then upon the occurrence of any
of such events referred to in clauses (a), (b), (c), or (d) (an "Event of
Default"), then Landlord may:
(i) terminate this Lease by giving written notice of termination to Tenant, in
which event Tenant shall immediately surrender the Demised Premises to
Landlord. If Tenant fails to so surrender the Demised Premises, then Landlord
may without prejudice to any other remedy it has for possession of the Demised
Premises or arrearages in Rent or other damages, re-enter and take possession
of the Demised Premises and expel or remove Tenant and any other person
occupying the Demised Premises or any part thereof, in accordance with
applicable law; or
(ii) re-enter and take possession of the Demised Premises without terminating
this Lease in accordance with applicable law, and relet the Demised Premises
and apply the balance of rent and other sums received into the account of
Tenant after payment of all reasonable expenses of Landlord including, but not
limited to, repairs, changes, alterations, additions and the expenses of
repossession and such reletting. In the event Landlord so re-enters and takes
possession of the Demised Premises as set forth above, Landlord agrees to use
reasonable efforts to relet the Demised Premises for a commercially reasonable
rate at the time of such reletting. No reletting by Landlord is considered to
be for Landlord's own account unless Landlord has notified Tenant in writing
that this Lease has been terminated. In addition, no such reletting is to be
considered an acceptance of Tenant's surrender of the Demised Premises unless
Landlord so notifies Tenant in writing;
(iii) re-enter the Demised Premises without terminating the Lease and without
being liable for any damages, whether caused by the negligence of Landlord or
otherwise, and do whatever Tenant is obligated to do under the Lease. Tenant
shall pay to Landlord, upon demand, the reasonable expenses paid by Landlord
in satisfying Tenant's obligations under the terms of this Lease. Any sums so
expended by Landlord shall bear interest at a rate the lower of (i) the
highest rate then payable in the State of Indiana or (ii) 12% per annum from
the date expended until the date Landlord is repaid; or
(iv) maintain Tenant's right to possession of the Demised Premises and enforce
the provisions of this Lease by a suit or suits in equity or at law for the
enforcement of any other appropriate legal or equitable remedy including, but
not limited to, injunctive relief, and for recovery of all moneys due or to
become due from Tenant under any of the provisions of this Lease.
19.02 Except to the extent that Landlord may have otherwise agreed in writing,
no waiver by Landlord of any breach by Tenant of any of its obligations,
agreements or covenants hereunder shall be deemed to be a waiver of any
subsequent breach of the same or any other covenant, agreement or obligation;
nor shall any forbearance by Landlord to seek a remedy for any breach by
Tenant be deemed a waiver by Landlord of its rights or remedies with respect
to such breach.
19.03 The rights herein given to receive, collect, sue for or distrain any
rent or rents, moneys or payments, or to enforce the terms, provisions and
conditions of this Lease, or to prevent the breach or nonobservance thereof,
or the exercise of any such right or of any other right or remedy hereunder or
otherwise granted or arising, shall not in any way affect or impair or toll
the right or power of Landlord upon the conditions and subject to the
provisions in this Lease expressed to terminate Tenant's right of possession
because of the occurrence of an Event of Default.
19.04 Nothing contained in this Article XIX hereof shall limit or restrict the
right of Tenant or its sellers, lessors, or lenders under Article V hereof to
remove Tenant's Personal Property from the Demised Premises.
19.05 Landlord shall be deemed to be in default under this Lease if Landlord
shall fail, whether by action or inaction, to perform or observe or be in
default in any other of its covenants or agreements contained herein, and such
failure shall continue for thirty (30) days after written notice thereof to
Tenant specifying the default; provided, however, in the case of failure or
default referred to in this Section 19.05 such that by its nature it cannot
with due diligence and in good faith be cured within the thirty (30) days,
Landlord's period of time to cure shall be extended for such period as shall
be reasonably necessary to remedy the same using all due diligence and good
faith, provided such period shall not exceed an additional thirty (30) days.
ARTICLE XX
RIGHT TO CURE
20.01 Landlord may, but shall not be obligated to, cure any Event of Default
by Tenant specifically including, but not limited to, Tenant's failure to
obtain insurance, make repairs, or satisfy lien claims and, whenever Landlord
so elects, all costs and expenses paid by Landlord in curing such Event of
Default including, but not limited to, reasonable attorneys' fees, shall be
deemed additional Rent due on the next rent date after such payment, together
with interest (except in the case of said attorneys' fees) at a rate the lower
of (i) the highest rate then payable in the State of Indiana or (ii) 12% per
annum from the date of the advance to the date of repayment by Tenant to
Landlord.
