UNITED STATES
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report June 27, 1995
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JAYARK CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 0-3255 13-1863419
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(State or other jurisdiction of incorporation) (Commission File Number)
(I.R.S.Employer Identification No.)
POST OFFICE BOX 741528, HOUSTON, TEXAS 77274
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(Address of principal executive offices ) (Zip Code)
713-783-9184
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(Registrant's telephone number, including area code)
(Former name, former address and fiscal year, if changed since last report.)
ITEM 2. ACQUISITION OF ASSETS
Jayark Corporation
Form 8-K - June 27, 1995
On June 27, 1995, LCL International Traders, Inc., a wholly owned
subsidiary of Jayark Corporation (the ``ompany''), completed the acquisition of
substantially all the assets and business of a group of affiliated companies
engaged in the import and distribution of seasonal and promotional merchandise.
The sellers, located in Hong Kong and Central Islip, New York, have operated
under the trade names ``iberty Bell Christmas'', ``Ivy Mar'', ``reative Home
Products''and ``Award Manufacturing''. LCL International Traders, Inc. acquired
these trade names as part of the transaction.
Consideration paid by LCL International Traders, Inc. included: $3,000,000
cash; a $3,000,000 `zero coupon'' note of LCL International Traders, Inc.;
1,000,000 newly issued, restricted shares of Jayark Corporation common stock;
assumption of approximately $3,482,000 of scheduled liabilities of the sellers;
and a contingent future additional cash payment equal to 25% of the net income
of LCL International Traders, Inc. in excess of $500,000, if any, for the year
May 31, 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of business acquired. It is impracticable to
provide the required financial statements for the acquired business at this
time. The required financial statements shall be filed as soon as practicable,
but not later than September 11, 1995.
Page: 2 of 5
Jayark Corporation
Form 8-K - June 27, 1995
(b) Pro forma financial information. It is impracticable to provide the
required pro forma financial information at this time. The required pro forma
financial information shall be filed as soon as practicable, but not later than
September 11, 1995.
(c) Exhibits.
(2)(a) Asset Purchase Agreement, dated June 5, 1995, among LIB-Com Ltd.,
Liberty Bell Christmas, Inc., Ivy Mar Co., Inc., Creative Home
Products, Inc., and Liberty Bell Christmas Realty, Inc. as the sellers
and LCL International Traders, Inc. as the buyer.
(2)(b) Asset Purchase Agreement, dated June 5, 1995, between Award
Manufacturing Corporation as the seller, and LCL International
Traders, Inc., as the buyer.
(2)(c) Guarantee Agreement, dated June 5, 1995, by Award Manufacturing
Corporation in favor of LCL International Traders, Inc.
(2)(d) Guarantee Agreement, dated June 5, 1995, by LIB-Com Ltd., Liberty
Bell Christmas, Inc., Ivy Mar Co., Inc., Creative Home Products, Inc.,
and Liberty Bell Christmas Realty, Inc. in favor of LCL International
Traders, Inc.
Page: 3 of 5
Jayark Corporation
Form 8-K - June 27, 1995
(2)(e) Promissory Note of LCL International Traders, Inc., due July 29,
1998, payable to the order of Commerzbank AG, Hong Kong Branch.
(2)(f) Confirmation Letter agreement, dated June 22, 1995, among
Citibank, N.A., Commerzbank AG, Bayerische Vereinsbank AG, LCL
International Traders, Inc., and Jayark Corporation.
(99)(a) Factoring Agreement dated June 23, 1995, between LCL
International Traders, inc. and The CIT Group/Commercial Services,
Inc.
(99)(b) Inventory Security Agreement dated June 23, 1995, between LCL
International Traders, Inc. and The CIT Group/Commercial Services,
Inc.
(99)(c) Letter Agreement dated June 23, 1995, between LCL International
Traders, Inc. and The CIT Group/Commercial Services, Inc.
(99)(d) Letter Agreement dated June 23, 1995, between LCL International
Traders, Inc. and The CIT Group/Commercial Services, Inc., Liberty
Bell Christmas, Inc., Ivy Mar Co., Inc., and Creative Home Products,
Inc.
Page: 4 of 5
Jayark Corporation
Form 8-K - June 27, 1995
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 thereunto duly authorized.
JAYARK CORPORATION
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Registrant
By: /s/ Clay Whitehead Date: June 27, 1995
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Clay Whitehead, Controller,
Chief Financial Officer
ASSET PURCHASE AGREEMENT
AMONG
LIB-COM LTD.,
LIBERTY BELL CHRISTMAS, INC.,
IVY MAR CO., INC.,
CREATIVE HOME PRODUCTS, INC., AND
LIBERTY BELL CHRISTMAS REALTY, INC.
AS THE SELLERS
and
LCL INTERNATIONAL TRADERS, INC.
AS THE BUYER
JUNE 5, 1995
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TABLE OF CONTENTS
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Page
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1. Sale of Assets........................................... 1
1.1 Assets to be Sold................................... 1
1.2 Excluded Assets..................................... 3
1.3 Instruments of Conveyance........................... 3
2. Assumption of Business Liabilities....................... 4
2.1 No General Assumption of Liabilities by the Buyer... 4
2.2 Assumed Liabilities................................. 4
2.3 Instruments of Assumption........................... 4
3. Purchase Price........................................... 5
3.1 Purchase Price...................................... 5
3.2 Purchase Price Subject to Offset.................... 5
3.3 Allocation of Purchase Price........................ 5
4. Closing.................................................. 5
5. Representations and Warranties of the Sellers............ 6
5.1 Due Incorporation and Qualification................. 6
5.2 Subsidiaries........................................ 6
5.3 Records of the Sellers.............................. 6
5.4 Tax Matters......................................... 6
5.5 Lawsuits............................................ 7
5.6 Authority to Execute and Perform Agreements; Required Consents
7
5.7 Real Estate......................................... 8
5.8 Employee Benefits................................... 8
5.9 No Broker........................................... 9
5.10 Title............................................... 9
5.11 Compliance with Laws; Illegal Payments.............. 9
5.12 Licenses and Permits................................ 9
5.13 Labor Matters; Collective Bargaining Agreements..... 10
5.14 Bulk Sales Matters.................................. 10
5.15 Special Relationships and Arrangements.............. 10
5.16 Due Diligence Matters............................... 10
5.17 Representations and Warranties of the Sellers Regarding
Acceptance of and Investment in the Shares and the Promissory
Note................................................ 11
6. Representations and Warranties of the Buyer.............. 12
6.1 Incorporation and Authority of the Buyer............ 12
6.2 No Conflict......................................... 12
6.3 Consents and Approvals.............................. 12
6.4 Absence of Litigation............................... 13
6.5 No Broker........................................... 13
6.6 Acknowledgement Regarding Financial Information..... 13
6.7 Other Information................................... 13
7. Covenants and Agreements................................. 14
7.1 Conduct of Business Prior to the Closing............ 14
7.2 Access to Information............................... 15
7.3 Regulatory and Other Authorizations; Consents....... 16
7.4 Employee Matters.................................... 16
7.5 Expenses of Sale.................................... 18
7.6 Books and Records; Post-Closing Cooperation......... 18
7.7 Treatment of Certain Merchandise Orders............. 19
7.8 Further Assurances.................................. 19
7.9 Payment of Liabilities.............................. 19
7.10 Corporate Names..................................... 19
7.11 Confidentiality..................................... 19
7.12 Exclusive Dealing................................... 19
8. Conditions Precedent to the Obligations of the Sellers to Close 19
8.1 Representations and Warranties; Covenants........... 20
8.2 No Order............................................ 20
8.3 Consents............................................ 20
8.4 Delivery of Closing Documents and Purchase Price.... 20
9. Conditions Precedent to the Obligations of the Buyer to Close 21
9.1 Due Diligence Schedule; Representations and Warranties;
Covenants........................................... 21
9.2 No Order............................................ 21
9.3 Consents............................................ 21
9.4 Approval of Board of Directors...................... 22
9.5 Financing........................................... 22
9.6 Delivery of Closing Documents....................... 22
9.7 Evidence of Satisfaction of the Sellers' Obligations 22
9.8 Change of Names..................................... 22
10. Indemnification.......................................... 23
10.1 Survival of Representations and Warranties of the Parties 23
10.2 Obligation of the Sellers To Indemnify.............. 23
10.3 Obligation of the Buyer To Indemnify................ 24
10.4 Notice and Resolution of Claims..................... 24
10.5 Defense of Third Party Claims....................... 24
10.6 Payment............................................. 24
10.7 Limits on Indemnification; Determining Amount of Loss 24
10.8 Offsets; Mitigation................................. 25
11. Miscellaneous............................................ 26
11.1 Public Announcements................................ 26
11.2 Notices............................................. 26
11.3 Entire Agreement.................................... 27
11.4 Waivers and Amendments.............................. 27
11.5 Governing Law....................................... 27
11.6 Assignment.......................................... 28
11.7 Severability........................................ 28
11.8 Variations in Pronouns.............................. 28
11.9 Due Diligence Schedule.............................. 28
11.10...............................................Headings 28
11.11...........................No Third-Party Beneficiaries 28
11.12...........................................Counterparts 28
CONTENTS OF DUE DILIGENCE SCHEDULE
Section 1.1..............................Certain Purchased Assets
Section 1.2.......................................Excluded Assets
Section 2.2...................................Assumed Liabilities
Section 5.1..........................Qualification; Jurisdictions
Section 5.2..........................................Subsidiaries
Section 5.4...........................................Tax Matters
Section 5.5..............................................Lawsuits
Section 5.6.....................................Required Consents
Section 5.8.....................................Employee Benefits
Section 5.10.....................................Title Exceptions
Section 5.13.....................Collective Bargaining Agreements
Section 5.16................................Due Diligence Matters
Section 7.4................................Employee Benefit Plans
Section 7.7....................................Merchandise Orders
EXHIBITS
Exhibit A.........................................Promissory Note
Exhibit B.......................................Release Agreement
Exhibit C...........................Supplemental Letter Agreement
Exhibit D..................................Confirmation Agreement
Pursuant to Item 601(b)(2) of Regulation S-K, the registrant has omitted
schedules (or similar attachments) to this document. The registrant will
furnish supplementally a copy of any omitted schedule to the Commission upon
request.
ASSET PURCHASE AGREEMENT
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This ASSET PURCHASE AGREEMENT dated June 5, 1995 (this "Agreement") by and
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among LIB-COM LTD., a Delaware corporation ("LIB-Com"), LIBERTY BELL CHRISTMAS,
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INC., a Delaware corporation ("Liberty Bell"), IVY MAR CO., INC. a Delaware
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corporation ("Ivy Mar"), CREATIVE HOME PRODUCTS, INC., a Delaware corporation
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("Creative"), and LIBERTY BELL CHRISTMAS REALTY, INC., a New York corporation
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("Realty," and together with LIB-Com, Liberty Bell, Ivy Mar, and Creative,
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collectively referred to as the "Sellers", and each individually referred to as
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a "Seller"), and LCL INTERNATIONAL TRADERS, INC., a Delaware corporation (the
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"Buyer") that is wholly owned by JAYARK CORPORATION, a Delaware corporation,
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WITNESSETH :
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WHEREAS, the Sellers are engaged in the business of purchasing, importing
and marketing various seasonal and other merchandise items, in selling such
items at wholesale, and in acting as a sourcing agent with respect to such items
(such business being herein collectively referred to as the "Business"); and
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WHEREAS, the Buyer desires to purchase from the Sellers, and the Sellers
desire to sell to the Buyer, substantially all of the assets that are used to
conduct the Business, and the Sellers desire to transfer to the Buyer, and the
Buyer has agreed to assume, certain liabilities of the Sellers relating to the
Business, all pursuant to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
1. SALE OF ASSETS
1 ASSETS TO BE SOLD Except as otherwise provided in Section 1.2 below,
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at the Closing (as defined in Section 4 below) the Sellers shall grant, convey,
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sell, assign, transfer and deliver to the Buyer, and the Buyer shall purchase
and receive, all of the Sellers' rights, properties, assets, claims, goodwill,
contracts and businesses of every kind, character and description, whether
tangible or intangible, whether real, personal or mixed, whether accrued,
contingent or otherwise, and wherever located which are used in or are related
to the Business (collectively, the "Purchased Assets"), which shall include,
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without limitation, the following as of the Closing Date (as defined in
Section 4 below):
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(i) all of the Sellers' accounts (as defined in Article 9 of the
Uniform Commercial Code as in effect in the State of New York),
including but not limited to those accounts listed or otherwise
identified in Section 1.1(i) of the Due Diligence Schedule (as
described in more detail in Section 7.2 and 9.1 hereof), and all
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rights (including all rights of rescission, replevin, reclamation and
stoppage in transit, and rights to returned, reclaimed or repossessed
goods) with respect thereto and all proceeds thereof (collectively,
the "Accounts Receivable");
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(ii) all of the Sellers' inventories, including finished goods and
supplies that are held for sale or are used or intended for use in
connection with the Business, and including but not limited to goods
in transit from suppliers or manufacturers, goods warehoused by any of
the Sellers or by third parties, and goods held by third parties on
consignment as of the Closing Date, including but not limited to those
inventories listed or otherwise identified in Section 1.1(ii) of the
Due Diligence Schedule (collectively, the "Inventory");
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(iii) all of the Sellers' fixed assets, including but not limited to
fixtures, machinery, equipment, tools, furniture, furnishings, plant
and office equipment, leasehold improvements and vehicles, including
but not limited to those fixed assets listed or otherwise identified
in Section 1.1(iii) of the Due Diligence Schedule;
(iv) all prepaid rent, prepaid property taxes, prepaid supplies,
advances and other prepaid expenses and deposits of the Sellers which
will not be accounted for as an expense of the Business until after
the Closing Date, including but not limited to those items listed or
otherwise identified in Section 1.1(iv) of the Due Diligence Schedule;
(v) all of the Sellers' rights in and under leases, licenses,
permits, contracts, purchase and sale orders, quotations and other
agreements relating to the Business to which any of the Sellers is a
party or in which any of the Sellers has any interest on the Closing
Date and (A) which shall be listed in Section 1.1(v), 7.4 or 7.7 of
the Due Diligence Schedule or (B) which are expressly assumed by Buyer
by Buyer's delivery to Sellers prior to the Closing Date of a written
notice to that effect (collectively, the "Assumed Contracts");
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(vi) all advertising and promotional materials, customer lists, credit
information, cost and pricing information, supplier lists, business
plans, reference and sales catalogs, computer programs, databases,
electronic data processing software and other similar property,
information and rights (including any and all proprietary information)
relating to the Business;
(vii) all technology, trade secrets, know-how and other similar data or
information (including any and all proprietary information) owned by
the Sellers and relating to the Business;
(viii) all issued patents, trademark and service mark registrations,
copyrights, trade names, confidential information, logos and similar
rights, and other intellectual property rights owned by the Sellers
and relating to the Business, and all pending applications for pat-
ents, trademarks, service marks, copyrights, trade names, logos and
similar rights or registrations owned by Sellers and relating to the
Business; and
(ix) all of the Sellers' cash and cash equivalents, including but not
limited to bank accounts, funds in transit or in the process of
collection, certificates of deposit, instruments and securities (other
than stock of subsidiaries).
2 EXCLUDED ASSETS Anything in Section 1.1 to the contrary
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notwithstanding, there shall be excluded from the meaning of the term "Purchased
Assets" and from the assets, properties, rights and business to be transferred
and sold to the Buyer at the Closing hereunder the following (collectively, the
"Excluded Assets"):
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(i) cash permitted to have been expended pursuant to Section 7.1(iii)
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between June 1, 1995 and the Closing Date but that has not been so
expended as of the Closing Date, provided that any such cash shall be
Excluded Assets only if and to the extent applied for the purposes
referred to in Section 7.1(iii);
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(ii) those assets, properties, claims and rights as shall be set forth
in Section 1.2 of the Due Diligence Schedule;
(iii) all accounts receivable of the Sellers from Asia Pacific
Industries Corp., A.P. Trading Ltd. and its subsidiaries including,
without limitation, Am-World Co., Ltd., and account debtors in
bankruptcy as of the date hereof;
(iv) all refunds and receivables from tax returns filed or to be filed
by the Sellers;
(v) all tax returns, corporate minutes, seals and stock books of the
Sellers; and
(vi) all recoveries under pending litigation, and from those
bankruptcy or insolvency proceedings of account debtors listed in
Section 1.2 of the Due Diligence Schedule.
3 INSTRUMENTS OF CONVEYANCE. In order to effectuate the grant,
conveyance, sale, assignment, transfer and delivery contemplated by Section 1.1
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above, the Sellers will execute and deliver at the Closing a Bill of Sale and
Assignment in customary form and substance reasonably satisfactory to Buyer and
Sellers (the "Bill of Sale and Assignment"), dated the Closing Date, and at the
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Closing and thereafter from time to time as reasonably requested by the Buyer or
the Sellers such other bills of sale, vehicle registration transfers and other
documents or instruments of assignment, transfer or conveyance (collectively,
including the Bill of Sale and Assignment, referred to herein as the "Conveyance
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Documents") as shall be effective to vest in or confirm to the Buyer good and
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marketable title to the Purchased Assets.
2. ASSUMPTION OF BUSINESS LIABILITIES
1 NO GENERAL ASSUMPTION OF LIABILITIES BY THE BUYER. Except for the
Assumed Liabilities as defined in and as set forth in Section 2.2 and except as
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otherwise disclosed in the Due Diligence Schedule, Sellers shall transfer the
Purchased Assets to Buyer free and clear of all liabilities, claims, charges,
liens, security interests and encumbrances and without any assumption by Buyer
of any liabilities or obligations of any of the Sellers; and specifically, but
without limiting any of the foregoing, Buyer shall not assume or in any way be
liable or responsible for the following (which, with all other liabilities and
obligations of Sellers that are not expressly assumed by Buyer hereunder, are
collectively referred to as the "Excluded Liabilities"):
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(i) any liability or obligation of the Sellers arising out of or in
connection with the negotiation and preparation of this Agreement and
the consummation and performance of the transactions contemplated
hereby;
(ii) any liability, indebtedness or obligation of the Sellers to
Citibank, N.A., Bank of America, N.A., Commerzbank AG, Bayerische
Vereinsbank AG (collectively, the "Hong Kong Banks"), or any other
bank in respect of any notes or drafts payable, bankers' acceptances
or documents against acceptance; and
(iii) any and all taxes based on income payable in respect of the
operation of the Business up to and including the Closing Date.
2 ASSUMED LIABILITIES. Notwithstanding the foregoing, as of the Closing
Date Buyer shall assume, and hereby covenants and agrees to timely perform, pay
or discharge in accordance with their terms, the following liabilities and
obligations of the Sellers (collectively, the "Assumed Liabilities"):
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(i) all liabilities and obligations under the Assumed Contracts, but
only to the extent that the same are disclosed on the face of such
Assumed Contracts as furnished to the Buyer or have been otherwise
disclosed in writing to the Buyer;
(ii) all liabilities and obligations of the Sellers under the employee
agreements, plans, policies and contracts as (but only to the extent)
provided in Section 7.4 below; and
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(iii) those other liabilities and obligations of the Sellers as (but
only to the extent) set forth in Section 2.2 of the Due Diligence
Schedule.
3 INSTRUMENTS OF ASSUMPTION. In order to effectuate the assumption and
transfer of the Assumed Liabilities contemplated by Section 2.2 above, the Buyer
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and the Sellers will execute and deliver at the Closing one or more Assignment
and Assumption Agreements, each in customary form and substance reasonably
satisfactory to Buyer and Sellers (the "Assignment and Assumption Agreements"),
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dated the Closing Date, and at the Closing and thereafter from time to time as
reasonably requested by the Buyer or any Seller shall execute and deliver all
other instruments of assumption and other documents as shall be sufficient to
confirm the assignment to the Buyer of, and the Buyer's obligation to duly
assume and timely pay, perform and discharge in accordance with their terms, the
Assumed Liabilities (collectively, including the Assignment and Assumption
Agreements, referred to herein as the "Assumption Documents").
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3.PURCHASE PRICE.
1 PURCHASE PRICE. The aggregate consideration to be paid by the Buyer
to the Sellers for the Purchased Assets (the "Purchase Price") shall be:
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(i) Two Million Six Hundred Thousand Dollars ($2,600,000), payable on
the Closing Date by wire transfer of immediately available funds;
(ii) the issuance and delivery by the Buyer of its unsecured
promissory note, substantially in the form attached hereto as Exhibit
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A, in the face amount of $3,000,000 (the "Promissory Note");
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(iii) One Million (1,000,000) unregistered shares of Common Stock,
$0.30 par value per share, of Jayark Corporation (the "Shares")
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evidenced by a certificate issued in the name of Sellers as joint
holders of the Shares;
(iv) Twenty-five percent (25%) of the amount (if any) by which the
Buyer's net income, as determined in accordance with U.S. generally
accepted accounting principles, for the Buyer's fiscal year ended
April 30, 1996 shall exceed $500,000, such amount (if any) (the
"Contingent Payment") to be payable to Sellers within fifteen (15)
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days of the date that Buyer's audited financial statements for the
fiscal year ended April 30, 1996 become available; and
(v) the assumption by Buyer of the Assumed Liabilities.
2 PURCHASE PRICE SUBJECT TO OFFSET. The amounts payable to Sellers
pursuant to subsections (ii) or (iv) above, and the Shares issued to Sellers
pursuant to subsection (iii) above, shall be subject to the Buyer's right of
offset provided in Section 10.8.
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3 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Sellers and the Purchased Assets as determined by the Buyer after
reasonable consultation with the Sellers. The parties agree that for U.S.
federal and state and all other U.S. tax reporting purposes, all parties hereto
shall report this transaction consistent with such allocation.
4. CLOSING. The consummation of the transactions contemplated hereby
(the "Closing") shall take place immediately upon satisfaction of the conditions
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set forth in Sections 8 and 9 hereof, at the offices of Herrick, Feinstein LLP,
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Two Park Avenue, New York, New York 10016, or at such other time and place as
the Sellers and the Buyer may mutually agree upon in writing (the day on which
the Closing takes place being the "Closing Date"); provided, however, that if
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the Closing shall not have occurred by July 15, 1995, this Agreement and the
rights and obligations of each of the parties hereunder (except for the
confidentiality provisions of Section 7.11) shall be null and void. The
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consummation of the transactions contemplated hereby shall be effective as of
the Closing Date.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. The Sellers jointly
and severally make the following representations and warranties to the Buyer to
induce the Buyer to enter into and perform this Agreement, all of which are true
and correct as of the date hereof and shall be true and correct as of the
Closing Date (except that representations and warranties made as of a specified
date are true and correct as of such date):
1 DUE INCORPORATION AND QUALIFICATION. Each of the Sellers is a
corporation duly organized, validly existing and in good standing under the laws
of their respective states of incorporation. The Sellers are qualified to
transact business and are in good standing in each jurisdiction set forth in
Section 5.1 of the Due Diligence Schedule. The Sellers do not own or lease
property in any jurisdiction other than the jurisdictions set forth in Section
5.1 of the Due Diligence Schedule, which Due Diligence Schedule indicates those
jurisdictions in which any significant portion of the Sellers' assets are
located. The Sellers have not used, been known as, or done business under, any
names or identities other than those set forth in Section 5.1 of the Due
Diligence Schedule.
2 SUBSIDIARIES. Except as set forth in Section 5.2 of the Due Diligence
Schedule, the Sellers do not, directly or indirectly, own or have the power to
vote, or to exercise a controlling influence with respect to, fifty percent
(50%) or more of the securities of any corporation, association, partnership,
joint venture or other entity.
3 RECORDS OF THE SELLERS. The copies of the Certificates of
Incorporation and By-laws of each Seller, and all amendments to each, and the
records of actions of each Seller's Board of Directors and stockholders
authorizing the transactions contemplated by this Agreement have been, or at the
Closing Date shall have been, delivered to the Buyer and are, or at the Closing
Date shall be, true, correct and complete.
4 TAX MATTERS. The Sellers have filed on a timely basis all federal,
state and municipal returns and reports which the Sellers are required to file
relating in any respect to taxes, and have paid or provided for all taxes,
interest or penalties assessed or imposed upon any of Sellers' properties,
assets, income, receipts, payrolls, transactions, capital, net worth or
franchises. Except as set forth in Section 5.4 of the Due Diligence Schedule, no
audit of any tax return of the Sellers is in progress, and Sellers have received
no notice of any deficiencies or assessments of any additional taxes. Except
for liens for taxes not yet due and payable, there are no liens for taxes and
none will attach as a result of the sale by Sellers to Buyer of the Purchased
Assets. Except as set forth in Section 5.4 of the Due Diligence Schedule, no
extensions of time with respect to any date on which any tax return was or is to
be filed by the Sellers is in force, and no waiver or agreement by the Sellers
is in force for the extension of time for the assessment or payment of any tax.
The tax referred to in the proviso to the last sentence of Section 7.5 is the
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only New York state or local tax that will be payable by the Buyer in respect of
the consummation of the transactions contemplated by this Agreement.
5 LAWSUITS Except as set forth in Section 5.5 of the Due Diligence
Schedule, there are no claims, actions, suits or proceedings pending or, to the
knowledge of Sellers, threatened, and there are no consent decrees, settlements
or judgments effective, against the Sellers or affecting their properties or
businesses, 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. The Sellers are not in default with
respect to any order, writ, injunction or decree of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, including but not limited to the Federal
Trade Commission or U.S. Customs Service. The Sellers have furnished to the
Buyer, or will have furnished to the Buyer prior to the Closing, copies of all
material pleadings that have been filed in each of the pending court proceedings
related to or arising out of each of the material matters described in Section
5.5 of the Due Diligence Schedule.
6 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS; REQUIRED CONSENTS.
(i) The Sellers have the full legal right and power and all authority and
approvals required to enter into, execute and deliver this Agreement and to
perform fully the Sellers' obligations hereunder.