20.02 In the event Landlord shall fail to perform any of its covenants or
agreements contained herein and such failure shall continue for thirty (30)
days after written notice thereof to Landlord specifying the default, Tenant
may, but shall not be obligated to, cure any default by Landlord specifically
including, but not limited to, Landlord's failure to obtain insurance or make
repairs or maintain the Demised Premises, the Parking Area or the sidewalks,
walkways, driveways and/or private roads located on the Premises and, whenever
Tenant so elects, all costs and expenses paid by Tenant in curing such default
including, but not limited to, reasonable attorneys' fees, shall be paid by
Landlord to Tenant or, at Tenant's option, credited against the next
installment of Rent payable by Tenant (except in the case of said attorneys'
fees) at a rate the lower of (i) the highest rate then allowed in the State of
Indiana or (ii) 12% per annum from the date of the advance to the date of
repayment by Landlord to Tenant within thirty (30) days of the delivery of
Tenant's notice thereof together with interest.
ARTICLE XXI
SURRENDER
21.01 Upon the termination of this Lease, whether by forfeiture, lapse of time
or otherwise, or upon the termination of Tenant's right to possession of the
Demised Premises, Tenant will at once surrender and deliver up the Demised
Premises, together with all improvements and other property thereon which are
the property of Landlord, to Landlord in good condition and repair, ordinary
wear and tear excepted.
21.02 Upon the termination of the Lease whether by forfeiture, lapse of time
or otherwise, or upon the termination of Tenant's right to possession of the
Demised Premises, Tenant or Tenant's sellers, lessors or creditors may remove
Tenant's Personal Property, provided that Tenant shall repair any injury or
damage which may result from such removals.
21.03 Any holding over by Tenant of the Demised Premises after the expiration
of this Lease shall not be deemed to extend the term of this Lease, but shall
operate and be construed to be a tenancy from month to month upon the
covenants and conditions set forth hereunder at the monthly rate of 150% of
the Rent in effect during the last month of the term of this Lease payable in
accordance with Article III hereof.
ARTICLE XXII
SUBORDINATION
22.01 This Lease and all rights of Tenant hereunder shall not be subject and
subordinate to the lien or liens of any mortgage or mortgages now or at any
time hereafter in force against the Demised Premises unless the holder of any
such mortgage and Landlord shall execute and deliver to each other and Tenant,
and Tenant shall execute and deliver to such holder and Landlord an instrument
(a "Subordination and Nondisturbance Agreement") reasonably satisfactory to
such holder and Tenant that provides in substance that, notwithstanding such
subordination, this Lease and Tenant's rights hereunder shall not be
terminated by reason of foreclosure of such mortgage so long as Tenant is not
in default hereunder beyond any applicable cure period and Tenant shall, in
the event any proceedings are brought for the foreclosure of any such mortgage
or other financing documents made by Landlord covering the Demised Premises,
attorn to the purchaser upon such foreclosure and recognize such purchaser as
the Landlord under this Lease, but only upon the request of purchaser and the
delivery by purchaser of evidence that purchaser shall not disturb Tenant's
rights under this Lease.
ARTICLE XXIII
ESTOPPEL CERTIFICATES
23.01 Landlord and Tenant shall as of the time of possession and thereafter
within ten (10) business days of written request by the other party execute,
acknowledge and deliver a written statement certifying (if true) that Tenant
has accepted the Demised Premises, that this Lease is unmodified and in full
force and effect (or, if there have been modifications, that the same is in
full force and effect as modified and stating the modifications), that the
other party is not in default hereunder, the date to which Base Rent,
additional rent and other charges have been paid in advance, if any, and such
other accurate certifications as may reasonably be required by Landlord (or
Landlord's mortgagee) or Tenant. It is intended that any such statement
delivered pursuant to this Article XXIII may be relied upon by any prospective
purchaser of the Building and Demised Premises, any mortgagee of the Building
and Demised Premises, any assignee or sublessee of Tenant or any creditor of
Tenant and their respective successors and assigns.
ARTICLE XXIV
PREPAYMENT
24.01 In the event (i) of the occurrence of an "Event of Default" pursuant to
that certain Credit Agreement, dated as of March 31, 1998, between Harris
Trust and Savings Bank, an Illinois banking corporation, and its successors or
assigns (the "Bank") (the Credit Agreement or any loan agreement which
replaces the Credit Agreement, collectively the "Credit Agreement"), and
Landlord, which results in the Bank declaring the principal and interest due
and payable under the Credit Agreement, (ii) of the exercise of any remedy by
the Bank pursuant to Sections 9.2 or 9.3 of the Credit Agreement, (iii) the
Bank provides notice that it will exercise any remedy pursuant to Section 9.2
of the Credit Agreement, (iv) Landlord passes a resolution or declaration that
it will file bankruptcy, or (v) Landlord fails to cure an "Event of Default"
pursuant the Credit Agreement within any time period provided by the Bank,
Tenant shall have the right to prepay to Landlord in full all Rent due under
this Lease through the Termination Date by forgiving all amounts due under the
Services Agreement and/or the Promissory Note. Landlord agrees to provide
notice to Tenant promptly, but in any event within two (2) days upon Landlord
becoming aware of any of the events referred to in (i) through (v) above.
ARTICLE XXV
MISCELLANEOUS
25.01 None of the covenants and agreements of this Lease to be kept and
performed by either party shall in any manner be altered, waived, modified,
changed or abandoned except by a written instrument, duly signed, acknowledged
and delivered by the other party. No act or acts, omission or omissions or
series of acts or omissions, or waiver, acquiescence or forgiveness by either
party as to any default in or failure of performance, either in whole or in
part, by Landlord or Tenant, as the case may be, or any of the covenants and
agreements of this Lease, shall be deemed or construed to be a waiver by the
other party of the right at all times thereafter to insist upon the prompt,
full and complete performance by the other party of each and all the covenants
and agreements set forth in this Lease thereafter to be performed in the same
manner and to the same extent as the same are herein covenanted to be
performed by Landlord and Tenant.
25.02 All notices, demands and other communications which may be or are
required to be given by either party to the other under this Lease shall be in
writing and shall be deemed given when delivered personally or by courier
(both parties agree to acknowledge in writing the receipt of any notice
delivered personally or by courier) or three (3) days after deposit in the
United States registered or certified mail, postage prepaid, to the parties at
the following addresses (or such other address for a party as shall be
specified by like notice, provided that such notices of a change of address
shall be effective only upon receipt thereof):
To Landlord:
Columbian Home Products, L.L.C.
1600 Beech Street
Terre Haute, Indiana 47804
Attention:
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
Attention: Pearl A. Zager, Esq.
To Tenant:
General Housewares Corp.
1536 Beech Street
Terre Haute, Indiana 47804
Attention: Paul Saxton
with a copy to:
General Housewares Corp.
1536 Beech Street
Terre Haute, Indiana 47804
Attention: Raymond J. Kulla
25.03 Tenant shall permit Landlord and its authorized agents and
representatives to enter the Demised Premises at all reasonable times and upon
reasonable notice to Tenant for the purpose of inspecting and, upon the
occurrence of an Event of Default and after the requisite notice, making any
necessary repairs and performing any other work that may be necessary by
reason of Tenant's failure to make any such repairs or perform any such work
therein or thereon or Tenant's failure to commence the same after reasonable
written notice from Landlord, provided Landlord shall use its best efforts to
minimize interference with Tenant's business. Nothing shall imply any duty on
Landlord's part to do any such work, and performance thereof by Landlord shall
not constitute a waiver of Tenant's default in having failed to perform the
same or an assumption of liability or obligation with respect thereto.
Landlord shall use its best efforts to avoid any inconvenience, annoyance,
disturbance, loss of business or other damage of Tenant by reason of making
such repairs or the performance of any such work, or on account of bringing
materials, tools, supplies or equipment into or through the Demised Premises
during the course thereof.
25.04 Time is of the essence of this Lease, and all provisions herein relating
thereto shall be strictly construed.
25.05 Landlord and Tenant hereby acknowledge that this Lease, the Services
Agreement and the Promissory Note are integrally related, have arisen in
connection with the Asset Purchase Agreement and would not have been entered
into individually apart from the Asset Purchase Agreement.
25.06 Landlord and Tenant warrant and represent that there are no real estate
brokers involved and that there are no commissions due to anyone arising out
of this transaction. Landlord and Tenant agree to indemnify and hold each
other harmless from any and all claims of any other brokers claiming through
the indemnifying party in connection with this Lease.
25.07 The captions of this Lease are for convenience only and are not to be
construed as part of this Lease or as defining or limiting in any way the
scope or intent of the provisions hereof.
25.08 If any term or provision of this Lease shall to any extent be held
invalid or unenforceable, the remaining terms and provisions of this Lease
shall not be affected thereby, but each term and provision of this Lease shall
be valid and be enforced to the fullest extent permitted by law.
25.09 This Lease shall be construed and enforced in accordance with the laws
of the State of Indiana.