(ii) This Agreement has been duly executed and delivered by the Sellers
and (assuming due authorization, execution and delivery by the Buyer)
constitutes or will constitute the valid and binding obligation of the Sellers
enforceable against them in accordance with its terms, except to the extent the
enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the rights of creditors
and subject to general principles of equity and equitable remedies. This
Agreement has been duly and unanimously approved by the Board of Directors and
the stockholders of each Seller, except that no approval has been obtained from
Richard Crandle who may assert a claim (which Sellers dispute) to stock of LIB-
Com representing a one percent (1%) interest therein. No approval or consent of
any foreign, federal, state, county, local or other governmental or regulatory
body is required in connection with the execution and delivery by the Sellers
of this Agreement and the consummation and performance by the Sellers of the
transactions contemplated hereby, including the assignment and assumption of the
Assumed Contracts, except (a) as described in Section 5.6 of the Due Diligence
Schedule or (b) as may be necessary as a result of any facts or circumstances
relating solely to the Buyer.
(iii) Assuming that all consents, approvals, exemptions and other similar
types of actions described in the Due Diligence Schedule have been obtained and
all filings and notifications listed in Section 5.6 of the Due Diligence
Schedule have been made, except as may result from any facts or circumstances
relating solely to the Buyer, the execution and delivery of this Agreement, the
consummation of the transactions contemplated under this Agreement, and the
performance by the Sellers of this Agreement in accordance with its terms and
conditions will not conflict with or result in the breach or violation of any of
the terms or conditions of, or constitute (or with notice or lapse of time or
both constitute) a default under (a) the Certificates of Incorporation or
By-Laws of the Sellers, or (b) any statute or any regulation, order, judgment or
decree of any foreign or domestic court or governmental or regulatory body.
7 REAL ESTATE. The Sellers do not own, and except as set forth in
Section 5.7 of the Due Diligence Schedule do not have any options, contracts or
obligations to acquire any interest in, any real property.
8 EMPLOYEE BENEFITS.
(i) Section 5.8 of the Due Diligence Schedule sets forth all bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical, dependent care,
cafeteria, employee assistance, scholarship or other plan, program, arrangement
or understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of any Seller (collectively, and
including all amendments thereto, for purposes of this Section 5.8 and Section
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7.4, "Benefit Plans"), including, but not limited to "employee pension benefit
- --- -------------
plans" (as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) (sometimes referred to in this Section 5.8
----- -----------
and in Section 7.4 as "Pension Plans") and "employee welfare benefit plans" (as
----------- -------------
defined in Section 3(1) of ERISA) (sometimes referred to in this Section 5.8 and
-----------
in Section 7.4 as "Welfare Plans") maintained in whole or in part, contributed
----------- -------------
to or required to be contributed to, within six years prior to the Closing Date,
by any Seller for the benefit of any present or former officers, employees or
directors of such Seller. The Sellers have delivered to the Buyer true,
complete and correct copies of each Benefit Plan (or, in the case of any
unwritten Benefit Plan, a description thereof).
(ii) With respect to the Benefit Plans assumed by the Buyer pursuant to
Section 7.4 below, neither the Sellers nor any such Benefit Plan are in
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violation in any material respect of any of the provisions of ERISA or the
Internal Revenue Code of 1986, as amended (the "Code") (including the final
----
regulations promulgated thereunder); no reportable event as defined in Section
4043 of ERISA which is required to be reported to the Pension Benefit Guaranty
Corporation ("PBGC") in accordance with the regulations of the PBGC has occurred
----
with respect to any such Benefit Plan subject to Title IV of ERISA; and the
Sellers have made or provided for all payments due to date with respect to each
such Benefit Plan. To the best knowledge of the Sellers, neither any of the
Benefit Plans assumed by the Buyer pursuant to Section 7.4 below, nor the
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Sellers, nor any trustee, administrator or other "party in interest" or
"disqualified person" (as defined in Section 3(14) of ERISA or Section
4975(e)(2) of the Code, respectively) with respect to such Benefit Plans has
engaged in any prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) which could subject such Plan or the Buyer to
any penalty or excise tax imposed by Section 4975 of the Code.
(iii) The Sellers do not and will not have any material liability or
obligation for taxes, penalties, contributions, losses, claims, damages,
judgments, settlement costs, expenses, costs, or any other liability or
liabilities of any nature whatsoever arising out of or in any manner relating to
any Benefit Plan, (including but not limited to employee benefit plans such as
foreign plans which are not subject to ERISA), that has been, or is, contributed
to by the Sellers or any entity, whether or not incorporated, which is deemed to
be under common control (as defined in Section 414 of the U. S. Internal Revenue
Code of 1986, as amended), with the Sellers at any time within the six
consecutive year period ending on the Closing Date.
9 NO BROKER. Except for FINANCO, INC., no broker, finder, agent or
similar intermediary has acted for or on behalf of the Sellers in connection
with this Agreement or the transactions contemplated hereby, and no broker,
finder, agent or similar intermediary is entitled to any broker's, finder's or
similar fee or other commission in connection therewith based on any agreement,
arrangement or understanding with the Sellers or any action taken by the
Sellers. The Sellers are solely responsible for the fees and expenses of
FINANCO, INC. Copies of Sellers' engagement letter and all other contracts,
agreements or arrangements with FINANCO in connection with this Agreement and
transactions contemplated hereby have been provided to Buyer.
10 TITLEExcept as set forth in Section 5.10 to the Due Diligence
Schedule:
(i) the Sellers have and at the Closing are delivering to the Buyer
good, valid and marketable title to the Purchased Assets, free and
clear of any lease or conditional sales contract, security agreement,
lien, encumbrance, charge, equity or claim; and
(ii) by delivery to the Buyer of the Conveyance Documents, the Sellers
shall convey to the Buyer and the Buyer shall receive good, valid and
marketable title to all of the Purchased Assets free and clear of all
liens, encumbrances, charges, equities and claims.
11 COMPLIANCE WITH LAWS; ILLEGAL PAYMENTS. The Business has been
conducted in all material respects in accordance and in compliance with all
applicable foreign, federal, state and local laws, ordinances, rules and
regulations. No part of the Business is dependent upon, or results from, any
payments, direct or indirect, in the nature of bribes, kick-backs, or similar
payments to any government or agency thereof or to any other person in the
nature of contributions to any domestic or foreign political party or candidate,
no illegal payments have been made by or on behalf of the Sellers or otherwise
in connection with the Business, and there has been no violation of the Foreign
Corrupt Practices Act.
12 LICENSES AND PERMITS. Sellers hold all licenses and permits that are
required pursuant to any applicable statute, law, regulation or authority for
the conduct of the Business, all such licenses and permits are in full force and
effect as of the date hereof, and all such licenses and permits are fully
transferable to, and at the Closing will be fully transferred to, the Buyer
without any additional payments or other conditions.
13 LABOR MATTERS; COLLECTIVE BARGAINING AGREEMENTS. Section 5.13 of the
Due Diligence Schedule lists all collective bargaining agreements of the Sellers
currently in effect, copies of all of which have been furnished to the Buyer or
made available for the Buyer's inspection. The Sellers are not in violation or
default of any collective bargaining agreements, and the Sellers have not
experienced or received any written notice of any claim of unfair labor
practice, strike, work stoppage, slowdown, or other labor dispute or action
within the past three (3) years, nor is any such matter, to the Sellers'
knowledge, threatened or pending.
14 BULK SALES MATTERS. The list of the Sellers' creditors and the
schedule of the Sellers' assets furnished to Buyer pursuant to Section 6.04 of
the New York Bulk Sales Act are true, correct and complete as of the date set
forth thereon.
15 SPECIAL RELATIONSHIPS AND ARRANGEMENTS. The Sellers have special
relationships and arrangements with their agents and suppliers including,
without limitation, those for fees, mark-ups, commissions, defective merchandise
adjustments, rebates, and charge-ups for banking, letters of credit, cargo
insurances and shipping fees, which may not continue, and (except to the extent
such relationships and arrangements are Assumed Contracts) the Buyer will have
no obligation or right to maintain, and may not benefit from, such relationships
and arrangements after the Closing.
16 DUE DILIGENCE MATTERS. Except as disclosed in Section 5.16 of the Due
Diligence Schedule:
(i) As of the Closing Date, the Sellers have had the opportunity to
assist the Buyer in the Buyer's due diligence investigation of the
Business and in the Buyer's preparation of the Due Diligence Schedule,
have reviewed the Due Diligence Schedule delivered by the Buyer at the
Closing pursuant to Section 8.4(ii) and have had the opportunity to
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make such amendments or corrections to the Due Diligence Schedule as
the Sellers consider necessary to make the Due Diligence Schedule
true, correct, and complete.
(ii) Subject to Section 6.6, as of the Closing Date, the Sellers have
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furnished the Buyer with, and have given the Buyer access to, all
information, including but not limited to all business, financial, and
operating books and records, documents, instruments, contracts,
agreements, schedules, computer files, and other materials as
requested by the Buyer, and have further given Buyer access to
Sellers' facilities, officers and employees in connection with Buyer's
due diligence investigation.
(iii) Subject to Section 6.6, all information furnished by Sellers and
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their representatives to Buyer in connection with the Buyer's due
diligence investigation and Buyer's preparation of the Due Diligence
Schedule, is true, correct, and complete, and all copies of documents,
instruments, agreements, contracts and other materials furnished to
Buyer (including but not limited to the Assumed Contracts) shall be
true, correct and complete copies of the originals of such materials.
17 REPRESENTATIONS AND WARRANTIES OF THE SELLERS REGARDING
ACCEPTANCE OF AND INVESTMENT IN THE SHARES AND THE PROMISSORY NOTE. With
respect to the Sellers' acceptance of and investment in the Shares and the
Promissory Note, and subject to the acknowledgements by the Buyer that are set
forth in the Confirmation Agreement referenced in Section 9.6(i), the Sellers
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represent and warrant to the Buyer and to Jayark Corporation, the issuer of the
Shares and an express third party beneficiary of the representations and
warranties contained in this Section 5.17, as follows:
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(i) The Sellers are acquiring the Shares and the Promissory Note for their
own account, for investment, with no present intention of reselling or otherwise
distributing the Shares and the Promissory Note or participating in a
distribution of the Shares or the Promissory Note. The Sellers acknowledge that
the Buyer and Jayark Corporation are relying upon an exemption under the
Securities Act of 1933 and upon the Sellers' representations and warranties
contained in this Section 5.17 in connection with the issuance of the Shares and
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the Promissory Note.
(ii) The Sellers represent that they have been advised that the Shares and
the Promissory Note have not been registered under the Securities Act of 1933
(the "Act") and the rules and regulations thereunder and, therefore, that the
---
Shares and the Promissory Note cannot be resold unless they are registered under
the Act or unless an exemption from such registration is available. The Sellers
represent that they are aware that the Shares and the Promissory Note are, and
will be when issued, "restricted securities" as that term is defined in Rule 144
under the Act, and that as such the Shares and the Promissory Note may be
subject to limitations on resale (including, in the case of the Shares, among
other restrictions, limitations on the amount of securities that can be resold
and the timing and manner of resale) set forth in Rule 144 or in administrative
interpretations of the Act. The Sellers acknowledge and agree that the
Promissory Note shall bear a legend substantially to the effect included on
Exhibit A and certificate(s) representing the Shares shall bear a legend
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substantially to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY OTHER
APPLICABLE SECURITIES LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED (i) UNLESS REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND ANY OTHER APPLICABLE SECURITIES LAW OR (ii) UNLESS THE
ISSUER RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
The Sellers represent that they and their representatives have such
knowledge and experience in financial, investment and business matters that they
are capable of evaluating the merits, risks and advisability of an investment in
the Shares, the Promissory Note and the Contingent Payment that the Sellers have
independently examined Jayark Corporation and the Buyer in making their decision
to invest in the Shares, the Promissory Note and the Contingent Payment, and
that the Sellers have examined or have had the opportunity to examine before the
date hereof all information that they deem to be material to an understanding of
Jayark Corporation and the Buyer. Jayark Corporation has furnished to the
Sellers, and the Sellers acknowledge receipt of, copies of the most recent
Annual Report on Form 10-K and of all subsequent reports and filings made
pursuant to the Securities Exchange Act of 1934, and all other documents and
information that Sellers has requested related to an investment in Jayark
Corporation. Jayark Corporation has afforded the Sellers the opportunity to
discuss an investment in the Shares, the Promissory Note and the Contingent
Payment and to ask questions of representatives of Jayark Corporation and the
Buyer concerning Jayark Corporation and the Buyer and their businesses, and such
representatives have provided answers to all such questions.
The Sellers are capable of bearing the economic risk of investing in the
Shares, and can afford a total loss of such investment.
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer makes the
following representations and warranties to the Sellers to induce the Sellers to
enter into and perform this Agreement, all of which are true and correct as of
the date hereof and shall be true and correct as of the Closing Date (except
that representations and warranties expressly made as of a specified date are
true and correct as of that date):
1 INCORPORATION AND AUTHORITY OF THE. The Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has, or as of the Closing Date will have, all necessary
corporate power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Buyer, and (assuming
due authorization, execution and delivery by the Sellers and approval by the
Board of Directors of the Buyer) constitutes or will constitute a legal, valid
and binding obligation of the Buyer enforceable against the Buyer in accordance
with its terms, except to the extent the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the rights of creditors and subject to general principles of equity
and equitable remedies. The Board of Directors of the Buyer has approved, or as
of the Closing Date will have approved, the transactions contemplated by this
Agreement and has authorized, or as of the Closing Date will have authorized,
the execution and delivery of this Agreement by the Buyer. No approval of this
Agreement and the transactions contemplated hereby by the Buyer's stockholder is
required.
2 NO CONFLICT. The execution, delivery and performance of this
Agreement by the Buyer does not and will not (i) violate or conflict with the
Certificate of Incorporation or By-laws of the Buyer, (ii) conflict with or
violate any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to the Buyer, or (iii) except as will not
prevent the Buyer from consummating the transactions contemplated by this
Agreement, violate or conflict with any instrument, contract or other agreement
to which the Buyer is a party or to which Buyer or any of its assets or
properties is bound or subject.
3 CONSENTS AND APPROVALS. The execution and delivery of this Agreement
by the Buyer does not, and the performance of this Agreement by the Buyer will
not, require any consent, approval, authorization or other action by, or filing
with or notification to, any governmental or regulatory authority, except as may
be necessary as a result of any facts or circumstances relating solely to the
Sellers.
4 ABSENCE OF LITIGATION. There are no claims, actions, suits or
proceedings pending or, to the knowledge of Buyer, threatened, and there are no
consent decrees, settlements or judgments effective, against the Buyer or its
properties or businesses, 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 seek to delay or prevent
the consummation of, or which would be reasonably likely to adversely affect the
Buyer's ability to consummate, the transactions contemplated hereby.
5 NO BROKER. Except as may otherwise be applicable pursuant to Jayark
Corporation's engagement letter with Ladenburg, Thalmann & Co., Inc., no broker,
finder, agent or similar intermediary has acted for or on behalf of the Buyer in
connection with this Agreement or the transactions contemplated hereby, and no
broker, finder, agent or similar intermediary is entitled to any broker's,
finder's, or similar fee or other commission in connection therewith based on
any agreement, arrangement or understanding with the Buyer or any action taken
by the Buyer. The Buyer is solely responsible for the fees and expenses of
Ladenburg, Thalmann & Co., Inc. Copies of the Buyer's engagement letter with
Ladenburg, Thalmann & Co., Inc. and all other contracts, agreements or
arrangements with Ladenburg, Thalmann & Co., Inc. in connection with this
Agreement and transactions contemplated hereby have been, or by the Closing will
have been, provided to the Sellers.
6 ACKNOWLEDGEMENT REGARDING FINANCIAL INFORMATION. In connection with
its due diligence investigation, the Buyer has been furnished with certain
audited and unaudited financial statements for the Sellers and, to the Buyer's
knowledge, the Sellers have provided to the Buyer access to the Sellers'
accounting and financial records as the Buyer has requested. The Buyer
acknowledges that the Sellers are making no representation or warranty with
respect to the audited or unaudited financial statements; however, nothing in
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this Section 6.6 shall be construed to limit the Sellers' representations and
-----------
warranties to the Buyer.
7 OTHER INFORMATION. The Buyer has been advised by the Sellers that the
results of the Sellers' operations for the Sellers' fiscal year commencing on
June 1, 1994 have been substantially and adversely affected by, among other
things, the bankruptcy of two large customers of the Sellers and as a result of
former employees of the Sellers leaving the employ of the Sellers, establishing
a new company, and diverting a substantial volume of business away from the
Sellers. In addition, the Buyer has been advised by the Sellers that Robert
Gerdoney and Peter Phillips, two former employees and officers of the Sellers,
have left their employment with the Sellers.
As of the Closing Date only, and assuming satisfaction of the conditions
set forth in Section 9 hereof, the Buyer represents and warrants that (i) it has
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made its own inquiry and investigation into, and based thereon has formed an
independent judgment concerning, the assets, liabilities, past performance and
future prospects of the Sellers and the Business, (ii) it has, to Buyer's
knowledge, been furnished with or given adequate access to such information
about the assets and liabilities of Sellers and the Business as it has
requested, and (iii) the Purchase Price negotiated between the Sellers and the
Buyer accounts for and reflects each of the items disclosed in this Agreement
and the Due Diligence Schedule; provided, however, that no investigation by the
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Buyer and no provisions of this Section 6.7 shall be deemed to relieve the
-----------
Sellers from any liability or obligation they would otherwise have, pursuant to
this Agreement or otherwise.
7. COVENANTS AND AGREEMENTS. The parties covenant and agree as follows:
1 CONDUCT OF BUSINESS PRIOR TO THE CLOSING.
(i) The Sellers covenant and agree that, from the date hereof until the
Closing, they shall conduct the Business in the ordinary course and (subject to
Section 7.1(ii) below) consistent with prior practice, use commercially
reasonable efforts to preserve substantially intact the business organization of
the Business, keep available to the Buyer the services of the employees of the
Business, and preserve the current relationships of the Sellers with their
important customers and suppliers and other persons with whom the Sellers have
significant business relationships.
(ii) The Buyer expects and currently intends that, within ten (10) business
days after the date of this Agreement, the Buyer will provide or arrange for
letters of credit or other financing in an amount of at least $1,000,000, in
such forms and on such terms and conditions as the Buyer in its sole discretion
shall deem appropriate (the "Interim Financing") to be used by the Sellers in
-----------------
the operations of the Business. To induce the Buyer to provide or arrange for
the provision of the Interim Financing, the Sellers covenant and agree that,
from and after the date hereof and up to and including the Closing Date, the
Sellers will not, except with the prior approval of at least one Seller
Representative and at least one Buyer Representative (as defined below), or
alternatively, except in compliance with any policies or procedures that may be
established with respect to the following and that shall be approved by at least
one Seller Representative and at least one Buyer Representative:
(a) pay or incur any obligation or liability, or make any expenditure,
cash withdrawal or payment of any nature whatsoever, or take any other
action that would have the effect of reducing the amount of the
Sellers' cash from that which would have been on hand in the absence
of the taking of such action;
(b) enter into, renew, extend or modify any arrangement for borrowed money
or any factoring agreement or otherwise become further indebted in any
manner or in any amount whatsoever;
(c) enter into, renew, extend or modify any contract or agreement for the
purchase of any goods or services, including but not limited to
inventory;
(d) enter into, renew, extend or modify any contract or agreement for the
sale, consignment, or transfer of any inventory;
(e) establish or incur any liability in respect of any new letters of
credit or make any draws on or in respect of any existing letters of
credit, or draw any cash under or otherwise incur any liability under
the CIT Group/Factoring, Inc. agreement or other financing or
factoring agreement arrangements;
in each case regardless of whether any such transaction is or would have been in
the ordinary course of business prior to the date of this Agreement. For
purposes of this Section 7.1(ii), the "Seller Representatives" shall be Mr. Joel
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Margolin and Mr. Tom Muscarello, and the "Buyer Representatives" shall be Mr.
Clay Whitehead and Mr. David L. Koffman.
The Sellers' covenants set forth in this Section 7.1(ii) shall be effective
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immediately upon execution of this Agreement; provided, however, that in the
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event that the Buyer determines not to provide or arrange for the Interim
Financing within ten (10) business days of the date of this Agreement, the
Sellers' covenants in this Section 7.1(ii) shall terminate and be of no further
---------------
force or effect. The Sellers agree that the only result of the Buyer's
determination not to provide or arrange for the Interim Financing shall be the
termination of the Sellers' covenants in this Section 7.1(ii), that Buyer has no
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obligation to provide or arrange for the Interim Financing, that the Buyer's
determination not to provide or arrange for the Interim Financing shall not give
the Sellers any right to modify the terms of or terminate this Agreement or any
right to claim indemnification from the Buyer pursuant to Section 10.3, and that
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the Buyer shall have no responsibility or obligation for any Losses (as defined
in Section 10.2) that the Sellers may incur as a result of the Buyer's
------------
determination not to provide or arrange for the Interim Financing.
(iii) Notwithstanding the other provisions of this Section 7.1, the
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Sellers shall (and are hereby permitted to) withdraw up to $335,000 in cash from
and after the date hereof and up to and including the Closing Date, but solely
for the purpose of repaying certain obligations of the Sellers as approved by
the Buyer Representative and to settle certain outstanding litigation as
discussed between the Buyer and the Sellers.
2 ACCESS TO INFORMATION. From and after the date hereof and through
the Closing Date, the Buyer will continue to conduct a due diligence
investigation of the Business, and shall prepare the Due Diligence Schedule
which shall set forth all information provided to the Buyer by the Seller in the
course of Buyer's due diligence investigation and that is required by the terms
of this Agreement to be set forth thereon. Accordingly, from and after the date
hereof until the Closing, upon reasonable notice, the Sellers shall, and shall
cause each of their officers, directors, employees, auditors and agents to:
(i) afford the officers, employees and authorized agents and
representatives of the Buyer reasonable access during normal business
hours to the offices, properties, books and records of the Sellers;
(ii) furnish to the officers, employees and authorized agents and
representatives of the Buyer such additional financial and operating
data and other information regarding the assets, properties, goodwill
and business of the Sellers as the Buyer may from time to time
reasonably request; and
(iii) shall otherwise cooperate with and assist the Buyer;
in connection with the Buyer's due diligence investigation and preparation of
the Due Diligence Schedule; provided, however, that such investigation shall be
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conducted in such a manner as not to interfere unreasonably with any of the
Business of the Sellers. The Buyer shall afford the Sellers the opportunity to
assist in the preparation of the Due Diligence Schedule, shall furnish the Due
Diligence Schedule to the Sellers prior to or at the Closing, and the Sellers
shall make such amendments, supplements, or corrections as shall be necessary to
make the Due Diligence Schedule true, correct and complete as of the Closing
Date.
3 REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS. From the date hereof
until the Closing, each party hereto will use commercially reasonable efforts to
obtain all authorizations, consents, orders and approvals of all federal, state,
local and foreign regulatory bodies and officials that may be or become
necessary for its execution and delivery of, and the performance of its
obligations pursuant to, this Agreement and will cooperate with the other
parties' efforts in obtaining such authorizations, consents, orders and
approvals.
4 EMPLOYEE MATTERS.
(i) Effective as of the Closing Date, the Buyer shall assume the Benefit
Plans of the Sellers listed in Section 7.4 to the Due Diligence Schedule, and
shall pay, perform and discharge the debts, liabilities and obligations of the
Sellers in respect of such Plans. Each Benefit Plan assumed by the Buyer
pursuant to this Agreement shall be amended by making any changes necessary or
appropriate to effectuate the terms and intent of this Agreement. The
employment of any employee of the Sellers who is employed by the Buyer and is a
participant in any of the Benefit Plans as of the Closing Date shall not be
deemed to have been terminated or severed for any purpose under such Benefit
Plan by reason of the transactions contemplated herein.
(ii) Effective as of the Closing, the Buyer shall employ all of the
Sellers' employees (as employed by Sellers as of the Closing) on substantially
the same terms and conditions as the Sellers and shall honor those employment
benefit policies of the Sellers described in Section 7.4 of the Due Diligence
Schedule (the "Policies") for at least one (1) year from the Closing Date.
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Sellers' employees who are offered and accept employment by the Buyer as of the
Closing Date shall hereafter be referred to as "Transferred Employees."
---------------------
(iii) The Buyer shall also pay, perform and discharge the debts,
liabilities and obligations of the Sellers in respect of any severance
obligations of the Sellers that result from Buyer's failure to perform its
obligations under the immediately preceding Section 7.4(ii). Without limiting
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the generality of the foregoing, at the Closing the Buyer shall assume all
employment and non-competition agreements of the Sellers, including, without
limitation, the employment and non-competition agreements of Joel Margolin,
Craig Margolin and Melissa Margolin-Kramer, copies of which have been, or prior
to the Closing will be, furnished to the Buyer; however, Sellers shall be solely
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responsible, and hereby agree, to pay the $665,000 bonus to Joel Margolin
payable pursuant to his employment agreement in June, 1995.
(iv) With respect to each Multiemployer Plan that covers any of the
Transferred Employees, Buyer and Sellers agree as follows, in accordance with
the provisions of Section 4204 of ERISA: (a) the Buyer hereby assumes, effective
as of the Closing Date, the Sellers' obligations to contribute to each such
Multiemployer Plan for the Transferred Employees and any other employees of the
Buyer that are covered in each such plan; (b) the Buyer shall provide to each
such Multiemployer Plan the bond or escrow amount described in Section
4204(a)(1)(B) of ERISA, unless the bond or escrow amount is waived by the
Pension Benefit Guaranty Corporation ("PBGC"); (c) the parties agree that,
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unless the PBGC waives the requirements of Section 4204(a)(1)(C) of ERISA, if
the Buyer withdraws from any such Multiemployer Plan in a withdrawal described
in Section 4204(a)(1)(C) ERISA and its liability to the plan on account of such
withdrawal is not paid, the Sellers shall be secondarily liable to the plan for
any withdrawal liability it would have had to such plan with respect to the
Transferred Employees in the absence of Section 4204(a) of ERISA; and (d) as
soon as is practicable after the Closing, the Buyer and the Sellers shall
request from the PBGC an exemption from the requirements of Sections
4204(a)(1)(B) and 4204(a)(1)(C) of ERISA. Notwithstanding the provisions of the
preceding sentence and Section 4204 of ERISA, it is hereby expressly agreed that
if the Sellers incur any secondary withdrawal liability under the immediately
preceding sentence, the Buyer shall indemnify the Sellers and hold them harmless
from and against any loss, damage, cost, liability or expense, including
(without limitation) any costs and expenses of litigation and reasonable
attorneys' fees, incurred by the Sellers by reason of such secondary liability.