25.10 All of the covenants and agreements contained in this Lease shall
extend, inure to and be binding upon the successors and assigns of the
respective parties hereto, the same as if they were in every case specifically
named, and wherever in this Lease reference is made to either of the parties
hereto, it shall be held to include and apply to, wherever applicable, the
successors and assigns of such party. Nothing herein contained shall be
construed to grant or confer upon any person or persons, firm, corporation or
governmental authority other than the parties hereto, their successors and
assigns, any right, claim or privilege by virtue of any covenant and agreement
in this Lease contained.
IN WITNESS WHEREOF, the parties have executed this Lease in duplicate the day
and year first above written.
LANDLORD:
COLUMBIAN HOME PRODUCTS,
L.L.C., an Illinois limited liability company
By: D.R. Ryan, Jr.
Its: President
TENANT:
GENERAL HOUSEWARES CORP., a
Delaware corporation
By: Raymond J. Kulla
Its: Vice President
EXHIBIT A OF LEASE
(Premises)
EXHIBIT B OF LEASE
(Demised Premises)
EXHIBIT C OF LEASE
(Parking Area)
SCHEDULE I OF LEASE
Services Agreement Payment Schedule
SCHEDULE II OF LEASE
Note Payment Schedule
EXHIBIT 2C
INSTALLMENT PROMISSORY NOTE
$1,300,000.00 Dated: March 31, 1998
FOR VALUE RECEIVED, COLUMBIAN HOME PRODUCTS, LLC, an Illinois limited
liability company (the "Maker"), hereby promise to pay to the order of GENERAL
HOUSEWARES CORP., a Delaware corporation or its successors and assigns
("Holder"), at the address specified in Section 7 herein, or at such other
place as Holder may direct, the principal sum of One Million Three Hundred
Thousand Dollars ($1,300,000.00), plus interest, as provided herein.
1. Principal Payments, Principal Reduction and Final Maturity; Prepayment.
(a) The Maker shall pay to Holder the combined principal and interest
amount of this Promissory Note in six (6) equal annual installments,
each in the amount of $292,464.88 which shall be due beginning on April
1, 1999 and on April 1 of each year thereafter until April 1, 2004 at
which date the final payment of principal and interest shall be due.
Interest will accrue as described in Section 2 below.
(b) Except as otherwise provided herein, all unpaid principal and
accrued and unpaid interest due and payable under this Note shall in any
event become due and payable, and shall be paid by Maker, on March 31,
2005.
2. Interest. Interest on the unpaid principal balance existing from time to
time shall accrue at a rate of nine percent (9%) per annum commencing on even
date herewith provided that on and during the continuance of an Event of
Default, the rate of interest shall be increased to 11%. Interest shall be
compounded on a quarterly basis and shall be computed on the basis of a 360
day year. Interest shall be payable in arrears, net of applicable withholding
taxes if required by law, and interest payments shall be due on each day that
a principal payment is due pursuant to Section 1(a) above.
3. Method of Payment. The form of payment of both principal and interest
shall be paid by Maker by an offset against the amounts owed pursuant to that
certain Lease dated as of March 31, 1998 between Maker and Holder (the
"Lease") during the second year through the seventh year of the term of such
Lease so long as the Lease is in existence.
4. Events of Default. Each of the following constitutes an "Event of
Default" hereunder under this Note:
(a) Principal of or interest on this Note is not paid within five (5)
days after the due date thereof;
(b)(i) Maker generally fails to pay, or admits in writing such Maker's
inability to pay, debts as they become due; (ii) Maker applies for, consents
to or acquiesces in the appointment of a trustee, receiver or other custodian
for such Maker or any property or assets of Maker, or makes a general
assignment for the benefit of creditors, or, in the absence of such
application, consent or acquiescence, a trustee, receiver or other custodian
is appointed for Maker or for a substantial part of the property or assets of
Maker and is not discharged within sixty (60) days; or (iii) any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is
commenced in respect of Maker and if such case or proceeding is not commenced
by Maker it is consented to or acquiesced in by Maker or if such case or
proceeding is not vacated, stayed or dismissed within sixty (60) days of such
commencement;
(c) Maker, without the express written consent of Holder, (i) conveys
transfers, leases or otherwise disposes of all or substantially all of the
assets of Maker (whether now or hereafter acquired), whether in a single
transaction or a series of transactions; or (ii) merges or consolidates with
any individual, partnership, joint venture, corporation (whether or not for
profit), trust, unincorporated association, or any other entity or
organization and Maker is not the surviving corporation of such merger; or
(d) The occurrence of an "Event of Default" pursuant to that certain
Credit Agreement dated as of March 31, 1998 (the "Credit Agreement") between
Maker and Harris Trust and Savings Bank (the "Bank") which results in the Bank
declaring the principal and interest due and payable under the Credit
Agreement.