Notwithstanding any other provision of this Section 7.4(iv) to the contrary, it
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is hereby expressly agreed that the Sellers shall indemnify the Buyer and hold
the Buyer harmless from and against any withdrawal liability up to any amount by
which the value of nonforfeitable benefits under the Multiemployer Plan as of
the Closing Date exceeds the value of the assets of such plan as of the Closing
Date.
(v) The Sellers shall supply the Buyer with (a) all records in their
possession with respect to the Transferred Employees concerning participation,
vesting, accrual of benefits, payment of benefits or elective forms of benefits
under the Benefit Plans assumed hereunder and (b) any other information in their
possession reasonably requested by the Buyer that is necessary or appropriate
for the Buyer's administration of the Benefit Plans assumed hereunder.
(vi) The Sellers and the Buyer shall supply each other with any employee
data and records within their possession necessary to carry out the purposes and
terms of this Agreement, including without limitation data appropriate to
complete actuarial computations, evaluations, benefit reports, filings and
claims analysis and government filings. The Sellers and the Buyer agree to
execute such documents, to obtain required governmental approvals (if any) and
to take such other actions as may be necessary or appropriate to effect the
purposes described in this Agreement.
(vii) The Sellers and their affiliates shall not, for a period of two
(2) years from and after the Closing Date, recruit, solicit, or otherwise induce
any of the Transferred Employees to discontinue, reduce or modify their
employment relationship with the Buyer, or employ or seek to employ any
Transferred Employee in any business of any of the Sellers or their respective
affiliates that is similar to the Business.
5 EXPENSES OF SALE. The Sellers and the Buyer agree that all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, shall be paid by the party
incurring such costs and expenses. All New York state or local transfer,
documentary, gross receipts, sales and use taxes, if any, resulting from the
sale, assignment, transfer and delivery hereunder of the Purchased Assets shall
be paid by the Sellers; provided, however, that the Buyer shall pay the New York
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state transfer tax or sales tax at the rate of 8.5% on the value of the fixed
assets transferred hereunder and at the rate of 0.4% on the value of leases, if
any, providing for below-market rates.
6 BOOKS AND RECORDS; POST-CLOSING
(i) The Buyer agrees that it shall preserve and keep all books and records
of the Sellers in the Buyer's possession for a period of at least six (6) years
from the Closing Date. After such six (6) year period, before the Buyer shall
dispose of any of such books and records, at least thirty (30) calendar days'
prior written notice to such effect shall be given by the Buyer to the Sellers,
and the Sellers shall be given an opportunity, at their cost and expense, to
remove and retain all or any part of such books and records as the Sellers may
select.
(ii) After the Closing, upon reasonable notice, the Buyer shall give the
officers, attorneys, accountants and other authorized representatives of the
Sellers access, during normal business hours, to the books and records of the
Sellers related to the Business prior to the Closing and the assets sold to, and
liabilities assumed by, the Buyer hereunder, and the Buyer shall permit such
persons to examine and copy such books and records to the extent reasonably
requested by the Sellers in connection with the preparation of the Sellers' tax
and financial reporting matters; provided that such access does not disrupt the
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normal operation of the Business and that the parties granted such access are
subject to confidentiality agreements reasonably acceptable in form and
substance to Buyer. After the Closing, the Buyer will cause its employees and
agents to cooperate fully with the Sellers in connection with such reasonable
examination and copying of the books and records of the Buyer related to the
Business so long as such cooperation does not disrupt the normal operation of
the Business and that the parties granted such access are subject to
confidentiality agreements reasonably acceptable in form and substance to Buyer.
In connection with any claim or litigation in respect of the Business as
conducted on or prior to the Closing Date with respect to which the Sellers have
been or shall become engaged or participate, the Buyer shall cooperate in all
reasonable respects with the Sellers, including, without limitation, making
available to the Sellers relevant records or employees of the Buyer who may be
helpful with respect to such claim or litigation. The Sellers shall reimburse
the Buyer for any reasonable out-of-pocket expenses (excluding any costs for
internal personnel and overhead of the Buyer) incurred by the Buyer in
connection with any cooperation provided pursuant to this Section 7.6.
-----------
(iii) After the Closing, the Sellers shall grant access to their books
and records and cooperate in all reasonable respects with the Buyer in
connection with any audits of the Sellers' books and records that Buyer requests
in connection with the Buyer's reporting obligations under the rules and
regulations of the Securities and Exchange Commission.
7 TREATMENT OF CERTAIN MERCHANDISE ORDERS. The Buyer covenants and
agrees that from and after the Closing the Buyer shall pay for all merchandise
orders placed by the Sellers on or prior to the Closing Date which either
(i) have been furnished to the Buyer for inspection prior to
execution of this Agreement, or
(ii) are disclosed in Section 7.7 of the Due Diligence Schedule,
and in either event are satisfactory to the Buyer, by either replacing any
existing letters of credit issued on behalf of the Sellers with respect to such
merchandise orders or by paying for such merchandise within a reasonable time
period before such merchandise is to be shipped.
8 FURTHER ASSURANCES. Each of the parties shall execute such Conveyance
Documents and other papers and perform such further acts as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.
9 PAYMENT OF LIABILITIES. The Sellers agree to pay or otherwise satisfy
and discharge all of their liabilities and obligations existing as of the
Closing Date, other than the Assumed Liabilities. The Buyer agrees to pay and
discharge all of the Assumed Liabilities.
10 CORPORATE NAMES. The Sellers shall, from and after the Closing Date,
cease all uses of the names "LIB-Com," "Liberty Bell" and "Liberty Bell
Christmas," "Ivy Mar," "Creative Home Products," and derivations and variations
thereof.
11 CONFIDENTIALITY. Each of the parties acknowledges that it has
received, and up to and including the Closing Date will receive, certain oral
and written information concerning the other party's assets, business and
operation (the "Information"). Each of the parties covenants and agrees that it
-----------
shall keep the Information confidential and shall not disclose the Information
to any other person. Following the Closing Date, the provisions of this Section
-------
7.11 shall continue to be binding upon Sellers but shall no longer be binding
- ----
upon Buyer or Jayark Corporation; if the Closing shall not occur, each party
shall promptly return all Information in its possession to the other party, and
the provisions of this Section 7.11 shall thereafter continue in full force and
------------
effect.
12 EXCLUSIVE DEALING. The Sellers shall not, from and after the date
hereof, negotiate or enter into discussions with any party other than the Buyer
for the purchase, sale, lease, or transfer of, or similar transaction involving,
the Purchased Assets, other than transactions in the ordinary course of business
as permitted by Section 7.1.
-----------
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERS TO CLOSE. The
obligations of the Sellers to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, at or prior to the Closing, of
each of the following conditions:
1 REPRESENTATIONS AND WARRANTIES; COVENANTS.The representations and
warranties of the Buyer contained in this Agreement shall be true and correct in
all material respects as of the Closing Date, with the same force and effect as
if made as of the Closing Date, other than such representations and warranties
that are made as of another specified date, and all the covenants contained in
this Agreement to be complied with by the Buyer on or before the Closing Date
shall have been complied with in all material respects.
2 NO ORDER. No United States, state or foreign governmental authority or
other agency or commission or United States, state or foreign court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and has the effect of making the
transactions contemplated by this Agreement illegal or otherwise restraining or
prohibiting consummation of such transactions; provided, however, that the
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parties hereto shall use commercially reasonable efforts to have any such
statute, rule or regulation declared invalid or inapplicable and any such order
or injunction vacated.
3 CONSENTS. With respect to those consents from the third parties that
are identified in Section 5.6 of the Due Diligence Schedule as "Required
Consents", the Buyer and the Sellers shall have received written consents to the
transactions contemplated by this Agreement in form and substance satisfactory
to the Sellers.
4 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE. Sellers shall have
received each of the following:
(i) an executed copy of the Assumption Documents, and a copy of the
Confirmation Letter referenced in Section 9.7, substantially in the
-----------
form attached as Exhibit D and signed by the Hong Kong Banks;
---------
(ii) the Due Diligence Schedule, specifically identified by the Buyer
as the Due Diligence Schedule referenced herein and prepared in
connection herewith;
(iii) an opinion of counsel to the Buyer dated the Closing Date, in
customary form and with reasonable and customary exclusions and
limitations, confirming the legal conclusions set forth in (a) Section
-------
6.1 hereof and (b) Section 6.2 hereof (it being understood that such
--- -----------
counsel need not consider in connection with such opinion as to clause
(ii) of Section 6.2 any matters other than those disclosed to such
-----------
counsel by the Buyer as identified in such opinion and those otherwise
actually known to such counsel);
(iv) a certificate of the secretary of the Buyer attesting to the
certificate of incorporation and bylaws of the Buyer, the resolutions
of the Board of Directors of the Buyer approving this Agreement and
the transactions contemplated hereby, the good standing of the Buyer,
the incumbency of the officers of the Buyer, the truth and accuracy of
representations and warranties set forth in Section 6, and the
---------
satisfaction of the conditions set forth in Section 9;
---------
(v) a certificate of the secretary of Jayark Corporation attesting to
the resolutions of the Board of Directors of Jayark Corporation
approving the issuance of the Shares;
(vi) evidence of delivery and payment of the Purchase Price pursuant
to Section 3.1 hereof;
-----------
(vii) evidence that the Sellers are as of the Closing fully released
and discharged from all obligations and liabilities to CIT
Group/Factoring Inc. (other than any such obligations or liabilities
that are Excluded Liabilities); and
(viii) a Release Agreement, substantially in the form attached as
Exhibit B, executed by the Sellers.
---------
2. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER TO CLOSE. The
obligations of the Buyer to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, at or prior to the Closing, of
each of the following conditions:
1 DUE DILIGENCE SCHEDULE; REPRESENTATIONS AND WARRANTIES; COVENANTS.
(i) the Buyer shall have completed its due diligence investigation of the
Business, and shall have prepared and delivered to the Sellers the Due Diligence
Schedule, which Due Diligence Schedule shall set forth all information provided
to the Buyer and in the course of the Buyer's due diligence investigation and
that is required by the terms of this Agreement to be set forth therein.
(ii) Buyer shall be satisfied in all respects with its due diligence
investigation of the Business and with the matters disclosed therein and with
the results thereof, including but not limited to the degree of the Sellers'
cooperation and disclosure and all matters disclosed in the investigation and in
the Due Diligence Schedule; and
(iii) the representations and warranties of the Sellers contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date, with the same force and effect as if made as of the Closing Date, other
than such representations and warranties that are made as of another date, and
all the covenants contained in this Agreement to be complied with by the Sellers
on or before the Closing shall have been complied with in all material respects.
2 NO ORDER. No United States, state or foreign governmental authority or
other agency or commission or United States, state or foreign court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and has the effect of making the
transactions contemplated by this Agreement illegal or otherwise restraining or
prohibiting consummation of such transactions; provided, however, that the
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parties hereto shall use their commercially reasonable efforts to have any such
statute, rule or regulation declared invalid or inapplicable and any such order
or injunction vacated.
3 CONSENTS. With respect to those consents from third parties identified
in Section 5.6 to the Due Diligence Schedule as "Required Consents", the Buyer
and the Sellers shall have received written consents to the transactions
contemplated by this Agreement in form and substance reasonably satisfactory to
the Buyer.
4 APPROVAL OF BOARD OF DIRECTORS. The Buyer's Board of Directors shall
have approved the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby.
5 FINANCING. The Buyer shall have entered into definitive agreements
with the CIT Group/Factoring Inc. or with another source of financing
satisfactory to the Buyer for such financing as the Buyer shall require, upon
terms and conditions acceptable to the Buyer, and such financing shall be
available to the Buyer on the Closing Date.
6 DELIVERY OF CLOSING DOCUMENTS. The Buyer shall have received each of
the following in form and substance reasonably satisfactory to the Buyer:
(i) executed copies of the Conveyance Documents and the Supplemental
Letter substantially in the form attached hereto as Exhibit C;
---------
(ii) an opinion of counsel to Sellers dated the Closing, in customary
form and with reasonable and customary exclusions and limitations,
confirming the legal conclusions set forth in (a) the first sentence
of Section 5.1 hereof, (b) the last sentence of Section 5.4 hereof,
----------- -----------
(c) Section 5.6(i) hereof, (d) the first two sentences of
--------------
Section 5.6(ii) hereof, and (e) Section 5.6(iii) hereof;
--------------- ----------------
(iii) a certificate of the secretary of each of the Sellers attesting
to the certificate of incorporation and bylaws of each Seller, the
resolutions of the Board of Directors and stockholders of each Seller
approving this Agreement and the transactions contemplated hereby, the
good standing of each Seller, the incumbency of the officers of each
Seller, the truth and accuracy of representations and warranties set
forth in Section 5, and the satisfaction of the conditions set forth
---------
in Section 8; and
---------
(iv) with respect to each Lease identified in Section 5.6 of the Due
Diligence Schedule as a "Required Lease", a landlord's certificate of
estoppel in customary form and substance reasonably acceptable to the
Buyer, executed by the lessor of the subject property and attesting to
the existence of the Lease, confirming the essential terms thereof,
confirming the absence of any defaults thereunder, and consenting
(where required by the terms of such Lease) to the assignment of the
Lease to the Buyer at the Closing.
7 EVIDENCE OF SATISFACTION OF THE SELLERS' OBLIGATIONS. The Buyer shall
have received from the Hong Kong Banks the Confirmation Letter, substantially in
the form attached hereto as Exhibit D, and the Sellers shall have furnished
---------
evidence satisfactory to the Buyer in its reasonable discretion of the
satisfaction or other discharge of all other liabilities and obligations of the
Sellers (or arrangements satisfactory to the Buyer therefor).
8 CHANGE OF NAMES. The Sellers shall have amended their respective
certificates of incorporation and taken all other actions necessary to change
their respective names to names other than "LIB-Com," "Liberty Bell" and
"Liberty Bell Christmas," "Ivy Mar," "Creative Home Products," or derivations
and variations thereof.
3. INDEMNIFICATION.
1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE PARTIES. All
representations and warranties made by the Sellers and the Buyer shall survive
the Closing Date and remain in full force and effect, regardless of any
investigation made by or on behalf of the Sellers or the Buyer, for a period of
two (2) years from and after the Closing Date, except that the Sellers'
representations and warranties set forth in Section 5.4 with respect to tax
-----------
matters shall survive until the expiration of the applicable statute of
limitations (the "Survival Period"); provided, however, that as to any claim of
--------------- -------- -------
breach or alleged breach of any agreement, covenant, representation or warranty
hereunder (a "Claim), notice of which Claim has been delivered prior to the date
-----
that the Survival Period would have otherwise expired, but which has not been
resolved by such date (whether by performance of an indemnifying party's
obligations under this Section 10, by adjudication, or otherwise), the Survival
----------
Period as to such representation and warranty (insofar as it relates to the
Claim) and the parties' obligations under this Section 10 shall be extended
----------
until final resolution of such Claim.
2 OBLIGATION OF THE SELLERS TO INDEMNIFY. Subject to the limitations
contained in Sections 10.7 and 10.8, the Sellers shall jointly and severally
------------- ----
indemnify, defend and hold harmless the Buyer and any of its parents,
subsidiaries, affiliates, successors and assigns from and against any and all
claims, actions, causes of action, damages, losses, liabilities, deficiencies,
costs or other expenses (including interest, penalties and reasonable attorneys'
fees) (collectively "Losses," and each a "Loss") arising out of or in any manner
------ ----
related to or due to:
(i) any breach of any representation, warranty, covenant or agreement
of the Sellers contained in this Agreement, in the Due Diligence
Schedule or in any document or other writing delivered pursuant
hereto;
(ii) any Excluded Liability;
(iii) any liability or obligation in respect of the Business or the
Purchased Assets (except Assumed Liabilities) incurred as a result of
or arising out of any action or inaction of Sellers or any person
acting by or on behalf of Sellers before the Closing Date, including
but not limited to any liability or obligation arising under any
theory of successor liability or otherwise as a result of the
consummation of the transactions contemplated by this Agreement;
(iv) any liability of Sellers resulting from one or more pending or
threatened lawsuits;
(v) any liability of Sellers to creditors of Sellers, other than the
Assumed Liabilities, which is imposed on Buyer whether as a result of
bankruptcy proceedings, judgments or otherwise and whether as an
account payable by Sellers or as a claim of alleged preferential
payments within the meaning of the United States Bankruptcy Code or
otherwise;
(vi) the existence of creditors of Sellers which are not disclosed to
Buyer; or
(vii) contesting the imposition of or complying with any injunction,
direction or restriction (except for those disclosed in writing to
Buyer prior to the Closing Date or disclosed in the Due Diligence
Schedule) on the free and unfettered use of, or adversely affecting,
the Purchased Assets by the Buyer.
3 OBLIGATION OF THE BUYER TO INDEMNIFY. Subject to the limitations
contained in Sections 10.7 and 10.8, the Buyer shall indemnify, defend and hold
------------- ----
harmless the Sellers and any of their parents, subsidiaries, affiliates,
successors and assigns from and against any Losses arising out of or in any
manner related to or due to:
(i) a breach of any representation, warranty, covenant or agreement
of the Buyer contained in this Agreement or in any document or other
writing delivered pursuant hereto;
(ii) any liability or obligation in respect of the Assumed Liabilities
or in respect of the Purchased Assets incurred after the Closing Date;
or
(iii) any liability or obligation of the Buyer under the Promissory
Note, as the same may be outstanding and in effect from time to time
after the Closing.
4 NOTICE AND RESOLUTION OF CLAIMS. An indemnified party hereunder shall
give written notice to the indemnifying party promptly of any claim after
receipt of notice of any lawsuit or other action or proceeding for which
recovery may be sought under Sections 10.2 or 10.3 above. If such indemnity
------------- ----
shall arise from the claim of a third party, each indemnified party shall permit
the indemnifying party to assume the defense of any such claim or any litigation
resulting from such claim with counsel reasonably acceptable to such indemnified
party. The indemnifying party assuming the defense of such litigation or claim
shall take all steps necessary in the defense or settlement of such claim or
litigation but shall obtain the written approval of each indemnified party prior
to any settlement that does not include a full and final release from any and
all liability associated with such claim or litigation.
5 DEFENSE OF THIRD PARTY CLAIMS. Failure by the indemnifying party to
notify the indemnified party of its election to defend any such claim or
litigation by a third party within ten (10) days after written notice thereof
shall have been given to the indemnifying party, shall be deemed a waiver by the
indemnifying party of its right to defend such claim or litigation. If the
indemnifying party does not assume the defense of any such claim by a third
party or any litigation resulting therefrom then the indemnified party may
defend against such claim or litigation in such manner as it may deem
appropriate and may settle such claim or litigation on terms as it may deem
appropriate.
6 PAYMENT. Upon final determination that a party is entitled to
indemnification under this Section 10 by the parties or by a final, non-
----------
appealable judgment of a court of competent jurisdiction, the indemnifying party
shall promptly reimburse the indemnified party for any Loss incurred.
7 LIMITS ON INDEMNIFICATION; DETERMINING AMOUNT OF LOSS. Anything in
this Agreement to the contrary notwithstanding, no payment shall be due to an
indemnified party pursuant to this Section 10 unless and until such party's
----------
aggregate Loss (net of (i) and (ii) below) shall at any time exceed $50,000,
whereupon such indemnified party shall be entitled to indemnification for the
full amount of such party's net Loss. A party shall be deemed to have suffered
a Loss or to have paid or to have become obligated to pay any sum in respect of
a Loss if the same shall be suffered, paid or incurred by the party or any
parent, subsidiary, affiliate, successor or assignee of such party. The amount
of each Loss shall be the aggregate amount suffered, paid or incurred by the
party and each such parent, subsidiary, affiliate, successor or assignee (net of
(i) and (ii) below). Payments by the indemnifying party pursuant to Section
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10.2 or Section 10.3 shall be limited to the amount of any Loss that remains
- ---- ------------
(i) after deducting therefrom any insurance proceeds and any indemnity,
contribution or other similar payment recovered by the applicable indemnified
party from any third party with respect thereto and (ii) after taking into
account any tax benefits actually realized or to be realized in respect of the
then current tax period by the party incurring the Loss, the determination of
which shall take into account the effect of such Loss, any indemnification
payments hereunder, and any insurance proceeds and indemnity, contribution or
other similar payment recovered by the applicable indemnified party from any
third party with respect thereto, (the purpose of clauses (i) and (ii) being to
assure that the effect of the indemnity is to fully compensate for the Loss but
not to produce any windfall benefit to the indemnified party).
8 OFFSETS; MITIGATION.
(i) In the event that any amount is or otherwise would be payable by the
Sellers to the Buyer or by the Buyer to the Sellers pursuant to any provision
(including but not limited to Section 3.2, Section 10.2 or Section 10.3) of this
----------- ------------ ------------
Agreement at a time when an offsetting amount also is or otherwise would be
payable by the Buyer to the Sellers or by the Sellers to the Buyer (whether
pursuant to this Agreement or otherwise), the parties shall be entitled to
offset the applicable amounts and to pay only the net amounts; provided such
--------
offset is only made after giving effect to the provisions of Section 10.7. In
------------
addition, the Buyer may elect to offset against the Shares, and in such event,
the Sellers (or any successor holder(s) of any of the Shares) shall be required
to cooperate with Jayark Corporation and its Transfer Agent to transfer to the
Buyer that number of the Shares (rounded to the nearest whole share) that has an
aggregate Value (as defined below) as of the date of the notice of the offset.
For purposes of this Section 10.8(i), the "Value" of the Shares shall be the
---------------
greater of $2.50 per share, or the Market Price per share, and "Market Price"
shall be the average of the closing price per share of Jayark Corporation Common
Stock as reported by NASDAQ (or any successor principal trading market for such
stock) for the five (5) consecutive trading days immediately preceding the third
(3rd) trading day immediately prior to the date as of which the Value is being
determined.
(ii) No party shall have any liability under any provision of this
Agreement for any Loss of the other party to the extent that such Loss relates
solely to actions taken by the other party or its affiliates after the Closing
Date. Any party claiming any Loss for which it seeks indemnification hereunder
shall take commercially reasonable steps to mitigate such Loss upon and after
becoming aware of any event which could reasonably be expected to give rise to
such Loss.
(iii) Until such time as a party incurs net Losses in excess of the
$50,000 threshold provided in Section 10.7 above is reached, the rights and
------------
remedies provided to the parties under this Section 10 shall be the sole and
----------
exclusive remedy available to the parties with respect to any matters referred
to in Section 10.2 and 10.3 hereof; and from and after such time, the rights and
------------ ----
remedies provided to the parties under this Section 10 are and shall be in
----------
addition to, and are not in limitation or substitution of, any other rights and
remedies available to the parties, whether under this contract, at law, or in
equity.
4. MISCELLANEOUS.
1 PUBLIC ANNOUNCEMENTS. Jayark Corporation will make a public press
announcement regarding the closing of this Agreement and other disclosures as
required by applicable law and the NASDAQ Stock Market. Except as required by
applicable law, Sellers shall not make any public announcement or otherwise
communicate with any news media in respect of this transaction or the other
transactions contemplated herein without prior notification to Buyer, and the
parties shall cooperate as to the terms and content of any such announcement by
Sellers.
2 NOTICES. All notices, requests, claims, demands and other
communications given or made pursuant hereto shall be in writing (and shall be
deemed to have been duly given or made upon receipt) by delivery in person, by
cable, by telecopy (with confirmation copy of such telecopied material delivered
in person or by registered or certified mail, postage prepaid, return receipt
requested) or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 11.2):
------------
if to the Buyer:
LCL International Traders, Inc.
c/o Jayark Corporation
6116 Skyline Drive
Suite 102
Houston, Texas 77057
Telecopy: (713) 783-7850
Attention: David L. Koffman
with a copy to:
Mayor, Day, Caldwell &
Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002-2778
Telecopy: (713) 225-7047
Attention: Geoffrey K. Walker, Esq.
If to the Sellers:
LIB-Com Ltd.
1150 Motor Parkway
Central Islip, New York 11722
Telecopy: (516) 582-8366
Attention: President
with a copy to:
Herrick, Feinstein LLP
Two Park Avenue
New York, New York 10016
Telecopy: (212) 889-7577
Attention: Michael Heitner, Esq.
5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral, between the Sellers
and the Buyer with respect to the subject matter hereof.
6 WAIVERS AND AMENDMENTS. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived only by a written instrument signed by the parties or, in the case
of a waiver, the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder, nor any single or partial exercise of any right, power or
privilege hereunder, preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. Except as otherwise
set forth in Section 10.8(iii) above, the rights and remedies herein provided
-----------------
are cumulative and are not exclusive of any rights or remedies which any party
may otherwise have at law or in equity. The rights and remedies of any party
arising out of or otherwise in respect of any inaccuracy in or breach of any
representation, warranty, covenant or agreement contained in this Agreement
shall in no way be limited by the fact that the act, omission, occurrence or
other state of facts upon which any claim of any such inaccuracy or breach is
based may also be the subject matter of any other representation, warranty,
covenant or agreement contained in this Agreement (or in any other agreement
between the parties) as to which there is no inaccuracy or breach.
7 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts
executed and to be performed in that State, regardless of laws that might
otherwise govern under applicable principles of conflicts of laws thereof. The
parties agree that state or federal courts in the State of New York shall have
exclusive jurisdiction over any litigation commenced by either party which has
as its basis this Agreement or any of the transactions contemplated hereunder,
and that all such litigation shall be instituted and maintained therein;
provided, however, that, until the sixth (6th) anniversary of the Closing, each
- -------- -------
of the Sellers shall appoint and maintain CT Corporation System or Prentice Hall
Legal and Financial Services as its registered agent for service of process
within the State of New York, and shall maintain its corporate existence, good
standing and qualifications and shall take all other actions as shall be
necessary or appropriate to remain within the jurisdiction of, and amenable to
suit in, such courts.
8 ASSIGNMENT. This Agreement or any portion thereof may be assigned by
the Buyer to one or more wholly-owned subsidiaries of the Buyer or Jayark
Corporation, provided that no such assignment shall relieve the Buyer from any
liability or obligation hereunder.
9 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
10 VARIATIONS IN PRONOUNS. All pronouns and any variations thereof refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
person or persons may require.
11 DUE DILIGENCE SCHEDULE. The Due Diligence Schedule is hereby made a
part of this Agreement as if set forth in full herein.
12 HEADINGS. The descriptive headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
13 NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole benefit
of the parties hereto and their permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other person or entity any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the Sellers and the Buyer have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
BUYER:
LCL INTERNATIONAL TRADERS, INC.
By /s/ David L. Koffman
---------------------------------
Name: David L. Koffman
Title: President
SELLERS:
LIB-COM LTD.
By /s/ Joel Margolin
--------------------------------------
Name: Joel Margolin
Title: President
LIBERTY BELL CHRISTMAS, INC.
By /s/ Joel Margolin
--------------------------------------
Name: Joel Margolin
Title: President
IVY MAR CO., INC.
By /s/ Joel Margolin
--------------------------------------
Name: Joel Margolin
Title: President
[Signatures continued on next page]
CREATIVE HOME PRODUCTS, INC.
By /s/ Joel Margolin
--------------------------------------
Name: Joel Margolin
Title: President
LIBERTY BELL CHRISTMAS REALTY, INC.
By /s/ Joel Margolin
--------------------------------------
Name: Joel Margolin
ASSET PURCHASE AGREEMENT
BETWEEN
AWARD MANUFACTURING CORPORATION
AS THE SELLER
and
LCL INTERNATIONAL TRADERS, INC.
AS THE BUYER
JUNE 5, 1995
TABLE OF CONTENTS
-----------------
Page
----
1. Sale of Assets........................................... 1
1.1 Assets to be Sold................................... 1
1.2 Excluded Assets..................................... 2
1.3 Instruments of Conveyance........................... 2
2. Assumption of Business Liabilities....................... 3
2.1 No General Assumption of Liabilities by the Buyer... 3
2.2 Assumed Liabilities................................. 3
2.3 Instruments of Assumption........................... 3
3. Purchase Price........................................... 4
3.1 Purchase Price...................................... 4
3.2 Allocation of Purchase Price........................ 4
4. Closing.................................................. 4
5. Representations and Warranties of the Seller............. 4
5.1 Due Incorporation and Qualification................. 4
5.2 Subsidiaries........................................ 4
5.3 Records of the Seller............................... 5
5.4 Lawsuits............................................ 5
5.5 Authority to Execute and Perform Agreements; Required Consents
5
5.6 Real Estate......................................... 6
5.7 Employee Benefits................................... 6
5.8 No Broker........................................... 6
5.9 Title............................................... 6
5.10 Compliance with Laws; Illegal Payments.............. 6
5.11 Inventory........................................... 7
5.12 Licenses and Permits................................ 7
5.13 Special Relationships and Arrangements.............. 7
5.14 Due Diligence Matters............................... 7
6. Representations and Warranties of the Buyer.............. 8
6.1 Incorporation and Authority of the Buyer............ 8
6.2 No Conflict......................................... 8
6.3 Consents and Approvals.............................. 8
6.4 Absence of Litigation............................... 8
6.5 No Broker........................................... 9
6.6 Acknowledgement Regarding Financial Information..... 9
6.7 Other Information................................... 9
7. Covenants and Agreements................................. 10
7.1 Conduct of Business Prior to the Closing............ 10
7.2 Access to Information............................... 11
7.3 Regulatory and Other Authorizations; Consents....... 11
7.4 Expenses of Sale.................................... 12
7.5 Books and Records; Post-Closing Cooperation......... 12
7.6 Treatment of Certain Merchandise Orders............. 13
7.7 Further Assurances.................................. 13
7.8 Payment of Liabilities.............................. 13
7.9 Corporate Names..................................... 13
7.10 Confidentiality..................................... 13
7.11 Exclusive Dealing................................... 13
8. Conditions Precedent to the Obligations of the Seller to Close 14
8.1 Representations and Warranties; Covenants........... 14
8.2 No Order............................................ 14
8.3 Consents............................................ 14
8.4 Delivery of Closing Documents and Purchase Price.... 14
9. Conditions Precedent to the Obligations of the Buyer to Close 15
9.1 Due Diligence Schedule; Representations and Warranties;
Covenants........................................... 15
9.2 No Order............................................ 15
9.3 Consents............................................ 16
9.4 Approval of Board of Directors...................... 16
9.5 Financing........................................... 16
9.6 Guarantees.......................................... 16
9.7 Delivery of Closing Documents....................... 16
9.8 Evidence of Satisfaction of the Seller's Obligations. 16
9.9 Changes of Names.................................... 17
10. Indemnification.......................................... 17
10.1 Survival of Representations and Warranties of the Parties 17
10.2 Obligation of the Seller To Indemnify............... 17
10.3 Obligation of the Buyer To Indemnify................ 18
10.4 Notice and Resolution of Claims..................... 18
10.5 Defense of Third Party Claims....................... 18
10.6 Payment............................................. 18
10.7 Limits on Indemnification; Determining Amount of Loss 18
10.8 Offsets; Mitigation................................. 19
11. Miscellaneous............................................ 19
11.1 Public Announcements................................ 19
11.2 Notices............................................. 20
11.3 Entire Agreement.................................... 21
11.4 Waivers and Amendments.............................. 21
11.5 Governing Law....................................... 22
11.6 Assignment.......................................... 22
11.7 Severability........................................ 22
11.8 Variations in Pronouns.............................. 22
11.9 Exhibits and Due Diligence Schedules................ 22
11.10...............................................Headings 22
11.11...........................No Third-Party Beneficiaries 22
11.12...........................................Counterparts 22
EXHIBITS
Exhibit A Release Agreement
Exhibit B Guarantee Agreement of Seller
Exhibit C Guarantee Agreement of LIB-Com Sellers
Exhibit D Supplemental Letter Agreement
Exhibit E Confirmation Agreement
CONTENTS OF DUE DILIGENCE SCHEDULE
Section 1.1..............................Certain Purchased Assets
Section 1.2.......................................Excluded Assets
Section 2.2...................................Assumed Liabilities
Section 5.1..........................Qualification; Jurisdictions
Section 5.2..........................................Subsidiaries
Section 5.4..............................................Lawsuits
Section 5.5..........................Authority; Required Consents
Section 5.9......................................Title Exceptions
Section 5.14................................Due Diligence Matters
Section 7.6....................................Merchandise Orders
Pursuant to Item 601(b)(2) of Regulation S-K, the registrant has omitted
schedules (or similar attachments) to this document. The registrant will
furnish supplementally a copy of any omitted schedule to the Commission upon
request.
ASSET PURCHASE AGREEMENT
------------------------
This ASSET PURCHASE AGREEMENT dated June 5, 1995 (this "Agreement") by and
---------
between AWARD MANUFACTURING COMPANY, a British Virgin Islands company (the
"Seller"), and LCL INTERNATIONAL TRADERS, INC., a Delaware corporation (the
------
"Buyer") that is wholly owned by JAYARK CORPORATION, a Delaware corporation,
-----
WITNESSETH:
----------
WHEREAS, the Seller is engaged in the business of purchasing, exporting to
the United States and marketing various seasonal and other merchandise items, in
selling such items at wholesale, and in acting as a sourcing agent with respect
to such items (such business being herein collectively referred to as the
"Business"); and
--------
WHEREAS, the Buyer desires to purchase from Seller, and the Seller desires
to sell to the Buyer, substantially all of the assets that are used to conduct
the Business, and the Seller desires to transfer to the Buyer, and the Buyer has
agreed to assume, certain liabilities of the Seller relating to the Business,
all pursuant to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
1. SALE OF ASSETS.
1 ASSETS TO BE SOLD. Except as otherwise provided in Section 1.2 below,
-----------
at the Closing (as defined in Section 4 below) the Seller shall grant, convey,
---------
sell, assign, transfer and deliver to the Buyer, and the Buyer shall purchase
and receive, all of the Seller's rights, properties, assets, claims, goodwill,
contracts and businesses of every kind, character and description, whether
tangible or intangible, whether real, personal or mixed, whether accrued,
contingent or otherwise, and wherever located which are used in or are related
to the Business (collectively, the "Purchased Assets"), which shall include,
----------------
without limitation, the following as of the Closing Date (as defined in
Section 4 below):
- ---------
(i) all of the Seller's accounts (as defined in Article 9 of the
Uniform Commercial Code as in effect in the State of New York),
including but not limited to those accounts listed or otherwise
identified in Section 1.1(i) of the Due Diligence Schedule (as
described in more detail in Sections 7.2 and 9.1 hereof), and all
------------ ---
rights (including all rights of rescission, replevin, reclamation and
stoppage in transit, and rights to returned, reclaimed or repossessed
goods) with respect thereto and all proceeds thereof (collectively,
the "Accounts Receivable");
-------------------
(ii) all of the Seller's rights in and under permits, contracts,
purchase and sale orders, quotations and other agreements relating to
the Business to which the Seller is a party or in which the Seller has
any interest on the Closing Date and (A) which shall be listed in
Section 1.1(ii) or 7.6 of the Due Diligence Schedule or (B) which are
expressly assumed by Buyer by Buyer's delivery to Seller prior to the
Closing Date of a written notice to that effect (collectively, the
"Assumed Contracts");
-----------------
(iii) all advertising and promotional materials, customer lists, credit
information, cost and pricing information, supplier lists, business
plans, reference and sales catalogs, and other similar property,
information and rights (including any andall proprietary information)
relating to the Business;
(iv) all technology, trade secrets, know-how and other similar data or
information (including any and all proprietary information) owned by
the Seller and relating to the Business; and
(v) all of the Seller's cash and cash equivalents, including but not
limited to bank accounts, funds in transit or in the process of
collection, certificates of deposit, instruments and securities (other
than stock of subsidiaries).
2 EXCLUDED ASSETS. Anything in Section 1.1 to the contrary
-----------
notwithstanding, there shall be excluded from the meaning of the term "Purchased
Assets" and from the assets, properties, rights and business to be transferred
and sold to the Buyer at the Closing hereunder the following (collectively, the
"Excluded Assets"):
---------------
(i) those accounts receivable and other assets, properties, claims
and rights, as set forth in Section 1.2 of the Due Diligence Schedule;
(ii) all accounts receivable of the Seller from Asia Pacific
Industries Corp., A.P. Trading Ltd. and its subsidiaries including,
without limitation, Am-World Co., Ltd., and account debtors in
bankruptcy as of the date hereof;
(iii) all refunds and receivables from tax returns filed or to be filed
by the Seller;
(iv) all tax returns, corporate minutes, seals and stock books of the
Seller; and
(v) all recoveries under pending litigation, and from those
bankruptcy or insolvency proceedings of account debtors listed in
Section 1.2 of the Due Diligence Schedule.
3 INSTRUMENTS OF CONVEYANCE. In order to effectuate the grant,
conveyance, sale, assignment, transfer and delivery contemplated by Section 1.1
-----------
above, the Seller will execute and deliver at the Closing a Bill of Sale and
Assignment in customary form and substance reasonably satisfactory to the Buyer
and the Seller (the "Bill of Sale and Assignment"), dated the Closing Date, and
---------------------------
at the Closing and thereafter from time to time as reasonably requested by the
Buyer or the Seller such other bills of sale and other documents or instruments
of assignment, transfer or conveyance (collectively, including the Bill of Sale
and Assignment, referred to herein as the "Conveyance Documents") as shall be
--------------------
effective to vest in or confirm to the Buyer good and marketable title to the
Purchased Assets.
2. ASSUMPTION OF BUSINESS LIABILITIES.
1 NO GENERAL ASSUMPTION OF LIABILITIES BY THE BUYER. Except for the
Assumed Liabilities as defined in and as set forth in Section 2.2 and except as
-----------
otherwise disclosed in the Due Diligence Schedule, Seller shall transfer the
Purchased Assets to Buyer free and clear of all liabilities, claims, charges,
liens, security interests and encumbrances and without any assumption by Buyer
of any liabilities or obligations of the Seller; and specifically, but without
limiting any of the foregoing, Buyer shall not assume or in any way be liable or
responsible for the following (which, with all other liabilities and obligations
of Seller that are not expressly assumed by Buyer hereunder, are collectively
referred to as the "Excluded Liabilities"):
--------------------
(i) any liability or obligation of the Seller arising out of or in
connection with the negotiation and preparation of this Agreement and
the consummation and performance of the transactions contemplated
hereby;
(ii) any liability, indebtedness or obligation of the Seller to
Citibank, N.A., Bank of America, N.A., Commerzbank AG, Bayerische
Vereinsbank AG (collectively, the "Hong Kong Banks"), or any other
---------------
bank in respect of any guarantees by the Seller of obligations of LIB-
Com Ltd., Liberty Bell Christmas, Inc., Ivy Mar Co., Inc., Creative
Home Products, Inc. or Liberty Bell Christmas Realty, Inc.
(collectively, the "LIB-Com Sellers") to such banks; and
---------------
(iii) any and all taxes based on income payable in respect of the
operation of the Business up to and including the Closing Date.
2 ASSUMED LIABILITIES. Notwithstanding the foregoing, as of the Closing
Date Buyer shall assume, and hereby covenants and agrees to timely perform, pay
or discharge in accordance with their terms, the following liabilities and
obligations of the Seller (collectively, the "Assumed Liabilities"):
-------------------
(i) all liabilities and obligations under the Assumed Contracts, but
only to the extent that the same are disclosed on the face of such
Assumed Contracts as furnished to the Buyer or have been otherwise
disclosed in writing to the Buyer; and
(ii) those other liabilities and obligations of the Seller as (but
only to the extent) set forth in Section 2.2 of the Due Diligence
Schedule.
3 INSTRUMENTS OF ASSUMPTION. In order to effectuate the assumption and
transfer of the Assumed Liabilities contemplated by Section 2.2 above, the Buyer
-----------
and the Seller will execute and deliver at the Closing one or more Assignment
and Assumption Agreements, each in customary form and substance reasonably
satisfactory to the Buyer and the Seller (the "Assignment and Assumption
-------------------------
Agreements"), dated the Closing Date, and at the Closing and thereafter from
- ----------
time to time as reasonably requested by the Buyer or the Seller shall execute
and deliver all other instruments of assumption and other documents as shall be
sufficient to confirm the assignment to the Buyer of, and the Buyer's obligation
to duly assume and timely pay, perform and discharge in accordance with their
terms, the Assumed Liabilities (collectively, including the Assignment and
Assumption Agreements, referred to herein as the "Assumption Documents").
--------------------
3. PURCHASE PRICE.
1 PURCHASE PRICE. The aggregate consideration to be paid by the Buyer
to the Seller for the Purchased Assets (the "Purchase Price") shall be:
--------------
(i) Four Hundred Thousand Dollars ($400,000), payable on the Closing
Date by wire transfer of immediately available funds; and
(ii) the assumption by Buyer of the Assumed Liabilities.
2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets as determined by the Buyer after reasonable
consultation with the Seller. The parties agree that for tax reporting
purposes, all parties hereto shall report this transaction consistent with such
allocation.
4. CLOSING. The consummation of the transactions contemplated hereby
(the "Closing") shall take place immediately upon satisfaction of the conditions
-------
set forth in Sections 8 and 9 hereof at the offices of Herrick, Feinstein LLP,
---------- -
Two Park Avenue, New York, New York 10016, or at such other time and place as
the Seller and the Buyer may mutually agree upon in writing (the day on which
the Closing takes place being the "Closing Date"); provided, however, that if
------------ -------- -------
the Closing shall not have occurred by July 15, 1995, this Agreement and the
rights and obligations of each of the parties hereunder (except for the
confidentiality provisions in 7.10) shall be null and void. The consummation of
----
the transactions contemplated hereby shall be effective as of the Closing Date.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller makes the
following representations and warranties to the Buyer to induce the Buyer to
enter into and perform this Agreement, all of which are true and correct as of
the date hereof and shall be true and correct as of the Closing Date (except
that representations and warranties made as of a specified date are true and
correct as of such date):
1 DUE INCORPORATION AND QUALIFICATION. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the British
Virgin Islands. The Seller is qualified to transact business and is in good
standing in each jurisdiction set forth in Section 5.1 of the Due Diligence
Schedule. The Seller does not own or lease tangible property. The Seller has
not used, been known as, or done business under, any names or identities other
than those set forth in Section 5.1 of the Due Diligence Schedule.
2 SUBSIDIARIES. Except as set forth in Section 5.2 of the Due Diligence
Schedule, the Seller does not, directly or indirectly, own or have the power to
vote, or to exercise a controlling influence with respect to, fifty percent
(50%) or more of the securities of any corporation, association, partnership,
joint venture or other entity.
3 RECORDS OF THE SELLER. The copies of the Certificate of Incorporation
and By-laws of Seller, and all amendments to each, and the records of actions of
Seller's Board of Directors and stockholders authorizing the transactions
contemplated by this Agreement have been, or at the Closing Date shall have
been, delivered to the Buyer and are, or at the Closing Date shall have been,
true, correct and complete.
4 LAWSUITS. Except as set forth in Section 5.4 of the Due Diligence
Schedule, there are no claims, actions, suits or proceedings pending or, to the
knowledge of the Seller, threatened, and there are no consent decrees,
settlements or judgments effective, against the Seller or affecting its
properties or businesses, at law or in equity or before or by any governmental
department, commission, board, bureau, agency or instrumentality. The Seller is
not in default with respect to any order, writ, injunction or decree of any
court or other governmental department, commission, board, bureau, agency or
instrumentality including but not limited to the Federal Trade Commission or
U.S. Customs Service. The Seller has furnished to the Buyer, or will have
furnished to the Buyer prior to the Closing, copies of all material pleadings
that have been filed in each of the pending court proceedings related to or
arising out of each of the material matters described in Section 5.4 of the Due
Diligence Schedule.
5 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS; REQUIRED CONSENTS.
(i) The Seller has the full legal right and power and all authority and
approvals required to enter into, execute and deliver this Agreement and to
perform fully the Seller's obligations hereunder.
(ii) This Agreement has been duly executed and delivered by the Seller
(assuming due authorization, execution and delivery by the Buyer) and
constitutes the valid and binding obligation of the Seller enforceable against
it in accordance with its terms, except to the extent the enforcement hereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the rights of creditors and subject to general principles
of equity and equitable remedies. This Agreement has been duly and unanimously
approved by the Board of Directors and the stockholders of Seller. No approval
or consent of any governmental or regulatory body is required in connection with
the execution and delivery by the Seller of this Agreement and the consummation
and performance by the Seller of the transactions contemplated hereby, including
the assignment and assumption of the Assumed Contracts, except (a) as described
in Section 5.5 of the Due Diligence Schedule or (b) as may be necessary as a
result of any facts or circumstances relating solely to the Buyer.
(iii) Assuming that all consents, approvals, exemptions and other
similar types of actions described in Section 5.5 of the Due Diligence Schedule
have been obtained and all filings and notifications listed in the Due Diligence
Schedule have been made, except as may result from any facts or circumstances
relating solely to the Buyer, the execution and delivery of this Agreement, the
consummation of the transactions contemplated under this Agreement, and the
performance by the Seller of this Agreement in accordance with its terms and
conditions will not conflict with or result in the breach or violation of any of
the terms or conditions of, or constitute (or with notice or lapse of time or
both constitute) a default under (a) the Certificate of Incorporation or By-Laws
of the Seller; or (b) any statute or any regulation, order, judgment or decree
of any court or governmental or regulatory body.
6 REAL ESTATE. The Seller does not own, lease, or have any option,
contract or obligation to acquire any interest in, any real property.
7 EMPLOYEE BENEFITS. Seller has no employees. Seller does not
maintain, in whole or in part, contribute to, is not required to contribute to,
and in the six years prior to the date hereof has not maintained in whole or in
part, contributed to or been required to contribute to, any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical, dependent care, cafeteria,
employee assistance, scholarship or other plan, program, arrangement or
understanding (whether or not legally binding) providing benefits to any current
or former employee, officer or director of Seller, including, but not limited to
"employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and "employment
-----
welfare benefit plans" (as defined in Section 3(1) of ERISA) for the benefit of
any present or former officers, employees or directors of such Seller.
8 NO BROKER. Except for FINANCO, INC., no broker, finder, agent or
similar intermediary has acted for or on behalf of the Seller in connection with
this Agreement or the transactions contemplated hereby, and no broker, finder,
agent or similar intermediary is entitled to any broker's, finder's or similar
fee or other commission in connection therewith based on any agreement,
arrangement or understanding with the Seller or any action taken by the Seller.
The Seller is solely responsible for the fees and expenses of FINANCO, INC.
Copies of Seller's engagement letter and all other contracts, agreements or
arrangements with FINANCO in connection with this Agreement and transactions
contemplated hereby have been provided to Buyer.
9 TITLE. Except as set forth in Section 5.9 of the Due Diligence
Schedule:
(i) the Seller has and at the Closing is delivering to the Buyer
good, valid and marketable title to the Purchased Assets, free and
clear of any lease or conditional sales contract, security agreement,
lien, encumbrance, charge, equity or claim; and
(ii) by delivery to the Buyer of the Conveyance Documents, the Seller
shall convey to the Buyer and the Buyer shall receive good, valid and
marketable title to all of the Purchased Assets free and clear of all
liens, encumbrances, charges, equities and claims.
10 COMPLIANCE WITH LAWS; ILLEGAL PAYMENTS. The Business has been
conducted in all material respects in accordance and in compliance with all
applicable laws, ordinances, rules and regulations. No part of the Business is
dependent upon, or results from, any payments, direct or indirect, in the nature
of bribes, kick-backs, or similar payments to any government or agency thereof
or to any other person in the nature of contributions to any domestic or foreign
political party or candidate, no illegal payments have been made by or on behalf
of the Seller or otherwise in connection with the Business, and there has been
no violation of the Foreign Corrupt Practices Act. The Seller is not and has
never been required to file any tax returns or reports or to pay any taxes.
11 INVENTORYSeller owns no inventory.
12 LICENSES AND PERMITS. Seller holds no, and there are no, licenses or
permits required, pursuant to any applicable statute, law, regulation or
authority for the conduct of the Business.
13 SPECIAL RELATIONSHIPS AND ARRANGEMENTS. The Seller has special
relationships and arrangements with its agents and suppliers including, without
limitation, those for fees, mark-ups, commissions, defective merchandise
adjustments, rebates, and charge-ups for banking, letters of credit, cargo
insurances and shipping fees, which may not continue, and (except to the extent
such relationships and arrangements are Assumed Contracts) the Buyer will have
no obligation or right to maintain, and may not benefit from, such relationships
and arrangements after the Closing.
14 DUE DILIGENCE MATTERS. Except as disclosed in Section 5.14 of the Due
Diligence Schedule:
(i) As of the Closing Date, the Seller has had the opportunity to
assist the Buyer in the Buyer's due diligence investigation of the
Business and in the Buyer's preparation of the Due Diligence Schedule,
has reviewed the Due Diligence Schedule delivered by the Buyer at the
Closing pursuant to Section 8.4(ii) and has had the opportunity to
---------------
make such amendments or corrections to the Due Diligence Schedule as
the Seller considers necessary to make the Due Diligence Schedule
true, correct and complete.
(ii) Subject to Section 6.6, as of the Closing Date, the Seller has
-----------
furnished the Buyer with, and has given the Buyer access to, all
information, including but not limited to all business, financial, and
operating books and records, documents, instruments, contracts,
agreements, schedules, computer files, and other materials as
requested by the Buyer, and has given the Buyer access to the Seller's
facilities, officers and employees in connection with the Buyer's due
diligence investigation.
(iii) Subject to Section 6.6, all information, including but not
-----------
limited to copies of the Assumed Contracts, furnished to the Buyer by
the Seller and its representatives in connection with the Buyer's due
diligence investigation and the Buyer's preparation of the Due
Diligence Schedule is true, correct, and complete, and all copies of
documents, instruments, agreements, contracts and other materials
furnished to Buyer (including but not limited to the Assumed
Contracts) shall be true, correct and complete copies of the originals
of such materials.
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer makes the
following representations and warranties to the Seller to induce the Seller to
enter into and perform this Agreement, all of which are true and correct as of
the date hereof and shall be true and correct as of the Closing Date (except
that representations and warranties expressly made as of a specified date are
true and correct as of that date).
1 INCORPORATION AND AUTHORITY OF THE BUYER. The Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of
Delaware and has, or as of the Closing Date will have, all necessary corporate
power and authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Buyer, and (assuming due
authorization, execution and delivery by the Seller and approval by the Board of
Directors of the Buyer) constitutes or will constitute a legal, valid and
binding obligation of the Buyer enforceable against the Buyer in accordance with
its terms, except to the extent the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the rights of creditors and subject to general principles of equity
and equitable remedies. The Board of Directors of the Buyer has approved, or as
of the Closing Date will have approved, the transactions contemplated by this
Agreement and has authorized, or as of the Closing Date will have authorized,
the execution and delivery of this Agreement by the Buyer. No approval of this
Agreement and the transactions contemplated hereby by the Buyer's stockholder is
required.
2 NO CONFLICT. The execution, delivery and performance of this
Agreement by the Buyer does not and will not (i) violate or conflict with the
Certificate of Incorporation or By-laws of the Buyer, (ii) conflict with or
violate any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to the Buyer, or (iii) except as will not
prevent the Buyer from consummating the transactions contemplated by this
Agreement, violate or conflict with any instrument, contract or other agreement
to which the Buyer is a party or to which Buyer or any of its assets or
properties is bound or subject.
3 CONSENTS AND APPROVALS. The execution and delivery of this Agreement
by the Buyer does not, and the performance of this Agreement by the Buyer will
not, require any consent, approval, authorization or other action by, or filing
with or notification to, any governmental or regulatory authority, except as may
be necessary as a result of any facts or circumstances relating solely to the
Seller.