5. Remedies Upon an Event of Default. If an Event of Default shall occur,
then Holder may, at his option, exercise any one or more of the following
rights and remedies:
(a) The Holder may declare the entire unpaid amount of this Note to be
immediately due and payable without presentment, demand, protest or notice of
any kind, all of which the Maker expressly waives and such amount may
immediately be used to prepay all amounts due under the Lease;
(b) Holder shall be entitled to all of the rights and remedies in
accordance with, and as provided by, the terms of this Note; and
(c) Holder may exercise from time to time any rights and remedies
available to it under all applicable laws, including, without limitation, the
Uniform Commercial Code as is in effect in the State of Illinois.
In addition, Holder shall be entitled to recover from Maker all costs and
expenses, including reasonable attorneys' fees and court costs, incurred in
enforcing his rights hereunder. The rights and remedies of Holder stated
herein are cumulative to and not exclusive of any rights or remedies otherwise
available to Holder.
6. Assignability. This Note and the rights and obligations hereunder shall
not be assignable or transferable, by operation of law or otherwise without
the written consent of Holder and Maker.
7. Notices. All notices, requests, demands and other communications under
this Note shall be in writing and shall be deemed to have been duly given on
the date of service if served personally on the party to whom notice is to be
given, or on the date of receipt by the party to whom notice is to be given if
transmitted to such party by facsimile, provided a copy is mailed as set forth
below on date of transmission, or on the third day after mailing if mailed to
the party to whom notice is to be given by registered or certified mail,
return receipt requested, postage prepaid, to the following addresses (or such
other addresses as are provided in writing by the parties hereto):
If to Maker:
General Housewares Corp.
1536 Beech Street
Terre Haute, Indiana 47804
Attn: Raymond J. Kulla
Telephone: (812) 232-1000
Telecopier:(812) 232-7016
If to the Holder, to:
Columbian Home Products, LLC
c/o D.R. Ryan, Jr.
21435 Prestwick
Barrington, Illinois 60010
Telephone: (847) 304-1335
Telecopier:(847) 304-1337
In each case with a copy to:
Lane R. Moyer
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street, Suite 2500
Chicago, Illinois 60601
Telephone: (312) 609-7586
Telecopier:(312) 609-5005
8. General.
(a) Governing Law. This Note shall in all respects be governed by and
construed in accordance with the laws of the State of Illinois without regard
to conflicts of law principles.
(b) No Waiver. Holder shall not (by act, delay, omission or otherwise)
be deemed to have waived any of its rights or remedies hereunder, or any
provision hereof, unless such waiver is in writing signed by Holder; and any
such waiver shall be effective only to the extent specifically set forth
therein; and a waiver by Holder of any right or remedy under this Note on any
one occasion shall not be construed as a bar to or waiver of any such right or
remedy which Holder would otherwise have had on any future occasion.
(c) Severability. Wherever possible, each provision of this Note which
has been prohibited by or held invalid under applicable law shall be
ineffective to the extent of such prohibition or invalidity, but such
prohibition or invalidity shall not invalidate the remainder of such provision
or the remaining provisions of this Note.
(d) Successors and Assigns. Wherever in this Note reference is made to
the Maker or Holder, such reference shall be deemed to include, as applicable,
a reference to their respective successors and assigns, legatees, heirs,
executors, administrators and legal representatives, as applicable, and, in
the case of Holder, any future holder of this Note, in any case as permitted
by this Note. The provisions of this Note shall be binding upon and shall
inure to the benefit of such successors, assigns, holders, legatees, heirs,
executors, administrators and legal representatives, as applicable.
(e) Acknowledgment. The parties acknowledge that this Promissory Note and the
Lease arise out of the same transaction, and it is the intent of the parties
that in the event of bankruptcy of Maker, all amounts due under the Lease will
offset amounts due under the Promissory Note. To the extent that the
obligations under the Promissory Note are restructured, cancelled, modified,
rejected, discharged or otherwise altered for any reason whatsoever, including
but not limited to, a bankruptcy of Maker, the obligation of Maker to make
payments under the Lease shall be restated, cancelled, modified, rejected,
discharged or otherwise altered in a like manner.
IN WITNESS WHEREOF, the Maker has executed, acknowledged, sealed and delivered
this Note as of the day and year first above written.
COLUMBIAN HOME PRODUCTS, LLC
an Illinois limited liability company
By: D.R. Ryan, Jr.
Its: President