4 ABSENCE OF LITIGATION. There are no claims, actions, suits or
proceedings pending or, to the knowledge of Buyer, threatened, and there are no
consent decrees, settlements or judgments effective, against the Buyer or its
properties or businesses, 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 seek to delay or prevent
the consummation of, or which would be reasonably likely to adversely affect the
Buyer's ability to consummate, the transactions contemplated hereby.
5 NO BROKER. Except as may otherwise be applicable pursuant to Jayark
Corporation's engagement letter with Ladenburg, Thalmann & Co., Inc., no broker,
finder, agent or similar intermediary has acted for or on behalf of the Buyer in
connection with this Agreement or the transactions contemplated hereby, and no
broker, finder, agent or similar intermediary is entitled to any broker's,
finder's, or similar fee or other commission in connection therewith based on
any agreement, arrangement or understanding with the Buyer or any action taken
by the Buyer. The Buyer is solely responsible for the fees and expenses of
Ladenburg, Thalmann & Co., Inc. Copies of the Buyer's engagement letter with
Ladenburg, Thalmann & Co., Inc. and all other contracts, agreements or
arrangements with Ladenburg, Thalmann & Co., Inc. in connection with this
Agreement and transactions contemplated hereby have been provided to the Seller.
6 ACKNOWLEDGEMENT REGARDING FINANCIAL INFORMATION. In connection with
its due diligence investigation, the Buyer has been furnished with certain
audited and unaudited financial statements for the Seller and, to the Buyer's
knowledge, the Seller has provided to the Buyer access to the Seller's
accounting and financial records as the Buyer has requested. The Buyer
acknowledges that the Seller is making no representation or warranty with
respect to the audited or unaudited financial statements. Nothing in this
Section 6.6 shall be construed to limited the Seller's representations and
- -----------
warranties to the Buyer.
7 OTHER INFORMATION. The Buyer has been advised by the Seller that the
results of the Seller's operations for the Seller's fiscal year commencing on
May 1, 1994 have been substantially and adversely affected by, among other
things, the bankruptcy of two large customers of LIB-Com Ltd. and its
subsidiaries and as a result of former employees of LIB-Com Ltd. and its
subsidiaries leaving the employ of LIB-Com Ltd. and its subsidiaries,
establishing a new company, and diverting a substantial volume of business away
from the Seller. In addition, the Buyer has been advised by the Seller that
Robert Gerdoney and Peter Phillips, two former employees and officers of LIB-Com
Ltd. and its subsidiaries, have left their employment with LIB-Com Ltd. and its
subsidiaries.
As of the Closing Date only and assuming satisfaction of the conditions set
forth in Section 9 hereof, the Buyer represents and warrants that (i) it has
---------
made its own inquiry and investigation into, and based thereon has formed an
independent judgment concerning, the assets, liabilities, past performance and
future prospects of the Seller and the Business, (ii) it has, to Buyer's
knowledge, been furnished with or given adequate access to such information
about the assets and liabilities of Seller and the Business as it has requested,
and (iii) the Purchase Price negotiated between the Seller and the Buyer
accounts for and reflects each of the items disclosed in this Agreement and the
Due Diligence Schedule; provided, however, that no investigation by the Buyer
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and no provisions of this Section 6.6 shall be deemed to relieve the Seller from
-----------
any liability or obligation it would otherwise have, pursuant to this Agreement
or otherwise.
7.
8.
9. COVENANTS AND AGREEMENTS. The parties covenant and agree as follows:
1 CONDUCT OF BUSINESS PRIOR TO THE CLOSING.
(i) The Seller covenants and agrees that, from the date hereof until the
Closing, it shall conduct the Business in the ordinary course and (subject to
Section 7.1(ii) below) consistent with prior practice, use commercially
- ---------------
reasonable efforts to preserve substantially intact the business organization of
the Business, and preserve the current relationships of the Seller with its
important customers and suppliers and other persons with whom the Seller has
significant business relationships.
(ii) The Buyer expects and currently intends that, within ten (10) business
days after the date of this Agreement, the Buyer will provide or arrange for
letters of credit or other financing in an amount of at least $1,000,000, in
such forms and on such terms and conditions as the Buyer in its sole discretion
shall deem appropriate (the "Interim Financing") to be used by the Sellers in
-----------------
the operations of the Business. To induce the Buyer to provide or arrange for
the Interim Financing, the Seller covenants and agrees that, from and after the
date hereof and up to and including the Closing Date, the Seller will not,
except with the prior approval of at least one Buyer Representative (as defined
below), or alternatively, except in compliance with any policies or procedures
that may be established with respect to the following and that shall be approved
by at least one Buyer Representative:
(a) pay or incur any obligation or liability, or make any expenditure,
cash withdrawal or payment of any nature whatsoever, or take any other
action that would have the effect of reducing the amount of the
Seller's cash from that which would have been on hand in the absence
of the taking of such action;
(b) enter into, renew, extend or modify any arrangement for borrowed money
or any factoring agreement or otherwise become further indebted in any
manner or in any amount whatsoever;
(c) enter into, renew, extend or modify any contract or agreement for the
purchase of any goods or services, including but not limited to
inventory;
(d) enter into, renew, extend or modify any contract or agreement for the
sale, consignment, or transfer of any inventory;
(e) establish or incur any liability in respect of any new letters of
credit or make any draws on or in respect of any existing letters of
credit, or draw any cash under or otherwise incur any liability under
the CIT Group/Factoring, Inc. agreement or other financing or
factoring agreement arrangements;
in each case regardless of whether any such transaction is or would have been in
the ordinary course of business prior to the date of this Agreement. For
purposes of this Section 7.1(ii), the "Buyer Representatives" shall be Mr. Clay
---------------
Whitehead and Mr. David L. Koffman.
The Seller's covenants set forth in this Section 7.1(ii) shall be effective
---------------
immediately upon execution of this Agreement; provided, however, that in the
-------- -------
event that the Buyer determines not to provide or arrange for the Interim
Financing within ten (10) business days of the date of this Agreement, the
Seller's covenants in this Section 7.1(ii) shall terminate and be of no further
---------------
force or effect. The Seller agrees that the only result of the Buyer's
determination not to provide or arrange for the Interim Financing shall be the
termination of the Seller's covenants in this Section 7.1(ii), that Buyer has no
---------------
obligation to provide or arrange for the Interim Financing, that the Buyer's
determination not to provide or arrange for the Interim Financing shall not give
the Seller any right to modify the terms of or terminate this Agreement or any
right to claim indemnification from the Buyer pursuant to Section 10.3, and that
------------
the Buyer shall have no responsibility or obligation for any Losses (as defined
in Section 10.2) that the Sellers may incur as a result of the Buyer's
------------
determination not to provide or arrange for the Interim Financing.
2 ACCESS TO INFORMATION. From and after the date hereof, and through the
Closing Date, the Buyer will continue to conduct a due diligence investigation
of the Business, and shall prepare the Due Diligence Schedule which shall set
forth all information provided to the Buyer by the Seller in the course of the
Buyer's due diligence investigation and that is required by the terms of this
Agreement to be set forth thereon. Accordingly, from and after the date hereof
until the Closing, upon reasonable notice, the Seller shall, and shall cause its
officers, directors, employees, auditors and agents to:
(i) afford the officers, employees and authorized agents and
representatives of the Buyer reasonable access during normal business
hours to the offices, properties, books and records of the Seller;
(ii) furnish to the officers, employees and authorized agents and
representatives of the Buyer such additional financial and operating
data and other information regarding the assets, properties, goodwill
and business of the Seller as the Buyer may from time to time
reasonably request; and
(iii) shall otherwise cooperate with and assist the Buyer in connection
with the Buyer's due diligence investigation and preparation of the
Due Diligence Schedule;
provided, however, that such investigation shall be conducted in such a manner
- -------- -------
as not to interfere unreasonably with any of the Business of the Seller. The
Buyer shall afford the Seller the opportunity to assist in the preparation of
the Due Diligence Schedule, shall furnish the Due Diligence Schedule to the
Seller prior to or at the Closing, and the Seller shall make such amendments,
supplements, or corrections as shall be necessary to make the Due Diligence
Schedule true, correct and complete as of the Closing Date.
3 REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS. From the date hereof
until the Closing, each party hereto will use commercially reasonable efforts to
obtain all authorizations, consents, orders and approvals of all regulatory
bodies and officials that may be or become necessary for its execution and
delivery of, and the performance of its obligations pursuant to, this Agreement
and will cooperate with the other parties' efforts in obtaining such
authorizations, consents, orders and approvals.
4 EXPENSES OF SALE. The Seller and the Buyer agree that all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, shall be paid by the party
incurring such costs and expenses. All transfer, documentary, gross receipts,
sales and use taxes, if any, resulting from the sale, assignment, transfer and
delivery hereunder of the Purchased Assets shall be paid by the Seller.
5 BOOKS AND RECORDS; POST-CLOSING COOPERATION.
(i) The Buyer agrees that it shall preserve and keep all books and records
of the Seller in the Buyer's possession for a period of at least six (6) years
from the Closing Date. After such six (6) year period, before the Buyer shall
dispose of any of such books and records, at least thirty (30) calendar days'
prior written notice to such effect shall be given by the Buyer to the Seller,
and the Seller shall be given an opportunity, at its cost and expense, to remove
and retain all or any part of such books and records as the Seller may select.
(ii) After the Closing, upon reasonable notice, the Buyer shall give the
officers, attorneys, accountants and other authorized representatives of the
Seller access, during normal business hours, to the books and records of the
Seller related to the Business prior to the Closing and the assets sold to, and
liabilities assumed by, the Buyer hereunder, and the Buyer shall permit such
persons to examine and copy such books and records to the extent reasonably
requested by the Seller in connection with the preparation of the Seller's tax
and financial reporting matters; provided that such access does not disrupt the
--------
normal operation of the Business and that the parties granted such access are
subject to confidentiality agreements reasonably acceptable in form and
substance to Buyer. After the Closing, the Buyer will cause its employees and
agents to cooperate fully with the Seller in connection with such reasonable
examination and copying of the books and records of the Buyer related to the
Business so long as such cooperation does not disrupt the normal operation of
the Business and that the parties granted such access are subject to
confidentiality agreements reasonably acceptable in form and substance to Buyer.
In connection with any claim or litigation in respect of the Business as
conducted on or prior to the Closing Date with respect to which the Seller has
been or shall become engaged or participate, the Buyer shall cooperate in all
reasonable respects with the Seller, including, without limitation, making
available to the Seller relevant records or employees of the Buyer who may be
helpful with respect to such claim or litigation. The Seller shall reimburse
the Buyer for any reasonable out-of-pocket expenses (excluding any costs for
internal personnel and overhead of the Buyer) incurred by the Buyer in
connection with any cooperation provided pursuant to this Section 7.5.
-----------
(iii) After the Closing, the Seller shall grant access to its books and
records and cooperate in all reasonable respects with the Buyer in connection
with any audit of Seller's books and records that Buyer requests in connection
with the Buyer's reporting obligations under the rules and regulations of the
Securities and Exchange Commission.
6 TREATMENT OF CERTAIN MERCHANDISE ORDERS. The Buyer covenants and
agrees that from and after the Closing the Buyer shall pay for all merchandise
orders placed by the Seller on or prior to the Closing Date which either
(i) have been furnished to the Buyer for inspection prior to
execution of this Agreement, or
(ii) are disclosed in Section 7.6 of the Due Diligence Schedule,
and in either event are satisfactory to the Buyer, by either replacing any
existing letters of credit issued on behalf of the Seller with respect to such
merchandise orders or by paying for such merchandise within a reasonable time
period before such merchandise is to be shipped.
7 FURTHER ASSURANCES. Each of the parties shall execute such Conveyance
Documents and other papers and perform such further acts as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.
8 PAYMENT OF LIABILITIES. The Seller
agrees to pay or otherwise satisfy and discharge all of its liabilities and
obligations existing as of the Closing Date, other than the Assumed Liabilities.
The Buyer agrees to pay and discharge all of the Assumed Liabilities.
9 CORPORATE NAMES. The Seller
shall, from and after the Closing Date, cease all uses of the names "Award,"
"Award Manufacturing," and derivations and variations thereof.
10 CONFIDENTIALITY. Each of the
parties acknowledges that it has received, and up to and including the Closing
Date will receive, certain oral and written information concerning the other
party's assets, business and operation (the "Information"). Each of the parties
-----------
covenants and agrees that it shall keep the Information confidential and shall
not disclose the Information to any other person. Following the Closing Date,
the provisions of this Section 7.10 shall continue to be binding upon Seller but
------------
shall no longer be binding upon Buyer or Jayark Corporation; if the Closing
shall not occur, each party shall promptly return all Information in its
possession to the other party, and the provisions of this Section 7.10 shall
------------
thereafter continue in full force and effect.
11 EXCLUSIVE DEALING. The Sellers
shall not, from and after the date hereof, negotiate or enter into discussions
with any party other than the Buyer for the purchase, sale,lease, or transfer
of, or similar transaction involving, the Purchased Assets, other than
transactions in the ordinary course of business as permitted by Section 7.1.
-----------
10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER TO CLOSE
The obligations of the Seller to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, at or prior
to the Closing, of each of the following conditions:
1 REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties of the Buyer contained in this Agreement shall be true and correct in
all material respects as of the Closing Date, with the same force and effect as
if made as of the Closing Date, other than such representations and warranties
that are made as of another specified date, and all the covenants contained in
this Agreement to be complied with by the Buyer on or before the Closing Date
shall have been complied with in all material respects.
2 NO ORDER. No governmental authority or
other agency or commission or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other order (whether temporary, preliminary or permanent) which is
in effect and has the effect of making the transactions contemplated by this
Agreement illegal or otherwise restraining or prohibiting consummation of such
transactions; provided, however, that the parties hereto shall use commercially
-------- -------
reasonable efforts to have any such statute, rule or regulation declared invalid
or inapplicable and any such order or injunction vacated.
3 CONSENTS. With respect to those consents
from the third parties that are identified in Section 5.6 of the Due Diligence
Schedule as "Required Consents", the Buyer and the Seller shall have received
written consents to the transactions contemplated by this Agreement in form and
substance satisfactory to the Seller.
4 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE.
Seller shall have received each of the following:
(i) an executed copy of the Assumption Documents, and a copy of the
Confirmation Agreement referenced in Section 9.8, substantially in the
-----------
form of Exhibit E attached hereto and executed by the Hong Kong Banks;
---------
(ii) the Due Diligence Schedule, identified by Buyer as the Due
Diligence Schedule referenced herein and prepared in connection
herewith;
(iii) an opinion of counsel to the Buyer dated the Closing Date, in
customary form and with reasonable and customary exclusions and
limitations, confirming the legal conclusions set forth in
(a) Section 6.1 hereof and (b) Section 6.2 hereof (it being understood
----------- -----------
that such counsel need not consider in connection with such opinion as
to clause (ii) of Section 6.2 any matters other than those disclosed
-----------
to such counsel by the Buyer as identified in such opinion and those
otherwise actually known to such counsel;
(iv) a certificate of the secretary of the Buyer attesting to the
certificate of incorporation and bylaws of the Buyer, the resolutions
of the Board of Directors of the Buyer approving this Agreement and
the transactions contemplated hereby, the good standing of the Buyer,
the incumbency of the officers of the Buyer, the truth and accuracy of
representations and warranties set forth in Section 6, and the
---------
satisfaction of the conditions set forth in Section 9;
---------
(v) evidence of delivery and payment of the Purchase Price pursuant
to Section 3.1 hereof;
-----------
(vi) evidence that the Seller is as of the Closing fully released and
discharged from all obligations to CIT Group/Factoring, Inc. (other
than any such obligations or liabilities that are Excluded
Liabilities); and
(vii) a Release Agreement, substantially in the form attached hereto as
Exhibit A, executed by the Sellers.
---------
2. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER TO
CLOSE. The obligations of the Buyer to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, at or prior
to the Closing, of each of the following conditions:
1 DUE DILIGENCE SCHEDULE; REPRESENTATIONS AND WARRANTIES;
COVENANTS.
(i) The Buyer shall have completed its due diligence investigation of
the Business, and shall have prepared and delivered to the Seller the
Due Diligence Schedule, which Due Diligence Schedule shall set forth
all information provided to the Buyer by the Seller in the course of
the Buyer's due diligence investigation and that is required by the
terms of this Agreement to be set forth therein;
(ii) Buyer shall be satisfied in all respects with its due diligence
investigation of the Business and with the matters disclosed therein
and with the results thereof, including but not limited to the degree
of the Seller's cooperation and disclosure and all matters disclosed
in the investigation and in the Due Diligence Schedule; and
(iii) The representations and warranties of the Seller contained
in this Agreement shall be true and correct in all material respects
as of the Closing Date, with the same force and effect as if made as
of the Closing Date, other than such representations and warranties
that are made as of another date, and all the covenants contained in
this Agreement to be complied with by the Seller on or before the
Closing shall have been complied with in all material respects.
2 NO ORDER. No governmental authority or
other agency or commission or United States, state or foreign court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and has the effect of making the
transactions contemplated by this Agreement illegal or otherwise restraining or
prohibiting consummation of such transactions; provided, however, that the
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parties hereto shall use their commercially reasonable efforts to have any such
statute, rule or regulation declared invalid or inapplicable and any such order
or injunction vacated.
3 CONSENTS. With respect to those consents
from third parties identified in Section 5.6 to the Due Diligence Schedule as
"Required Consents", the Buyer and the Seller shall have received written
consents to the transactions contemplated by this Agreement in form and
substance reasonably satisfactory to the Buyer.
4 APPROVAL OF BOARD OF DIRECTORS. The Buyer's Board of Directors shall
have approved the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
5 FINANCING. The Buyer shall have
entered into definitive agreements with the CIT Group/Factoring Inc. or with
another source of financing satisfactory to the Buyer for such financing as the
Buyer shall require, upon terms and conditions acceptable to the Buyer and such
financing shall be available to Buyer on the Closing Date.
6 GUARANTEES. The Seller shall
guarantee the performance of the obligations of the LIB-Com Sellers pursuant to
that certain Asset Purchase Agreement of even date herewith between the LIB-Com
Sellers and the Buyer, and the LIB-Com Sellers shall guarantee the performance
of the Seller's obligations to the Buyer hereunder, pursuant to Guarantee
Agreements executed and delivered by the LIB-Com Sellers or by the Seller, as
the case may be, substantially in the form attached hereto as Exhibits B and C
---------- -
(the "Guarantees").
----------
7 DELIVERY OF CLOSING DOCUMENTS. The Buyer shall have received each of
the following in form and
substance reasonably satisfactory to the Buyer:
(i) executed copies of the Conveyance Documents, the Supplemental
Letter substantially in the form attached hereto as Exhibit D, and the
---------
Guarantees;
(ii) an opinion of counsel to Seller dated the Closing Date, in
customary form and with reasonable and customary exclusions and
limitations, confirming the legal conclusions set forth in (a) the
first sentence of Section 5.1 hereof, (b) Section 5.5(i) hereof,
----------- --------------
(c) the first two sentences of Section 5.5(ii) hereof, and
---------------
(d) Section 5.5(iii) hereof; and
----------------
(iii) a certificate of the secretary of the Seller attesting to the
certificate of incorporation and bylaws of Seller, the resolutions of
the Board of Directors and stockholders of the Seller approving this
Agreement and the transactions contemplated hereby, the good standing
of the Seller, the incumbency of the officers of the Seller, the truth
and accuracy of representations and warranties set forth in Section 5,
---------
and the satisfaction of the conditions set forth in Section 8.
---------
8 EVIDENCE OF SATISFACTION OF THE SELLER'S OBLIGATIONS. The Buyer shall
have received from the Hong Kong Banks the Confirmation Letter substantially in
the form attached hereto as Exhibit E, and the Seller shall have furnished
---------
evidence satisfactory to the Buyer in its reasonable discretion of the
satisfaction or other discharge of all liabilities and obligations of the Seller
(or arrangements satisfactory to the Buyer therefor).
9 CHANGES OF NAMES. The Seller
shall have amended or shall have taken steps reasonably satisfactory to the
Buyer to amend its certificate of incorporation and taken all other actions
necessary to change its name to a name other than "Award" or "Award
Manufacturing," or derivations and variations thereof.
3. INDEMNIFICATION.
1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE PARTIES. All
representations and warranties made by the Seller and the Buyer shall survive
the Closing Date and remain in full force and effect, regardless of any
investigation made by or on behalf of the Seller or the Buyer, for a period of
two (2) years from and after the Closing Date, except that the Seller's
representations and warranties set forth in the last sentence of Section 5.10
------------
with respect to tax matters shall survive until the expiration of the applicable
statute of limitations (the "Survival Period"); provided, however, that as to
--------------- -------- -------
any claim of breach or alleged breach of any agreement, covenant, representation
or warranty hereunder (a "Claim), notice of which Claim has been delivered prior
-----
to the date that the Survival Period would have otherwise expired, but which has
not been resolved by such date (whether by performance of an indemnifying
party's obligations under this Section 10, by adjudication, or otherwise), the
----------
Survival Period as to such representation and warranty (insofar as it relates to
the Claim) and the parties' obligations under this Section 10 shall be extended
----------
until final resolution of such Claim.
2 OBLIGATION OF THE SELLER TO INDEMNIFY. Subject to the limitations
contained in Sections
--------
10.7 and 10.8, the Seller shall indemnify, defend and hold harmless the Buyer
- ---- ----
and any of its parents, subsidiaries, affiliates, successors and assigns from
and against any and all claims, actions, causes of action, damages, losses,
liabilities, deficiencies, costs or other expenses (including interest,
penalties and reasonable attorneys' fees) (collectively "Losses" and each a
------
"Loss") arising out of or in any manner related to or due to:
----
(i) any breach of any representation, warranty, covenant or agreement
of the Seller contained in this Agreement, in the Due Diligence
Schedule or in any document or other writing delivered pursuant
hereto;
(ii) any Excluded Liability;
(iii) any liability or obligation in respect of the Business or the
Purchased Assets (except Assumed Liabilities), incurred as a result of
or arising out of any action or inaction of Seller or any person
acting by or on behalf of Seller before the Closing Date, and
including but not limited to any liability or obligation arising under
any theory of successor liability or otherwise as a result of the
consummation of the transactions contemplated by this Agreement;
(iv) any liability of Seller resulting from one or more pending or
threatened lawsuits;
(v) any liability of Seller to creditors of Seller, other than the
Assumed Liabilities, which is imposed on Buyer whether as a result of
bankruptcy proceedings, judgments or otherwise and whether as an
account payable by Seller or as a claim of alleged preferential
payments within the meaning of the United States Bankruptcy Code or
otherwise;
(vi) the existence of creditors of Seller which are not disclosed to
Buyer; and
(vii) contesting the imposition of or complying with any injunction,
direction or restriction (except for those disclosed in writing to
Buyer prior to the Closing Date or as disclosed in the Due Diligence
Schedule) on the free and unfettered use by Buyer of, or adversely
affecting, the Purchased Assets.
3 OBLIGATION OF THE BUYER TO INDEMNIFY. Subject to the limitations
contained in Sections 10.7
-------------
and 10.8, the Buyer shall indemnify, defend and hold harmless the Seller and any
----
of its parents, subsidiaries, affiliates, successors and assigns from and
against any Losses arising out of or in any manner related to or due to:
(i) a breach of any representation, warranty, covenant or agreement
of the Buyer contained in this Agreement or in any document or other
writing delivered pursuant hereto; or
(ii) any liability or obligation in respect of the Assumed Liabilities
or in respect of the Purchased Assets incurred after the Closing Date.
4 NOTICE AND RESOLUTION OF CLAIMS. An indemnified party hereunder
shall give written
notice to the indemnifying party promptly of any claim after receipt of notice
of any lawsuit or other action or proceeding for which recovery may be sought
under Sections 10.2 or 10.3 above. If such indemnity shall arise from the claim
------------- ----
of a third party, each indemnified party shall permit the indemnifying party to
assume the defense of any such claim or any litigation resulting from such claim
with counsel reasonably acceptable to such indemnified party. The indemnifying
party assuming the defense of such litigation or claim shall take all steps
necessary in the defense or settlement of such claim or litigation but shall
obtain the written approval of each indemnified party prior to any settlement
that does not include a full and final release from any and all liability
associated with such claim or litigation.
5 DEFENSE OF THIRD PARTY CLAIMS.
Failure by the indemnifying party to notify the indemnified party of
its election to defend any such claim or litigation by a third party within ten
(10) days after written notice thereof shall have been given to the indemnifying
party, shall be deemed a waiver by the indemnifying party of its right to defend
such claim or litigation. If the indemnifying party does not assume the defense
of any such claim by a third party or any litigation resulting therefrom then
the indemnified party may defend against such claim or litigation in such manner
as it may deem appropriate and may settle such claim or litigation on terms as
it may deem appropriate.
6 PAYMENT. Upon final determination that a
party is entitled to indemnification under this Section 10 by the parties or by
----------
a final, non-appealable judgment of a court of competent jurisdiction, the
indemnifying party shall promptly reimburse the indemnified party for any Loss
incurred.
7 LIMITS ON INDEMNIFICATION; DETERMINING AMOUNT OF LOSS. A party shall
be
deemed to have suffered a Loss or to have paid or to have become obligated to
pay any sum in respect of a Loss if the same shall be suffered, paid or incurred
by the party or any parent, subsidiary, affiliate, successor or assignee of such
party. The amount of each Loss shall be the aggregate amount suffered, paid or
incurred by the party and each such parent, subsidiary, affiliate, successor or
assignee (net of (i) and (ii) below). Payments by the indemnifying party
pursuant to Section 10.2 or Section 10.3 shall be limited to the amount of any
------------ ------------
Loss that remains (i) after deducting therefrom any insurance proceeds and any
indemnity, contribution or other similar payment recovered by the applicable
indemnified party from any third party with respect thereto and (ii) after
taking into account any tax benefits actually realized or to be realized in
respect of the then current tax period by the party incurring the Loss, the
determination of which shall take into account the effect of such Loss, any
indemnification payments hereunder, and any insurance proceeds and indemnity,
contribution or other similar payment recovered by the applicable indemnified
party from any third party with respect thereto, (the purpose of clauses (i) and
(ii) being to assure that the effect of the indemnity is to fully compensate for
the Loss but not to produce any windfall benefit to the indemnified party).
8 OFFSETS; MITIGATION.
(i) In the event that any amount is or otherwise would be payable by the
Seller to the Buyer or by the Buyer to the Seller pursuant to any provision
(including but not limited to Section 10.2 or Section 10.3) of this Agreement at
------------ ------------
a time when an offsetting amount also is or otherwise would be payable by the
Buyer to the Seller or by the Seller to the Buyer (whether pursuant to this
Agreement or otherwise), the parties shall be entitled to offset the applicable
amounts and to pay only the net amounts; provided such offset is only made after
--------
giving effect to the provisions of Section 10.7.
------------
(ii) No party shall have any liability under any provision of this
Agreement for any Loss of the other party to the extent that such Loss relates
solely to actions taken by the other party or its affiliates after the Closing
Date. Any party claiming any Loss for which it seeks indemnification hereunder
shall take commercially reasonable steps to mitigate such Loss upon and after
becoming aware of any event which could reasonably be expected to give rise to
such Loss.
(iii) The rights and remedies provided to the parties under this
Section 10 are and shall be in addition to, and are not in limitation or
- ----------
substitution of, any other rights and remedies available to the parties, whether
under this contract, at law, or in equity.
4. MISCELLANEOUS.
1 PUBLIC ANNOUNCEMENTS.
Jayark Corporation will make a public press announcement regarding the closing
of this Agreement and other disclosures as required by applicable law and the
NASDAQ Stock Market. Except as required by applicable law, Seller shall not
make any public announcement or otherwise communicate with any news media in
respect of this transaction or the other transactions contemplated herein
without prior notification to Buyer, and the parties shall cooperate as to the
terms and content of any such announcement by Seller.
2 NOTICES. All notices, requests, claims,
demands and other communications given or made pursuant hereto shall be in
writing (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by cable, by telecopy (with confirmation copy of such
telecopied material delivered in person or by registered or certified mail,
postage prepaid, return receipt requested) or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 11.2):
------------
if to the Buyer:
LCL International Traders, Inc.
c/o Jayark Corporation
6116 Skyline Drive
Suite 102
Houston, Texas 77057
Telecopy: (713) 783-7850
Attention: David L. Koffman
with a copy to:
Mayor, Day, Caldwell &
Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002-2778
Telecopy: (713) 225-7047
Attention: Geoffrey K. Walker, Esq.
If to the Seller:
Asia Pacific Industries Corp.
Re: Award Manufacturing Corporation
901-2 Tower 6
China Hong Kong City
33 Canton Road
Kowloon, Hong Kong
with a copy to:
Herrick, Feinstein LLP
Two Park Avenue
New York, New York 10016
Telecopy: (212) 889-7577
Attention: Michael Heitner, Esq.
5 ENTIRE AGREEMENT. This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and undertakings, both
written and oral, between the Seller and the Buyer with respect to the subject
matter hereof.
6 WAIVERS AND AMENDMENTS.
This Agreement may be amended, modified, superseded, canceled, renewed or
extended, and the terms and conditions hereof may be waived only by a written
instrument signed by the parties or, in the case of a waiver, the party waiving
compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder, nor any single
or partial exercise of any right, power or privilege hereunder, preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder. Except as otherwise set forth in Section 10.8(iii) above,
-----------------
the rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies which any party may otherwise have at law or in equity.
The rights and remedies of any party arising out of or otherwise in respect of
any inaccuracy in or breach of any representation, warranty, covenant or
agreement contained in this Agreement shall in no way be limited by the fact
that the act, omission, occurrence or other state of facts upon which any claim
of any such inaccuracy or breach is based may also be the subject matter of any
other representation, warranty, covenant or agreement contained in this
Agreement (or in any other agreement between the parties) as to which there is
no inaccuracy or breach.
7 GOVERNING LAW. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York applicable to contracts executed and to be performed in that State,
regardless of laws that might otherwise govern under applicable principles of
conflicts of laws thereof. The parties agree that state or federal courts in
the State of New York shall have exclusive jurisdiction over any litigation
commenced by either party which has as its basis this Agreement or any of the
transactions contemplated hereunder, and that all such litigation shall be
instituted and maintained therein; provided, however, that, until the sixth
-------- -------
(6th) anniversary of the Closing, Seller shall appoint and maintain CT
Corporation System or Prentice Hall Legal and Financial Services as its
registered agent for service of process within the State of New York, and shall
maintain its corporate existence, good standing and qualification, and shall
take all other actions as shall be necessary as appropriate to remain within the
jurisdiction of, and amenable to suit in, such courts.
8 ASSIGNMENT. This Agreement or any
portion thereof may be assigned by the Buyer to one or more wholly-owned
subsidiaries of the Buyer or Jayark Corporation, provided that no such
assignment shall relieve the Buyer from any liability or obligation hereunder.
9 SEVERABILITY. If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the greatest
extent possible.
10 VARIATIONS IN PRONOUNS. All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the identity of the person or persons may require.
11 EXHIBITS AND DUE DILIGENCE SCHEDULES
The Exhibits to this Agreement and Due Diligence
Schedule to this Agreement are hereby made a part of this Agreement as if set
forth in full herein.
12 HEADINGS. The descriptive headings
contained in this Agreement are for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
13 NO THIRD-PARTY BENEFICIARIES
This Agreement is for the sole benefit of the parties hereto
and their permitted assigns and nothing herein, express or implied, is intended
to or shall confer upon any other person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
14 COUNTERPARTS. This Agreement may be
executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the Seller and the Buyer have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
BUYER:
LCL INTERNATIONAL TRADERS, INC.
By /s/ David L. Koffman
----------------------------
Name: David L. Koffman
Title: President
SELLER:
AWARD MANUFACTURING COMPANY
By /s/ Fay Chan
----------------------------
Name: Fay Chan
GUARANTEE AGREEMENT
THIS GUARANTEE AGREEMENT (this "Guarantee") dated as of June 5, 1995, made
---------
and delivered by AWARD MANUFACTURING CORPORATION, a company organized under the
laws of the British Virgin Islands (the "Guarantor"), in favor of LCL
---------
INTERNATIONAL TRADERS, INC., a Delaware corporation ("Buyer"),
-----
WITNESSETH:
----------
WHEREAS, pursuant to that certain Asset Purchase Agreement dated June 5,
1995 (the "Asset Purchase Agreement") by and among LIB-Com Ltd., Liberty Bell
------------------------
Christmas, Inc., Ivy Mar Co., Inc., Creative Home Products, Inc., and Liberty
Bell Christmas Realty, Inc. (the "Sellers") and Buyer, Buyer agreed to purchase
-------
certain assets and assume certain liabilities of the Sellers; and
WHEREAS, the Sellers have jointly and severally made certain
representations and warranties to Buyer to induce Buyer to enter into the Asset
Purchase Agreement, as a result of which Sellers may have certain obligations to
Buyer; and
WHEREAS, as a condition to entering into the Asset Purchase Agreement,
Buyer has required that Guarantor execute, deliver and enter into this
Guarantee; and
WHEREAS, Guarantor is willing to execute, deliver and enter into this
Guarantee;
NOW, THEREFORE, in consideration of the premises and in order to induce
Buyer to enter into the Asset Purchase Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby agrees with Buyer as follows:
1. Guarantee. Guarantor hereby unconditionally and irrevocably
---------
guarantees the prompt and complete payment and performance of each and all of
the Obligations of each and all of the Sellers. As used in this Agreement,
"Obligations" shall mean any liability or obligation of any of the Sellers owed
-----------
to Buyer or any of Buyer's affiliates or assigns arising under or in connection
with the Asset Purchase Agreement or the transactions contemplated thereby,
arising under contract, at law, or in equity, and including but not limited to
any obligation of any of the Sellers to indemnify Buyer or any of its affiliates
or assigns from any Loss (as defined in the Asset Purchase Agreement) as a
result of a breach by any Seller of a representation or warranty made in the
Asset Purchase Agreement.
2. Term of Guarantee. This Guarantee shall remain in full force and
-----------------
effect for so long as any of the Obligations are enforceable against any of the
Sellers whether pursuant to Section 10.1 of the Asset Purchase Agreement or
otherwise.
3. Right of Offset. Upon any failure by Seller to pay or satisfy any of
---------------
its Obligations when due, Buyer is hereby irrevocably authorized at any time and
from time to time to apply any of Guarantors' respective assets which may be in
Buyer's possession or control towards satisfaction of the obligations of the
Guarantors hereunder. Buyer shall notify Guarantors promptly of any such
application of assets made by it, provided that the failure to give such notice
--------
shall not affect the validity of such appropriation. The rights of Buyer under
this Section 3 are in addition to all other rights and remedies (including,
---------
without limitation, other rights of set-off) which Buyer may have as a result of
this Guarantee or any other agreement.
4. Guarantee Absolute, Irrevocable and Unconditional. Guarantor waives
-------------------------------------------------
any and all notice of proof of reliance by Buyer upon this Guarantee or proof of
acceptance of this Guarantee, and the Asset Purchase Agreement shall
conclusively be deemed to have been entered into in reliance upon this
Guarantee. The Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon any Seller with respect
to the Obligations. This Guarantee shall be construed as a continuing,
absolute, irrevocable and unconditional guarantee of payment and performance
without regard to any circumstance which constitutes an equitable or legal
discharge of any Seller for the Obligations, or of the Guarantor under this
Guarantee, in bankruptcy. When Buyer is pursuing its rights and remedies
hereunder against Guarantor, Buyer may, but shall be under no obligation to,
pursue any rights and remedies as it may have against the Sellers for the
Obligations or any right of offset with respect thereto, and any failure by
Buyer to pursue such other rights or remedies or to collect any payments from
Sellers or to exercise any such right of offset, or any release of any Seller or
right of offset, shall not relieve the Guarantor of any liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of Buyer against the Guarantor.
5. Reinstatement. This Guarantee shall continue to be effective, or be
-------------
reinstated, as the case may be, if at any time payment or performance, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by Buyer upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Seller or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, any Seller or any substantial part of its property, or otherwise,
all as though such payments had not been made.
6. Costs of Enforcement. Guarantor agrees to pay any and all expenses
--------------------
(including, without limitation, fees and disbursements of counsel) incurred by
Buyer in enforcing this Guarantee.
7. Severability. Any provision of this Guarantee which is prohibited or
------------
unenforceable shall be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remaining provisions.
8. No Waiver; Cumulative Remedies. No failure to exercise, nor any delay
------------------------------
in exercising, on the part of Buyer, any right, power or privilege hereunder
shall operate as a waiver thereof. A waiver by Buyer of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which Buyer would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies available to Buyer.
9. Waivers and Amendments; Successors and Assigns; Governing Law. None
-------------------------------------------------------------
of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
Guarantor and Buyer.
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly
executed and delivered as of the day and year first above written.
AWARD MANUFACTURING CORPORATION
By: /s/ Fay Chan
--------------------------------
Name:Fay Chan
GUARANTEE AGREEMENT
THIS GUARANTEE AGREEMENT (this "Guarantee") dated June 5, 1995, made and
---------
delivered by LIB-COM LTD., LIBERTY BELL CHRISTMAS, INC., IVY MAR CO., INC.,
CREATIVE HOME PRODUCTS, INC., each companies organized under the laws of the
State of Delaware, and LIBERTY BELL CHRISTMAS REALTY, INC., a company organized
under the laws of the State of New York (collectively, the "Guarantors"), in
----------
favor of LCL INTERNATIONAL TRADERS, INC., a Delaware corporation ("Buyer"),
-----
WITNESSETH:
----------
WHEREAS, pursuant to that certain Asset Purchase Agreement dated June 5,
1995 (the "Asset Purchase Agreement") by and among Award Manufacturing
------------------------
Corporation (the "Seller") and Buyer, Buyer agreed to purchase certain assets
------
and assume certain liabilities of the Seller, and pursuant to a separate asset
purchase agreement of even date herewith (the "LIB-Com Agreement") Buyer further
-----------------
agreed to purchase certain assets and assume certain liabilities of Guarantors;
and
WHEREAS, Seller has made certain representations and warranties to Buyer in
the Asset Purchase Agreement to induce Buyer to enter into the Asset Purchase
Agreement, as a result of which Seller may have certain obligations to Buyer;
and
WHEREAS, as a condition to entering into the Asset Purchase Agreement,
Buyer has required that Guarantors execute, deliver and enter into this
Guarantee; and
WHEREAS, Guarantors are willing to execute, deliver and enter into this
Guarantee;
NOW, THEREFORE, in consideration of the premises and in order to induce
Buyer to enter into the Asset Purchase Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Guarantors hereby agree with Buyer as follows:
1. Guarantee. Guarantors hereby unconditionally and irrevocably and
---------
jointly and severally guarantee to Buyer the prompt and complete payment and
performance of each and all of the Obligations of each and all of the Sellers.
As used in this Agreement, "Obligations" shall mean any liability or obligation
-----------
of the Seller to Buyer or any of Buyer's affiliates or assigns arising under or
in connection with the Asset Purchase Agreement or the transactions contemplated
thereby, whether arising under contract, at law, or in equity, and including but
not limited to any obligation to indemnify Buyer or any of its affiliates or
assigns from Loss (as defined in the Asset Purchase Agreement) as a result of a
breach of any representation or warranty made by Seller in the Asset Purchase
Agreement.
2. Term of Guarantee. This Guarantee shall remain in full force and
-----------------
effect for so long as any of the Obligations are enforceable against Seller,
whether pursuant to Section 10.1 of the Asset Purchase Agreement or otherwise.
3. Right of Offset. Upon any failure by Seller to pay or satisfy any of
---------------
its Obligations when due, Buyer is hereby irrevocably authorized at any time and
from time to time to apply any of Guarantors' respective assets which may be in
Buyer's possession or control towards satisfaction of the obligations of the
Guarantors hereunder. Buyer shall notify Guarantors promptly of any such
application of assets made by it, provided that the failure to give such notice
--------
shall not affect the validity of such appropriation. The rights of Buyer under
this Section 3 are in addition to all other rights and remedies (including,
---------
without limitation, other rights of set-off) which Buyer may have as a result of
this Guarantee or any other agreement.
4. Guarantee Absolute, Irrevocable and Unconditional. Guarantors waive
-------------------------------------------------
any and all notice of proof of reliance by Buyer upon this Guarantee or proof of
acceptance of this Guarantee, and the Asset Purchase Agreement shall
conclusively be deemed to have been entered into in reliance upon this
Guarantee. The Guarantors waive diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon Seller with respect to
the Obligations. This Guarantee shall be construed as a continuing, absolute,
irrevocable and unconditional guarantee of payment and performance without
regard to any circumstance which constitutes an equitable or legal discharge of
Seller for the Obligations, or of the Guarantors under this Guarantee, in
bankruptcy. When Buyer is pursuing its rights and remedies hereunder against
Guarantors, Buyer may, but shall be under no obligation to, pursue any rights
and remedies as it may have against the Seller for the Obligations or any right
of offset with respect thereto, and any failure by Buyer to pursue such other
rights or remedies or to collect any payments from Seller or to exercise any
such right of offset, or any release of Seller or right of offset, shall not
relieve the Guarantors of any liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of Buyer against the Guarantors.
5. Reinstatement. This Guarantee shall continue to be effective, or be
-------------
reinstated, as the case may be, if at any time payment or performance, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by Buyer upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Seller or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, Seller or any substantial part of its property, or otherwise, all
as though such payments had not been made.
6. Costs of Enforcement. Guarantors further agree to pay any and all
--------------------
expenses (including, without limitation, all fees and disbursements of counsel)
which may be paid or incurred by Buyer in enforcing, or obtaining advice of
counsel in respect of, any of their rights under this Guarantee.
7. Severability. Any provision of this Guarantee which is prohibited or
------------
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions.
8. No Waiver; Cumulative Remedies. No failure to exercise, nor any delay
------------------------------
in exercising, on the part of Buyer, any right, power or privilege hereunder
shall operate as a waiver thereof. A waiver by Buyer of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which Buyer would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies available to Buyer.
9. Waivers and Amendments; Successors and Assigns; Governing Law. None
-------------------------------------------------------------
of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
Guarantors and Buyer.
IN WITNESS WHEREOF, the undersigned have caused this Guarantee to be duly
executed and delivered as of the day and year first above written.
LIB-COM LTD.
By:/s/ Joel Margolin
----------------------
NameJoel Margolin
TitlPresident
LIBERTY BELL CHRISTMAS, INC.
By:/s/ Joel Margolin
----------------------
NameJoel Margolin
TitlPresident
IVY MAR CO., INC.
By:/s/ Joel Margolin
----------------------
NameJoel Margolin
TitlPresident
CREATIVE HOME PRODUCTS, INC.
By: /s/ Joel Margolin
-----------------------
Name:Joel Margolin
TitlePresident
LIBERTY BELL CHRISTMAS REALTY, INC.
By: /s/ Joel Margolin
-----------------------
Name:Joel Margolin
THIS NOTE AND THE INDEBTEDNESS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY OTHER SECURITIES STATUTE. NO SALE, TRANSFER
OR OTHER DISPOSITION HEREOF OR THEREOF, OR OF ANY INTEREST HEREIN OR THEREIN,
MAY BE MADE OR SHALL BE RECOGNIZED UNLESS IN THE SATISFACTORY WRITTEN OPINION OF
COUNSEL FOR OR SATISFACTORY TO THE ISSUER SUCH TRANSACTION WOULD NOT VIOLATE OR
REQUIRE REGISTRATION UNDER SUCH ACT OR OTHER STATUTE.
PROMISSORY NOTE
$3,000,000.00 (U.S.) June 22, 1995
Central Islip, New York
FOR VALUE RECEIVED, and intending to be legally bound, LCL INTERNATIONAL
TRADERS, INC., a Delaware corporation (the "Maker"), having an address at 1150
Motor Parkway, Central Islip, New York, 11722, promises to pay on July 29, 1998
(the "Maturity Date") to the order of COMMERZBANK AG, HONG KONG BRANCH (the
"Payee") at 1150 Motor Parkway, Central Islip, New York 11722, in lawful money
of the United States of America and in immediately available funds, the sum of
THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) (the "Maturity Amount") subject
to the further terms and provisions hereof. The Maturity Amount payable at the
Maturity Date shall include interest at the rate of twelve percent (12%) per
annum from the date hereof to and including the Maturity Date, such interest to
be compounded quarterly and calculated on the basis of a 365 or 366-day year, as
appropriate, on the initial implicit principal amount hereof, which shall be
that amount which, when added to the amount of such accrued and compounded
interest thereon, shall aggregate the Maturity Amount on the Maturity Date.
This Note may not be prepaid, in whole or in part, prior to the Maturity
Date, other than as provided in this paragraph. This Note represents all or a
portion of the "Promissory Note" referred to in, and is subject to all of the
terms, conditions and provisions of, (i) the Asset Purchase Agreement dated as
of June 5, 1995 between the Maker and LIB-COM, Ltd., a Delaware corporation,
LIBERTY BELL CHRISTMAS, INC., a Delaware corporation, IVY MAR CO., INC., a
Delaware corporation, CREATIVE HOME PRODUCTS, INC., a Delaware corporation and
LIBERTY BELL CHRISTMAS REALTY, INC., a New York corporation (collectively, the
"Original Payee") and the Guaranty Agreement dated as of June 5, 1995 between
the Maker and the Original Payee, including provisions under which the Maker may
be entitled to set-off obligations of the Maker to the Original Payee pursuant
to such Asset Purchase Agreement and Guaranty Agreement against amounts
otherwise owing to the Original Payee by Maker under this Note and (ii) the
Confirmation Letter agreement between the Maker and Citibank, N.A., Commerzbank
AG and Bayerische Vereinsbank AG (collectively, the "Banks") dated June 22, 1995
pursuant to which the Maker has agreed that, notwithstanding anything to the
contrary in the Asset Purchase Agreement and Guaranty Agreement, the Maker shall
cease to have any such rights of set-off with respect to this Note (other than,
if applicable, the Tax Lien Set-Off Right, as defined in such Confirmation
Letter agreement) for so long as this Note is held and owned, of record and
beneficially, by any Exempt Party, as defined in such Confirmation Letter
agreement. In the event of any such set-off against this Note: (a) the amount
so set-off shall be deemed to have been repaid on the date of such set-off and
shall be deemed to have been applied first to payment of accumulated unpaid
interest and second to payment of the implicit principal amount hereof; and
(b) from and after the date of such set-off, the remaining unpaid principal and
accumulated unpaid interest on this Note (if any) shall continue to accrue
interest as provided in the first paragraph of this Note through the Maturity
Date, and the resulting aggregate principal and accumulated unpaid interest
amount shall be due and payable in full on the Maturity Date, subject to further
similar reduction in the event of any further set-off.
This Note is transferable only upon presentation and surrender, duly
endorsed for transfer and issuance of a replacement Note, at the office of the
Maker set forth above, and any such transfer is subject to the restrictions set
forth in the legend at the top of this Note. THIS NOTE IS NOT A NEGOTIABLE
INSTRUMENT.
THIS NOTE SHALL BE SUBJECT TO AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAWS PRINCIPLES.
THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES; AND THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed at
the place and on the date first above appearing.
LCL INTERNATIONAL TRADERS, INC.
By: /s/ David L. Koffman
--------------------------------
Name:David L. Koffman
LCL INTERNATIONAL TRADERS, INC.
1150 Motor Parkway
Central Islip
New York, New York 11722
June 22, 1995
Citibank, N.A. Via Telecopy 852 2523 0949
c/o Ms. Monique Lau
Group Head
Citibank Tower
47th Floor
Citibank Plaza
3 Garden Road
Central, Hong Kong
Global Finance Corporate Banking Group
Commerzbank AG Via Telecopy 852 2868 1414
Dr. Achim Lauermann
Senior Manager
Corporate Banking
Commerz Bank - Hong Kong Branch
3A Charter Road
Hong Kong
Bayerische Vereinsbank AG Via Telecopy 852 2877 2196
Mr. Michael Grabowski
Executive Vice President, General Manager
Hong Kong Branch
41st Floor
Bank of China Tower
June 22, 1995
Page 2
1 Garden Road
Hong Kong
Ladies and Gentlemen:
This letter (the "Confirmation Letter") confirms certain understandings and
agreements between LCL INTERNATIONAL TRADERS, INC., a Delaware corporation (the
"Buyer"), a wholly-owned corporate subsidiary of JAYARK CORPORATION, a Delaware
corporation ("Jayark"), and you (collectively the "Banks" and each individually
a "Bank") with respect to: (a) the purchase by the Buyer of substantially all
of the assets and assumption of certain liabilities of LIB-COM LTD., a Delaware
corporation ("LIB-Com"), LIBERTY BELL CHRISTMAS, INC., a Delaware corporation
("Liberty Bell"), IVY MAR CO., INC., a Delaware corporation ("Ivy Mar"),
CREATIVE HOME PRODUCTS, INC., a Delaware corporation ("Creative"), and LIBERTY
BELL CHRISTMAS REALTY, INC., a New York corporation ("Realty" and together with
LIB-Com, Liberty Bell, Ivy Mar and Creative, referred to collectively as the
"LIB-Com Sellers" and individually as a "LIB-Com Seller"), and related
transactions pursuant to the Asset Purchase Agreement dated as of June 5, 1995
among the Buyer and the LIB-Com Sellers (the "LIB-Com Asset Purchase
Agreement"); (b) the purchase by the Buyer of substantially all of the assets
and assumption of certain liabilities of Award Manufacturing Corporation, a
British Virgin Islands company ("Award" and together with the LIB-Com Sellers
referred to collectively as the "Sellers" and individually as a "Seller"), and
related transactions pursuant to the Asset Purchase Agreement dated as of June
5, 1995 between the Buyer and Award (the "Award Asset Purchase Agreement" and
together with the LIB-Com Asset Purchase Agreement, the "Asset Purchase
Agreements"); (c) the Guaranty Agreement by the LIB-Com Sellers in favor of the
Buyer (the "LIB-Com Guaranty"); (d) the Guaranty Agreement by Award in favor of
June 22, 1995
Page 3
the Buyer (the "Award Guaranty"); (e) the Supplemental Letter Agreement among
the Sellers and the Buyer (the "Supplemental Letter"); and (f) the other
agreements, instruments, documents, certificates, securities and schedules
executed or delivered by or on behalf of the Buyer or by or on behalf of any one
or more of the Sellers in connection with the transactions contemplated by the
Asset Purchase Agreements, the LIB-Com Guaranty, the Award Guaranty or the
Supplemental Letter (all of such agreements, instruments, documents,
certificates, securities and schedules referred to in clauses (a) through (f) of
this sentence being referred to collectively as the "Transaction Documents" and
individually as a "Transaction Document", and all of the actions and
transactions to be effected pursuant to or in connection with the execution,
delivery or performance of any or all of the Transaction Documents being
referred to collectively as the "Transaction").
1. The Buyer hereby confirms to each Bank as of the date of the Closing
(as defined in each of the Asset Purchase Agreements) that: (a) the
representations and warranties of the Buyer set forth in each Asset
Purchase Agreement are true and correct as of the date of the Closing;
(b) the forms of the Transaction Documents executed and delivered in
connection with the consummation of the Transaction did not or will
not differ in any respect material to the Banks from the forms thereof
furnished to the Banks prior to or contemporaneously with the delivery
of this Confirmation Letter; and (c) the Buyer intends in good faith
to seek to conduct its business after consummation of the Transaction
so as to optimize its long-term value and thereby to seek to optimize
the value of (i) the 1,000,000 shares of Jayark common stock issued to
the LIB-Com Sellers pursuant to the LIB-Com Asset Purchase Agreement
(the "Jayark Shares"), (ii) the "Promissory Note" of the Buyer issued
June 22, 1995
Page 4
to the LIB-Com Sellers pursuant to (and as defined in) the LIB-Com
Asset Purchase Agreement and (iii) the "Contingent Payment" by the
Buyer to the LIB-Com Sellers pursuant to (and as defined in) the LIB-
Com Asset Purchase Agreement. Nothing in the preceding sentence shall
under any circumstances be construed to impose any fiduciary or other
legal duty upon the Buyer or Jayark in favor or for the benefit of any
Bank, and the Buyer expressly disclaims any representation or warranty
that the Jayark Shares, the Promissory Note or the Contingent Payment
will at any time have any particular, or any, value.
2. Each Bank hereby confirms to the Buyer as of the Closing that: (a)
such Bank is aware of and consents fully and for all purposes to the
execution and delivery of all Transaction Documents and to the
Transaction; (b) such Bank irrevocably and for all purposes
foreswears, waives and forever releases and discharges any security or
other interest, claim or cause of action it may at any time have or
have had with respect to or against (i) the Buyer, Jayark or any
affiliate, agent or representative of the Buyer or Jayark or (ii) any
assets, rights, titles or interests acquired by the Buyer in the
Transaction; and (c) such Bank understands and agrees that Jayark
shall not under any circumstances be deemed responsible to any Bank or
any other party claiming by through or under any Bank, directly or
indirectly, primarily or secondarily, at law or in equity or otherwise
in whole or in part for any debt, liability, obligation, agreement,
duty, act or omission of the Buyer, and Jayark is hereby made an
express third party beneficiary of all agreements, undertakings and
confirmations of each Bank in this Confirmation Letter.
June 22, 1995
Page 5
3. Each Bank hereby further confirms to the Buyer that the Sellers and
certain of their affiliates (the "Bank Debtors") are indebted to the
Banks through guarantees or otherwise in an aggregate amount exceeding
the aggregate value, as of the Closing, of the following aggregate
consideration being received by the Sellers in the Transaction: (i)
the sum of $3,000,000 cash, (ii) the Jayark Shares, (iii) the
Promissory Note and (iv) the Contingent Payment (it being agreed that
the Contingent Payment is too uncertain to be attributed any value as
of the Closing). The Buyer understands and consents that, subject to
and on the terms provided in Section 4 below, the consideration
referred to in clauses (i) through (iv) of the preceding sentence is,
at or promptly after the Closing, to be assigned or otherwise
transferred to or for the benefit of one or more of the Banks in
partial satisfaction of the obligations of the Bank Debtors. In order
to induce the Buyer to consent to such transfer, each Bank hereby
confirms to the Buyer and to Jayark that: (a) such Bank will acquire
the Jayark Shares, the Promissory Note, the Contingent Payment, or any
interest in or portion of any of the foregoing (collectively, the
"Restricted Consideration"), solely for its own account, for
investment, and without any view to any resale or other distribution
thereof; and (b) the Restricted Consideration so acquired by such Bank
may not be resold, reassigned or transferred, directly or indirectly,
in whole or in part, except pursuant to registration under all
applicable securities laws or available exemptions therefrom, and each
certificate or other document evidencing any such Restricted
Consideration may bear an appropriate restrictive legend.
June 22, 1995
Page 6
4. In consideration of the foregoing, the Buyer agrees as set forth in
this Section 4.
(a) Upon the assignment or other transfer of the Restricted
Consideration to or for the benefit of one or more of the Banks,
notwithstanding anything to the contrary in any of the
Transaction Documents, the Buyer shall cease to have any rights
of set-off with respect to the Restricted Consideration (other
than the Tax Lien Set-Off Right, which the Buyer shall retain if
applicable) for so long as such Restricted Consideration is held
and owned, of record and beneficially, by any Exempt Party. The
term "Tax Lien Set-Off Right" shall mean the right of the Buyer
to set-off, with respect to the Restricted Consideration held by
an Exempt Party, any payment made by the Buyer by reason of any
liability or obligation incurred by the Buyer arising out of or
in connection with any tax lien filed by the Internal Revenue
Service on or prior to the Closing Date against any of the
Sellers (a "Tax Lien"); provided, however, that the maximum
aggregate amount that the Buyer shall be permitted so to set-off
with respect to a Tax Lien Set-Off Right shall be the lesser of
(i) the amount of the Tax Lien as of the date of such set-off or
(ii) $800,000; and provided further, however, that if and to the
extent that the Buyer receives and is entitled to retain any cash
reimbursement of any amounts so set-off pursuant to a Tax Lien
Set-Off Right, the Buyer will reverse and nullify such set-off to
the extent of such reimbursement amounts so received effective as
of the relevant dates of receipt. The Buyer will advise the
relevant Exempt Parties in writing reasonably promptly after any
such set-off or reversal and nullification of any such set-off.
June 22, 1995
Page 7
The Buyer shall have no such Tax Lien Set-Off Right unless the
Buyer furnishes to the Banks, within thirty (30) days after the
Closing Date, evidence that there was in fact a Tax Lien filed as
of the Closing Date. The term "Exempt Party" shall mean any of
the Banks or any subsequent permitted transferee of any
Restricted Consideration but shall at all times exclude any Bank
Debtor or any affiliate of, successor to or assignee of any Bank
Debtor. Upon any acquisition of any Restricted Consideration by
any person or entity that is not an Exempt Party, the Buyer's
full rights of set-off with respect to such Restricted
Consideration shall be reinstated as if all such Restricted
Consideration had remained subject to the sole record and
beneficial ownership of the Sellers to which such Restricted
Consideration is initially deliverable at the Closing. Each
Promissory Note issued upon transfer to a Bank or other Exempt
Party will be in substantially the form attached hereto as
Exhibit A.
---------
(b) Upon the assignment or other transfer of the Contingent Payment
to or for the benefit of one or more of the Banks,
notwithstanding anything to the contrary in any of the
Transaction Documents: (i) the Contingent Payment amount shall
equal twenty-five percent (25%) of the amount (if any) by which
(x) the amount of Buyer's net income, as determined in accordance
with U.S. generally accepted accounting principles, for the
period consisting of the Buyer's fiscal year ended April 30, 1996
or for the period consisting of the Buyer's fiscal year ended
April 30, 1996 together with the calendar month of May 1996,
June 22, 1995
Page 8
whichever is greater, shall exceed (y) $500,000; and (ii) the
Contingent Payment, if any, shall be payable within fifteen (15)
days after the Buyer's audited financial statements for the
fiscal year ended April 30, 1996 and the Buyer's unaudited
financial statements for the month of May 1996 become available.
Upon any acquisition of any interest in the Contingent Payment
by any person or entity that is not an Exempt Party, the
provisions of this Section 4(b) shall cease to apply with respect
to such interest in the Contingent Payment and the obligation of
the Buyer in respect of such interest in the Contingent Payment
(if any) shall be calculated and paid as provided in Section
3.1(iv) of the LIB-Com Asset Purchase Agreement as if such
interest in the Contingent Payment had remained subject to the
sole ownership of the LIB-Com Sellers pursuant to the LIB-Com
Asset Purchase Agreement.
The Buyer requests that each Bank execute and return a copy of this
Confirmation Letter by facsimile, with a signed copy to follow by courier
delivery, to evidence and confirm the foregoing.
Yours very truly,
LCL INTERNATIONAL TRADERS, INC.
By: /s/ David L. Koffman
-------------------------------
Name:David L. Koffman
TitlePresident
June 22, 1995
Page 9
AGREED AND CONFIRMED:
CITIBANK, N.A. COMMERZBANK AG
By: /s/ Monique Lau By: /s/ Michael J. Oliver /s/ Harold W. Moser
--------------------- --------------------------------------------
Name:Monique Lau Name:Michael J. OliveHarold W. Moser
TitleVice President TitleGeneral Manager Senior Manager
BAYERISCHE VEREINSBANK AG
By: /s/ T. Kessler /s/ A. Hertrampf
----------------------------------------------
Name:T. Kessler A. Hertrampf
TitleGeneral Manager Assistant Manager
June 22, 1995
Page 10
CONFIRMATION BY AND REGISTRATION AGREEMENT OF JAYARK CORPORATION:
By its signature below, Jayark Corporation confirms to the Banks (all
capitalized terms in this paragraph having the meanings provided in the
foregoing Confirmation Letter) that: (a) Jayark is aware of the Transaction and
Transaction Documents and has been advised by the LIB-Com Sellers of the
proposed assignment or other transfer of the Restricted Consideration by the
LIB-Com Sellers to the Banks at or promptly after the Closing; (b) Jayark hereby
consents to the assignment or other transfer of the Jayark Shares by the LIB-Com
Sellers to the Banks at or promptly after the Closing, and to the assignment or
other transfer by the Sellers to the Banks of the other consideration received
by the Sellers in the Transaction as provided in the foregoing Confirmation
Letter; (c) Jayark will use its influence as a stockholder of LCL International
Traders, Inc., as permitted by law, to assist the management of LCL
International Traders, Inc. to seek to optimize the long-term value of LCL
International Traders, Inc. and thereby to seek to optimize the value of the
Restricted Consideration; and (d) Jayark will not take any action as a result of
which Jayark would cease to be the majority stockholder of LCL International
Traders, Inc. prior to July 29, 1998 without the consent of the holder(s) of a
majority of the then outstanding face amount of the Promissory Note, provided
that such consent may not be unreasonably withheld. Nothing in the preceding
sentence shall under any circumstances be construed to impose any fiduciary or
other legal duty upon Jayark in favor or for the benefit of any Bank, and by its
signature above each of the Banks expressly disclaims any representation or
warranty that the Jayark Shares, the Promissory Note or the Contingent Payment
will at any time have any particular, or any, value.
June 22, 1995
Page 11
By its signature below, Jayark further agrees as follows (all capitalized
terms having the meanings provided in the foregoing Confirmation Letter):
1. At any time after the second anniversary of the Closing, the Banks
that are the record and/or beneficial owners of Jayark Shares
("Holders") shall have the right, on one occasion only, by written
notice delivered to Jayark (the "Demand Notice"), to require Jayark to
register under and in accordance with the provisions of the United
States Securities Act of 1933, as amended (the "Securities Act"), the
number of Jayark Shares requested by the Holders to be so registered
(a "Demand Registration"), subject to any restrictions under any
relevant securities laws, or rules or regulations of any relevant
stock exchange and to the reasonable and customary terms of any
relevant underwriting agreement. Jayark shall use its commercially
reasonable best efforts to file with the United States Securities and
Exchange Commission (the "SEC") a registration statement on Form S-1,
S-2, S-3, SB-1 or such other comparable successor form as may be
prescribed from time to time by the SEC (a "Registration Statement")
within 90 days with, and shall use its commercially reasonable best
efforts to cause the same to be declared effective by, the SEC within
150 days of the date on which the Holders give the Demand Notice with
respect to such Demand Registration. Jayark shall be entitled in
respect of any Demand Notice to postpone, for a reasonable period of
time, not in excess of 90 days, the filing and required effective date
of a Registration Statement if Jayark determines, in the good faith
exercise of its reasonable business judgment, that such registration
and offering could interfere with bona fide financing plans, or a
prospective acquisition or other material transaction, of Jayark or
June 22, 1995
Page 12
would otherwise require disclosure of information, the premature
disclosure of which could materially adversely affect Jayark. If
Jayark postpones the filing of a Registration Statement, it shall
promptly notify the Holders in writing when the events or
circumstances permitting such postponement have ended. Jayark shall
be released from its obligation to attempt to effect a Demand
Registration if, at the time of the giving of the Demand Notice or
within 150 days thereafter, the Holders would have available an
exemption from registration for an offering of all of the Jayark
Common Stock pursuant to Rule 144(k) under the Securities Act.
2. In the event that Jayark proposes to file a Registration Statement
with the SEC with respect to an underwritten public offering by Jayark
of Jayark Common Stock for cash, whether or not for Jayark's own
account, during the period commencing on the date hereof and ending on
the third anniversary of the Closing Date, Jayark shall give written
notice of such proposed filing to each of the Banks that is a holder
of any of the Jayark Shares at least fifteen (15) days before the
anticipated filing date (in which notice Jayark shall use its best
efforts to name the proposed managing underwriter of such offering and
the anticipated price range per share of Jayark Common Stock), and
such notice shall offer each Holder the opportunity to register such
number of the Holder's Jayark Shares as such Holder may request in
writing within ten (10) days after receipt of such notice.
Notwithstanding the foregoing, if the managing underwriter of such
offering advises Jayark that the total numbers of shares of Jayark
Common Stock which Jayark, the Holders and any other persons intend to
include in such offering would adversely affect the success of such
June 22, 1995
Page 13
offering, then the amount of Jayark Shares to be offered for the
account of the Holders shall be reduced to the extent necessary to
reduce the total number of shares of Jayark Common Stock to be
included in such offering to the amount recommended by such managing
underwriter; provided that if shares of Jayark Common Stock are being
offered for the account of other persons as well as the Holders, such
reduction shall not represent a greater fraction of the number of
shares of Jayark Common Stock requested to be registered by the
Holders than the fraction of similar reductions imposed on such other
persons over the amount of securities requested to be registered by
such other persons. Nothing contained herein shall require Jayark to
(a) reduce the amount of shares of Jayark Common Stock to be offered
by Jayark in such offering for any reason or (b) include any shares of
Jayark Common Stock of any Holder in any public offering for which a
Registration Statement is or is proposed to be filed if such shares of
Jayark Common Stock are, at the time of effectiveness of such
Registration Statement, eligible to be sold under paragraph (k) of
Rule 144 under the Securities Act. Nothing in this paragraph shall
create any liability on the part of Jayark to any Holder if Jayark for
any reason should decide not to file a Registration Statement or
decide not to request that the Registration Statement be declared
effective or otherwise elect not to consummate the public offering
contemplated thereby. The rights hereunder are not transferable by
any of the Banks and are subject to the condition that Holders
desiring to include shares of Jayark Common Stock in the public
offering agree to timely execute and deliver the underwriting
agreement to be executed and delivered by Jayark and the other
sellers, if any, in connection with such public offering.
June 22, 1995
Page 14
3. The obligations of Jayark to each Holder under the preceding
paragraphs 1 and 2 are and shall be subject to compliance by such
Holder with the following undertakings by such Holder:
(a) to cooperate with Jayark in its compliance with all federal and
state securities laws, including without limitation providing
such information and signing such documents as are necessary to
effect registration;
(b) to pay (i) in the case of a Demand Registration, all related
costs, fees and expenses incurred by Jayark and (ii) in the case
of a Demand Registration or any other registration, such Holder's
pro rata portion (calculated on the basis of the ratio of the
aggregate offering price attributable to the shares of such
Holder being registered and sold in relation to the aggregate
offering price attributable to the total number of securities
being registered and sold, including securities being registered
and sold by other selling stockholders) of the underwriting
discounts and selling commissions and to pay all the fees and
disbursements of such Holder's counsel; and
(c) in addition to all other transfer restrictions otherwise provided
for, unless otherwise agreed in writing by Jayark, not to sell or
otherwise dispose of any shares of Jayark Common Stock (other
than the shares covered by such registration, which may be sold
in accordance with the plan or plans of distribution described in
the Registration Statement) owned by such Holder for a period of
June 22, 1995
Page 15
the shorter of (i) the lock-up period applicable to Jayark or
(ii) one hundred twenty (120) days following the effective date
of such Registration Statement.
4. Jayark will indemnify each Holder (or contribute if indemnification is
unenforceable) with respect to any loss, damage, claim, liability or
expense suffered or incurred by such Holder as a result of any
material misrepresentation or alleged material misrepresentation or
any material omission or alleged material omission in any relevant
prospectus furnished by Jayark in connection with, or in, any such
Registration Statement except with regard to information expressly
furnished by such Holder for inclusion therein, as to which such
Holder shall indemnify (or contribute) with respect to any loss,
damage, claim, liability or expense suffered or incurred by Jayark on
the same terms as aforesaid.
JAYARK CORPORATION
By: /s/ David L. Koffman
-------------------------------
Name:David L. Koffman
, 1995
LCL International Traders, Inc.
1150 Motor Parkway
Central Islip, New York 11722
FACTORING AGREEMENT
-------------------
Gentlemen:
We are pleased to confirm the terms and conditions that are to govern our
collected funds accounting, factoring arrangement with you.
1. You hereby sell, transfer and assign to us, and we agree to purchase as
absolute owner, all of your accounts receivable created by or arising from all
of your sales of goods or rendition of services (herein "Accounts"). This
includes without limitation, all Accounts arising from sales made under any of
your trade names or styles or through any of your divisions.
2. Credit approval on all orders, as they are received from your
customers, is to be requested from our Credit Department via computer under our
Order Maintenance Automated Credit System ("OMACS"). This includes orders
submitted by either: (i) On-Line Terminal Access, or (ii) Electronic Batch
Transmissions. All orders from your customers are to be submitted to us for
credit approval in accordance with the procedures more particularly described in
either the Client Guide for On-Line Terminal Access or the Client Guide for
---------------------------------------- ----------------
Electronic Batch Transmissions (herein the "Guides"). The entire Credit Risk
- ------------------------------
(customer's failure to pay an invoice in full when due at its maturity because
of its financial inability to pay) will be assumed by us on each shipment which
our Credit Department has approved in writing, and as to which the customer
actually receives and finally accepts delivery of the goods. Without our prior
written consent, you will not change the amount, terms or shipping dates of any
invoice, whether or not approved by us as to credit, or grant any other
indulgence with respect thereto. Credit approval with respect to any shipment of
goods may be withdrawn any time before, but not after shipment is made and shall
be effective only if delivery is made within thirty (30) days from the date
specified in the approved order, or within thirty (30) days from the date of
approval (if no delivery date is specified). We shall have no liability
whatsoever to you or to any person or firm for not approving, or withholding
approval of, any credit to any customer. We shall send to you a computer
generated Order Confirmation Report (the "Report") each day, for orders entered
that day, which will indicate credit approvals by our Credit Department, or
other disposition. This Report shall constitute the official record of our
written credit approvals. All information and exhibits contained in the Guides
or on any screen accessed by you or any print-outs, reports, statements or
notices received by you (herein "Information and Documentation") are, and shall
remain, our exclusive property and shall be used only by you for the training,
reference and business use of authorized personnel within your organization and
for the processing of factoring related transactions between you and us.
Further, the Guides and any Information or Documentation shall not be disclosed
to or used by anyone other than you (nor by any unauthorized party whatsoever),
in whole or part, except after obtaining the express written permission of an
authorized officer of the undersigned. Although we will make every effort to
assure the correctness of the Information and Documentation, we make no
representations or warranties, express or implied, with respect to the
Information or Documentation or its intended use.
3. All of your invoices shall bear a notice that the Account has been
assigned to, is owned by, and is payable only to us. All invoices shall be
mailed by you to your customers at your expense. You will give us copies of all
invoices with such confirmation of the transfer of Accounts to us and such proof
of shipment or delivery as we may require. We are authorized to regard your
printed name or rubber stamp signature on confirmatory assignment schedules, or
invoices as the equivalent of a manual signature by one of your authorized
officers or agents. Should you for any reason defer shipment of goods which you
have sold and invoiced to a customer, you will: so note on the copies of
invoices submitted to us; submit all other relevant details to us; and comply
with any conditions we deem necessary as a prerequisite to our handling these
Accounts on our books.
4. You hereby represent and warrant that: each Account is based on an
actual and bona fide sale and delivery of goods or rendition of services to
customers, made by you in the ordinary course of your business; the goods and
inventory being sold and the Accounts created are your exclusive property and
are not and shall not be subject to any lien, consignment arrangement,
encumbrance, security interest or financing statement whatsoever, other than in
our favor; your customers have accepted the goods or services, owe and are
obligated to pay the full amounts stated in the invoices according to their
terms, without dispute, offset, defense or counterclaim; all amounts are due in
United States Dollars; all original invoices bear notice of the assignment to
us; any taxes or fees relating to your Accounts or goods are solely your
responsibility; and none of the Accounts factored with us hereunder represent
sales to any subsidiary, parent or affiliated company of yours. You also
warrant and represent that you are a duly organized and validly existing
corporation and are qualified in all states where necessary. You agree to
maintain such books and records regarding Accounts as we may require and agree
that they will reflect our interest in the Accounts. All of your books and
records will be available to us at reasonable business hours, and you agree to
furnish us with such other information regarding your business affairs and
financial condition, all as we may require from time to time. You further agree
promptly to notify us of any change in your name, place of business or corporate
structure.
5. We shall purchase the Accounts at the gross amount of the respective
invoices, less any trade and cash discounts (based on the longest or shortest
terms allowable to your customers, as we elect), and less credits and allowances
(the "Net Sales"). Trade and cash discounts shall be considered applicable to
postage, freight and incidental charges, as well as to the price of the goods.
Net Sales factored with us each month shall be posted to your account as of the
date we receive confirmatory assignment schedules.
6. We may at your request, make advances to you against the Net Sales
prior to the collection thereof, subject to our right to hold any reserve we
deem necessary as security for payment and performance of any and all of your
Obligations as herein defined. Any advances which may be made to you prior to
shipment, and any debit balances whatsoever in your account shall be payable to
us on demand. Checks and other proceeds of Net Sales, as are received by us in
payment of Accounts, will be posted to your account with us; however, we shall
debit your account monthly with the cost of four (4) additional business days on
all such amounts computed at the rate set forth in paragraph 13 hereof.
7. The amount of Net Sales for any Account shipped at our Credit Risk (as
hereinabove provided), which remains unpaid due solely to Credit Risk, will be
credited to your account with us:
(a) as of the date of the Account's longest maturity, if such
customer: makes an assignment for the benefit of creditors; files
or has filed against it a petition under any bankruptcy or
insolvency act; calls a meeting of its creditors; institutes any
proceeding to compromise or adjust its debts; or if any
proceeding is instituted by or against such customer for relief
under any State or Federal bankruptcy or insolvency law; or if a
receiver or trustee is appointed for the customer; or
(b) as of the last day of the third month following its longest
maturity date, if such Account remains unpaid as of said date
without the happening of any of the events specified in (a)
hereinabove.
Should it subsequently be determined that any such Account credited to you
hereby remained unpaid due to any reason other than Credit Risk, we shall have
the right to reverse the credit, and debit your account accordingly.
8. You agree to notify us promptly of any matters affecting the value
enforceability or collectability of any Account and of all customer disputes,
offsets, defenses, counterclaims, returns and rejections. You agree to issue
credit memoranda promptly (with duplicates to us) upon accepting returns or
granting allowances, and may continue to do so until we have notified you that
such credits or allowances are to be made only after our prior written approval.
We shall cooperate in the adjustment of any such customer disputes, but we may
at any time charge your account as of the due date of the invoice, with the
amount of (a) each Account with respect to which any alleged customer dispute,
offset, defense, deduction or counterclaim is asserted or which is not paid in
full at maturity for any reason other than Credit Risk (including, but not
limited to, non-payment due to acts of God, civil strife, war and the like); (b)
each Account upon which we do not have the Credit Risk at the time of shipment
and which is not paid in full at maturity; and (c) any Account as to which there
is any breach of warranty. Such charge shall not constitute a reassignment to
you of the Account involved. It is further agreed that any deduction taken by a
customer shall be immediately charged back to your account. We shall also be
entitled to charge your account with: amounts we receive in payment of Accounts
at your Credit Risk and which thereafter we are required to turnover or return;
any and all expenses and attorneys' fees incurred by us in collecting or
attempting to collect any Accounts charged back to you, or any Obligation
hereunder; and any expenses incurred by us as a result of customer checks that
are not paid upon presentment for any reason. Further, we shall be entitled to
charge your account a reasonable fee for each Account at your Credit Risk which
we may place with a collection agency or attorney for collection.
9. After the end of each month, we shall send you an Account Current
statement showing the accounting for the Net Sales, charges, advances and other
transactions occurring between us during that month. The monthly statements
shall be deemed correct and binding upon you and shall constitute an account
stated between us, unless we receive a written statement of your exceptions
within thirty (30) days after same is mailed to you.
10. Without the necessity of further formality or writing, you hereby
transfer, assign and grant to us a lien on and security interest in all of your
right, title and interest in and to all of your now existing and future (a)
Accounts (whether or not specifically assigned or factored hereunder), any and
all instruments, documents, contract rights, chattel paper, general intangibles,
including, without limitation, all federal, state and local income tax refunds,
and all forms of obligations owing to you; (b) unpaid seller's rights (including
rescission, replevin, reclamation and stopping in transit) relating to the
foregoing or arising therefrom; (c) rights to any goods represented by any of
the foregoing, including returned or repossessed goods; (d) reserves and credit
balances arising hereunder; (e) guarantees or collateral for any of the
foregoing; (f) insurance policies or rights relating to any of the foregoing;
and (g) cash and non-cash proceeds of any and all of the foregoing. (It is
however understood that we shall have no obligation to perform in any respect,
any contracts relating to any Accounts). You agree to comply with all
appropriate laws in order to perfect our interest in the collateral pledged
hereunder, and to execute any financing statements or additional documents, as
we may require, to effectuate the foregoing and to carry out this Agreement. We
are hereby authorized by you to file any financing statements covering the
collateral whether or not your signature appears thereon.
11. The lien and security interest hereunder and any lien or security
interest that we may have in any of your other assets or property, shall secure
payment and performance of all your now existing and future indebtedness or
obligations to us, whether absolute or contingent and whether arising hereunder
or under any other agreement or arrangement between us, or by operation of law
or otherwise, including without limitation, indebtedness for goods or services
purchased by you from any concern whose accounts receivable are factored or
financed by us and indebtedness arising under any guaranty made by you to us
(herein "Obligations"). Any reserves or balances to your credit and any other
property or assets of yours in our possession may be held by us as security for
any Obligations. We may in our discretion, charge any or all of the Obligations
to your account at any time and from time to time.
12. As owners and assignees of the Accounts, we shall have the right to
bring suit, in your name or ours, and generally shall have all other rights
respecting said Accounts, including without limitation the right to: accelerate
or extend the time of payment, settle, compromise, release in whole or in part
any amounts owing on any Accounts and issue credits in your name or ours. Any
checks, cash, notes or other instruments or property received by you with
respect to any Accounts shall be held by you in trust for us, separate from your
own property and funds, and immediately turned over to us with proper
assignments or endorsements. We may endorse or sign your name or ours on any
checks or other instruments with respect to Accounts or the goods covered
thereby. All returned, reclaimed or repossessed merchandise or goods shall be
set aside by you, marked with our name and held by you for our account as owner,
and you shall notify us promptly of all such goods. If we so request, you agree
promptly to pay us the invoice price thereof, or if we so elect you will deliver
such merchandise or goods to us or sell same for our account. We shall however
have the right to sell or otherwise dispose of such goods on terms acceptable to
us without notice to you. You further agree to make your records, files and
books of account available to us on request and that we may visit your premises
during normal business hours to examine such records, files and books of account
and to make copies of extracts thereof and to conduct such examinations as we
deem necessary. In order to cover any costs and expenses we may incur in
connection with performing any such examinations, we shall be entitled to charge
your account a fee for each day or part thereof in which the examination is
conducted, plus any additional out-of-pocket costs and expenses we incur as a
result of conducting said examination.
13. Interest shall be calculated at the rate of ten percent (10%) per
annum, based on the nine percent (9%) per annum "Chemical Rate" as of June 1,
1995. The Chemical Rate is the rate of interest publicly announced by Chemical
Bank in New York, New York from time to time as its prime rate. (The prime rate
is not intended to be the lowest rate of interest charged by Chemical Bank to
its borrowers.) In the event of any change in the aforesaid Chemical Rate, the
rate of interest hereunder shall change 1/4 of 1% for each 1/4 of 1% change in
the Chemical Rate, as of the first of the month following any such change.
Interest shall be calculated based on a 360 day year. Interest shall be charged
on: all advances, all charges hereunder, and any debit balance in your account.
14. For our services hereunder, we shall be entitled to a commission of
three-quarters of one percent (.75%) on the gross face amount of all Accounts
factored with us during each calendar month. The commission shall be due and
charged to your account as of the 15th day of that month. In no event shall the
minimum commission on each invoice evidencing an Account purchased by us be less
than $4.00.
15. Any collected credit balance on our books in your advance account
shall be credited with interest at a rate four percent (4%) per annum below the
Chemical Rate being used to calculate interest hereunder for the period.
16. We shall be entitled to charge your account with all costs and
expenses incurred by us in connection with the preparation, execution,
administration and enforcement of this Agreement, including without limitation,
all reasonable fees and expenses of our attorneys (whether in-house or outside
counsel), all search fees, the cost of all public record filings and wire
transfer charges. We shall also be entitled to charge your account, in our
discretion, with a reasonable fee for all trial balances and sales summaries we
prepare at your request, and for the use by you of the on-line computer services
described in paragraph 2 hereof, which fee for computer usage is presently
$20.00 per hour, or any part of an hour. Further, a fee will be charged to your
account for each new customer set-up on our accounts receivable data base, as
follows: a fee of $10.00 will be charged when you submit an order or invoice
for any customer that has not had any activity with us for at least eighteen
(18) months prior thereto and is not established on our files; and a fee of
$5.00 will be charged when you submit an order or invoice for any customer that
has not had any activity with us on your account for at least eighteen (18)
months, but has been active during such period with respect to other clients of
ours; provided, however, that no fees will be charged for new customer set-ups
during the first six (6) months from the date of this Agreement. All fees and
charges referred to in this paragraph may be changed by us from time to time on
notice to you.
17. You may terminate this Agreement only as of any Anniversary Date, as
herein defined, and then only by giving us at least sixty (60) days prior
written notice of termination. We may terminate this Agreement at any time by
giving you written notice stating a termination date not less than sixty (60)
days from the date such notice is given. This Agreement continues uninterrupted
unless terminated as herein provided. As used herein the term "Anniversary
Date" shall mean the date occurring one year from the date hereof and the same
date in every year thereafter. Unless sooner demanded, all of your Obligations
shall become due and payable as of any termination and, pending a final
accounting, we may withhold any balances in your account unless supplied with an
indemnity satisfactory to us to cover all of your Obligations, whether absolute
or contingent. All our rights and security hereunder shall continue after any
termination until all Obligations have been paid and satisfied in full. We may
terminate this agreement immediately upon the occurrence of any of the
following: cessation of your business or the calling of a meeting of your
creditors; failure to meet your debts as they mature; the commencement by or
against you of any bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceedings under any federal or state law; breach by
you of any warranty or covenant contained herein; or your failure to pay any of
the Obligations when due. In any such event, we may remove from any premises
where same may be located any and all documents, instruments, files and records,
and any receptacles or cabinets containing same, relating to the Accounts, or we
may use (at your expense) such of your personnel, supplies or space at your
place of business or otherwise, as may be necessary to properly administer and
control the Accounts or the handling of collections and realizations thereon.
Also in any such event we may without advertisement, sell, assign and deliver
the Accounts and any returned, reclaimed or repossessed merchandise, goods or
other property, held by you or by us for our account, at public or private sale,
for cash, on credit or otherwise at our sole option and discretion, and we may
bid or become purchasers at any such sale, free from any right of redemption
which is hereby expressly waived by you. (If notice of intended disposition of
any said collateral is required by law five days notice shall constitute
reasonable notification.) The net cash proceeds resulting from the exercise of
any of the foregoing rights, after deducting all charges, costs and expenses
(including attorneys' fees) shall be applied by us to the payment of your
Obligations to us, whether due or to become due in such order as we may elect
and you shall remain liable to us for any deficiencies.
18. This constitutes the entire agreement between us; supersedes any prior
agreements; can be changed only by a writing signed by both of us; and shall
bind and benefit each of us and our respective successors and assigns. Our
failure or delay to exercise any right hereunder shall not constitute a waiver
thereof or bar us from exercising any of our rights at any time; nor shall any
course of dealing between us change or modify this Agreement. The validity,
interpretation and enforcement of this Agreement shall be governed by the laws
of the State of New York.
19. If any provision of this Agreement, including, without limitation, any
provision relating to charges constituting interest payable by you under this
Agreement, is contrary to, prohibited by, or deemed invalid under applicable
laws or regulations, such provision shall be inapplicable and deemed omitted to
the extent so contrary, prohibited or invalid, but the remainder hereof shall
not be invalidated thereby and shall be given effect so far as possible.
20. TO THE EXTENT PERMITTED BY APPLICABLE LAW, YOU AND WE EACH HEREBY
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING DIRECTLY
OR INDIRECTLY OUT OF THIS AGREEMENT, OR ANY OTHER AGREEMENT OR TRANSACTION
BETWEEN US OR TO WHICH WE ARE BOTH PARTIES.
If the foregoing is in accordance with your understanding, please so
indicate by signing and returning to us the original and one copy of this
Agreement. This Agreement shall take effect as of the date set forth above
after being accepted below by one of our officers in New York, after which, we
shall forward your copy to you with signatures completed for your files.
Very truly yours,
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By
--------------------------------------
Name:
Title:
Read and Agreed to:
LCL INTERNATIONAL TRADERS, INC.
By
-----------------------------------
Name:
Title:
Accepted at New York, New York
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By
--------------------------------------
Name:
, 1995
LCL International Traders, Inc.
1150 Motor Parkway
Central Islip, New York 11722
INVENTORY SECURITY AGREEMENT
----------------------------
Gentlemen:
1. As security for the prompt payment in full of all loans and advances made
and to be made to you from time to time by us, in conjunction with the
factoring or accounts receivable financing agreement between us, as amended
from time to time (herein the "Agreement"), as well as to secure the
payment in full of the other Obligations (hereinafter defined), you hereby
pledge and grant to us a continuing general lien upon and security interest
in (herein "Security Interest") the following described "Collateral":
All present and hereafter acquired merchandise, inventory and goods, and
all additions, substitutions and replacements thereof, wherever located,
together with all goods and materials used or usable in manufacturing,
processing, packaging or shipping same; in all stages of production -- from
raw materials through work-in-process to finished goods -- and all proceeds
of whatever sort.
2. This agreement is being executed by you to induce us to make loans or
advances to you or otherwise to extend credit or financial accommodations
to you, or to induce us to enter into or continue a factoring or financing
arrangement with you, and is executed in consideration of our doing or
having done any of the foregoing. You agree that any of the foregoing
shall be done or extended by us in our sole discretion, and shall be deemed
to have been done or extended by us in consideration of and in reliance
upon the execution of this agreement, but that nothing herein shall
obligate us to do any of the foregoing.
3. The amount of the loans and advances made or to be made by us to you, and
the period of time during which they are to remain outstanding shall at all
times be in our sole discretion. The ratio of Collateral to such loans and
advances and to the other Obligations referred to herein must be
satisfactory to us at all times, and the valuation of the Collateral is to
be determined exclusively by us. We are to be at liberty, from time to
time, without responsibility or liability to you, to revise any limit
placed by us on loans and advances or other Obligations.
4. In addition to the loans and advances made or to be made by us to you or to
others for your account, "Obligations" shall include any and all
indebtedness which may at any time be owing by you to us howsoever arising.
Obligations shall include, without limitation, all indebtedness whether now
in existence or incurred by you from time to time hereafter; whether
secured by pledge, lien upon or security interest in any of your assets or
property other than the Collateral herein described, or by pledge, lien
upon or security interest in the assets or property of any other person,
firm, entity or corporation (herein "person"); whether such indebtedness is
absolute or contingent, joint or several, matured or unmatured, direct or
indirect and whether you are liable to us for such indebtedness as
principal, surety, endorser, guarantor or otherwise. Obligations shall
also include, without limitation, your liability to us for any balances
owing in any account maintained on our books under the Agreement or under
any other agreement or arrangement now or hereafter entered into between
us; indebtedness for goods or services purchased by you from any concern
whose accounts receivable are factored or financed by us; your liability to
us as maker or endorser on any promissory note or other instrument for the
payment of money; your liability to us under any instrument of guaranty or
indemnity, or arising under any guaranty, endorsement or undertaking which
we may make or issue to others for your account, including any
accommodation extended with respect to applications for letters of credit,
our acceptance of drafts or our endorsement of notes or other instruments
for your account and benefit. Obligations shall also include, without
limitation, all interest, commissions, financing and service charges, and
expenses and fees chargeable to and due from you under this agreement, the
Agreement or any other agreement or arrangement which may be now or
hereafter entered into between us.
5. The Security Interest in the Collateral, unless expressly limited by the
provisions of paragraph 1 above, shall extend and attach to:
(a) The entire Collateral which is presently in existence and which is
owned by you or in which you have any interest, and all Collateral which
you may purchase or in which you may acquire any interest at any time and
from time to time in the future, whether such Collateral is in transit or
in your or our constructive, actual or exclusive occupancy or possession or
otherwise, or is held by you or others for your account; and
(b) The entire Collateral wherever located, including without limitation,
all Collateral which may be located on your premises, or upon the premises
of any carriers, forwarding agents, truckers, warehousemen, vendors,
selling agents, finishers, converters, processors, or other third persons
who may have possession of the Collateral; and
(c) The entire Collateral and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either of us from your customers, as
well as to all supplies, goods, incidentals, packaging materials, and any
other items which contribute to the finished goods or products manufactured
or processed by you, or to the sale, promotion or shipment thereof.
6. You agree to safeguard, protect and hold all Collateral for our account and
make no disposition thereof except in the regular course of your business
as herein provided. Until we have given you notice to the contrary, any
Collateral which we may from time to time permit to remain in your or
another person's possession or control, may be sold and shipped by you to
your customers in the ordinary course of your business, on open account and
on terms not exceeding the terms currently being extended by you to your
customers, provided that all proceeds of all sales (including cash,
accounts receivable, checks, notes, instruments for the payment of money
and similar proceeds) are forthwith transferred, assigned, endorsed, and
turned over and delivered to us in accordance with the provisions of the
Agreement. We shall have the right to withdraw this permission at any
time, in which event no further disposition shall be made of the Collateral
without our prior written approval. Invoices covering sales of Collateral
are to be assigned to us in accordance with the provisions of the
Agreement, and the proceeds thereof (if collected by you) are to be turned
over to us in accordance with the provisions of the Agreement. Cash sales
of the Collateral, or sales in which a lien upon or security interest in
the Collateral is retained by you shall only be made by you with our
written approval, and all proceeds of such sales shall not be commingled
with your other property, but shall be segregated, held by you in trust for
us as our exclusive property, and shall be delivered immediately by you to
us in the identical form received by you. Upon the sale, exchange, or
other disposition of the Collateral, as herein provided, the Security
Interest provided for herein shall without break in continuity and without
further formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, accounts receivable,
contract rights, documents of title, shipping documents, chattel paper and
all other cash and non-cash proceeds of such sale, exchange or disposition.
As to any such sale, exchange or other disposition, we shall have all of
the rights of an unpaid seller, including stopping in transit, replevin,
rescission and reclamation.
7. You hereby warrant and represent that you are solvent; that this Security
Interest constitutes and shall at all times constitute a first and only
lien on the Collateral; that you are, or will be at the time additional
Collateral is acquired by you, the absolute owner of the Collateral with
full right to pledge, sell, consign, transfer and create a Security
Interest therein, free and clear of any and all claims or liens in favor of
others; that you will at your expense forever warrant and, at our request,
defend the same from any and all claims and demands of any other person;
and that you will not grant, create or permit to exist, any lien upon or
security interest in the Collateral, or any proceeds, in favor of any other
person.
8. You agree to maintain books and records pertaining to the Collateral in
such detail, form and scope as we shall require. You agree that we or our
agents may enter upon your premises at any time, and from time to time for
the purpose of inspecting the Collateral and any and all records pertaining
thereto. You agree to notify us promptly of any change in your name,
mailing address, principal place of business or the location of the
Collateral. You are also to advise us promptly, in sufficient detail, of
any substantial change relating to the type, quantity or quality of the
Collateral, or any event which would have a material effect on the value of
the Collateral or on the Security Interest granted to us herein.
9. You agree to: execute and deliver to us, from time to time, solely for our
convenience in maintaining a record of the Collateral, such consignments or
separate written statements as we may require, designating, identifying or
describing the Collateral pledged to us hereunder. Your failure, however,
to promptly give us such consignments, or other statements shall not
affect, diminish, modify or otherwise limit our Security Interest in the
Collateral.
10. You agree to comply with the requirements of all state and federal laws in
order to grant to us a valid and perfected first Security Interest in the
Collateral. We are hereby authorized by you to file any financing
statements covering the Collateral whether or not your signature appears
thereon. You agree to do whatever we may request, from time to time, by
way of; leasing warehouses; filing notices of lien, financing statements,
amendments, renewals and continuations thereof; cooperating with our
custodians; keeping stock records; transferring Collateral to our
possession; obtaining waivers from landlords and mortgagees; and performing
such further acts as we may require in order to effect the purposes of this
agreement.
11. You agree to maintain insurance on the Collateral under such policies of
insurance, with such insurance companies, in such amounts and covering such
risks as are at all times satisfactory to us. All policies covering the
Collateral are to be made payable to us, in case of loss, under a standard
non-contributory "mortgagee", "lender" or "secured party" clause and are to
contain such other provisions as we may require to fully protect our
interest in the Collateral and to any payments to be made under such
policies. All original policies are to be delivered to us, premium
prepaid, with the loss payable endorsement in our favor, and shall provide
for not less than ten days prior written notice to us of the exercise of
any right of cancellation. At your request, or if you fail to maintain
such insurance, we shall arrange for such insurance, but at your expense
and without any responsibility on our part for: obtaining the insurance,
the solvency of the insurance companies, the adequacy of the coverage, or
the collection of claims. Unless we shall otherwise agree with you in
writing, we shall have the sole right, in our name or yours, to file claims
under any insurance policies, to receive, receipt and give acquittance for
any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other
documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
12. You agree to pay, when due, all taxes, assessments, claims and other
charges (herein "taxes") lawfully levied or assessed upon the Collateral
and if such taxes remain unpaid after the date fixed for the payment
thereof, or if any lien shall be claimed thereunder which in our opinion
might create a valid obligation having priority over the rights granted to
us herein, we may, without notice to you, but on your behalf, pay such
taxes, and the amount thereof shall be an Obligation secured hereby and due
to us on demand. Any and all fees, costs and expenses, of whatever kind
and nature, (including any taxes, attorneys' fees or costs for insurance of
any kind), which we may incur in filing public notices; in preparing or
filing documents, making title examinations or rendering opinions; in
protecting, maintaining, or preserving the Collateral; in enforcing or
foreclosing the Security Interest hereunder, whether through judicial
procedures or otherwise; or in defending or prosecuting any actions or
proceedings arising out of or related to our transactions with you under
this arrangement, shall be borne and paid by you. If same are not promptly
paid by you, we may pay same on your behalf, and the amount thereof shall
be an Obligation secured hereby and due to us on demand.
13. You agree to comply with all acts, rules, regulations, and orders of any
legislative, administrative or judicial body or official, applicable to the
Collateral or any part thereof, or to the operation of your business;
provided that you may contest any acts, rules, regulations, orders and
directions of such bodies or officials in any reasonable manner which will
not, in our opinion, adversely affect our rights or priority in the
Collateral hereunder.
14. On a breach by you of any of the terms or provisions of this agreement, the
Agreement or any other agreement or arrangement now or hereafter entered
into between us; or on the effective date of a termination of the
Agreement; or on the nonpayment when due of any Obligation owing to us,
whether or not the Agreement shall continue; or upon your committing an act
of bankruptcy, making a general assignment for the benefit of creditors; or
there is filed by or against you a petition in bankruptcy or for the
appointment of a receiver; or there is commenced under any bankruptcy or
insolvency law, any proceeding for your relief or for the composition,
extension, arrangement or adjustment of any of your obligations; or your
business is discontinued as a going concern; then we shall have the right,
with or without notice to you, to foreclose the Security Interest created
herein by any available judicial procedure, or to take possession of the
Collateral without judicial process, and to enter any premises where the
Collateral may be located for the purpose of taking possession of or
removing the Collateral. We shall have the right without notice or
advertisement, to sell, lease, or otherwise dispose of all or any part of
the Collateral, whether in its then condition or after further preparation
or processing, in your name or in ours, or in the name of such party as we
may designate, either at public or private sale or at any broker's board,
in lots or in bulk, for cash or for credit, with or without warranties or
representations, and upon such other terms and conditions as we in our sole
discretion may deem advisable, and we shall have the right to purchase at
any such sale. If notice of intended disposition of any said Collateral is
required by law, five (5) days notice shall constitute reasonable
notification. If any Collateral shall require maintenance, preparation, or
is in process or other unfinished state, we shall have the right, at our
option, to do such preparation, processing or completion of manufacturing,
for the purpose of putting the Collateral in such saleable form as we shall
deem appropriate. You agree, at our request, to assemble the Collateral
and to make it available to us at places which we shall select, whether at
your premises or elsewhere, and to make available to us your premises and
facilities for the purpose of our taking possession of, removing or putting
the Collateral in saleable form. The proceeds of any such sale, lease or
other disposition of the Collateral shall be applied first, to the expenses
of retaking, holding, storing, processing, preparing for sale, selling, and
the like, and then to the satisfaction of your Obligations to us,
application as to particular Obligations or as to principal or interest to
be in our sole discretion. You shall be liable to us for, and shall pay to
us on demand, any deficiency which may remain after such sale, lease or
other disposition, and we in turn agree to remit to you, or your successors
or assigns, any surplus resulting therefrom. The enumeration of the
foregoing rights is not intended to be exhaustive and the exercise of any
right shall not preclude the exercise of any other rights, all of which
shall be cumulative.
15. The rights and Security Interest granted to us hereunder are to continue in
full force and effect, notwithstanding the termination of the Agreement or
the fact that the principal account maintained in your name on our books
may from time to time be temporarily in a credit position, until the final
payment to us in full of all Obligations due to us by you. Our delay, or
omission to exercise any right hereunder, shall not be deemed a waiver
thereof, or be deemed a waiver of any other right, unless such waiver be in
writing and signed by us. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any future
occasion.
16. To the extent that your Obligations are now or hereafter secured by any
assets or property other than the Collateral, or by the guarantee,
endorsement, assets or property of any other person, then we shall have the
right in our sole discretion to determine which rights, security, liens,
security interests or remedies we shall at any time pursue, foreclose upon,
relinquish, subordinate, modify or take any other action with respect to,
without in any way modifying or affecting any of them, or of any of our
rights hereunder.
17. This agreement, which is subject to modification only in writing signed by
us, is supplementary to and is to be considered as part of the Agreement.
No course of dealing between us shall change or modify this agreement. The
validity, interpretation and enforcement of this agreement shall be
governed by the laws of the State of New York.
18. If the foregoing is in accordance with your understanding, please so
indicate by signing and returning to us the original and one copy of this
agreement. The agreement shall take effect as of the date set forth above,
after being accepted below by one of our officers in New York State, after
which, we shall forward a copy to you with signatures completed for your
files.
Very truly yours,
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By
--------------------------------------
Name:
Title:
Read and Agreed to:
LCL INTERNATIONAL TRADERS, INC.
By
----------------------------
Name:
Title:
Accepted at New York, New York
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By
--------------------------------------
Name:
, 1995
--------------------------
LCL International Traders, Inc.
1150 Motor Parkway
Central Islip, NY 11722
Gentlemen:
We refer to the following:
1. The Factoring Agreement between Liberty Bell Christmas, Inc. (a
Delaware corporation) ("Liberty Bell") and us dated July 16, 1990, as
supplemented and amended (the "Liberty Bell Factoring Agreement");
2. The Factoring Agreement between Ivy Mar Co., Inc. (a Delaware
corporation) ("Ivy Mar") and us dated July 16, 1990, as supplemented
and amended (the "Ivy Mar Factoring Agreement");
3. The Factoring Agreement between Creative Home Products, Inc. ("Creative
Home") and us dated December 20, 1991, as supplemented and amended (the
"Creative Home Factoring Agreement"); and
-2-
4. The Factoring Agreement between LCL International Traders, Inc. ("LCL")
and us dated as of the date hereof, as supplemented and amended (the
"LCL Factoring Agreement").
We understand that effective , 1995 (the "Effective Date"),
---------------
Liberty Bell, Ivy Mar, and Creative Home have sold, assigned, transferred and
conveyed to LCL all of their right, title and interest in certain of their
assets that were sold and assigned to us or in which we were granted a security
interest pursuant to the Liberty Bell Factoring Agreement, the Ivy Mar Factoring
Agreement, and the Creative Home Factoring Agreement. In addition, as of the
Effective Date, Liberty Bell, Ivy Mar, and Creative Home have ceased making
sales to their customers and LCL will begin making sales to such customers and
otherwise carry on the businesses previously carried on by Liberty Bell, Ivy
Mar, and Creative Home.
By this letter, it is hereby confirmed as follows:
(i) As of the Effective Date, LCL shall assume any and all indebtedness,
liabilities and obligations now or hereafter owing to us by Liberty
Bell, Ivy Mar, and Creative Home.
(ii) As of the Effective Date, any and all liens, encumbrances,
collateral, security interest, mortgages, transfers and any and all
assignments of any right, claim or interest in and to property of any
nature whatsoever, heretofore given or granted to us by Liberty Bell
under the Liberty Bell Factoring Agreement, Ivy Mar under the Ivy Mar
Factoring Agreement, and Creative Home under the Creative Home
Factoring Agreement, shall be assumed by LCL and shall continue without
-3-
interruption in full force and effect, and shall apply to any and all
such property now or hereafter owned by LCL, including without
limitation, all such property acquired from Liberty Bell, Ivy Mar, and
Creative Home.
(iii) As of the Effective Date, LCL shall be substituted as a party to the
Liberty Bell Factoring Agreement, the Ivy Mar Factoring Agreement, and
the Creative Home Factoring Agreement with the same force and effect as
if these agreements had been entered into between LCL and us, and it
shall assume all of the obligations and succeed to all of the rights of
Liberty Bell, Ivy Mar, and Creative Home under the foregoing
agreements. All sales made by LCL on or after the Effective Date shall
be factored with us pursuant to the terms and conditions of the LCL
Factoring Agreement.
(iv) As of the Effective Date, all accounts of Liberty Bell, Ivy Mar, and
Creative Home on our books shall be transferred to LCL.
(v) You agree to make available to us, at our request, any and all
documents demonstrating the transfer of assets to, and assumption of
liabilities by, Liberty Bell, Ivy Mar, and
Creative Home, and to execute any and all documents necessary to
continue, without interruption, our liens and security interests as
described above.
Further, we ask LCL, Liberty Bell, Ivy Mar, and Creative Home to represent and
warrant to us, by each executing and returning to us a copy of this letter,
that:
-4-
(a) Each of them has the corporate power and authority to execute and perform
this agreement and, in the case of LCL, the Liberty Bell Factoring Agreement,
the Ivy Mar Factoring Agreement, and the Creative Home Factoring Agreement,
and performance by each of them of this agreement and, in the case of LCL,
the Liberty Bell Factoring Agreement, the Ivy Mar Factoring Agreement, and
the Creative Home Factoring Agreement, will not result in the violation of,
or cause a default under any other agreement to which it is a party;
(b) Execution and performance of this agreement and, in the case of LCL, the
Liberty Bell Factoring Agreement, the Ivy Mar Factoring Agreement, and the
Creative Home Factoring Agreement, has been authorized by all necessary
corporate action.
If you are in agreement with the foregoing, please so indicate by signing and
returning to us the enclosed copy of this letter. We have asked Liberty Bell,
Ivy Mar, and Creative Homes to sign below to acknowledge their confirmation of,
and agreement with, the foregoing.
This agreement may be executed in any number of counterparts, all of which
together shall constitute one and the same document.
Very truly yours,
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By
----------------------------------------
Name:
-5-
Read and Agreed to: Title:
LCL INTERNATIONAL TRADERS, INC.
By
-------------------------------
Name:
Title:
Confirmed:
LIBERTY BELL CHRISTMAS, INC.
(a Delaware corporation)
By
--------------------------------
Name:
Title:
IVY MAR CO., INC. (a Delaware corporation)
By
-------------------------------
Name:
Title:
-6-
CREATIVE HOME PRODUCTS, INC.
By
--------------------------------
Name:
, 1995
--------------------------
LCL International Traders, Inc.
1150 Motor Parkway
Central Islip, New York 11722
Gentlemen:
Reference is made to the Factoring Agreement between us dated as of the date
hereof, as supplemented and amended (the "Agreement").
This shall confirm our mutual understanding and agreement that notwithstanding
anything to the contrary contained in the Agreement, you may terminate the
Agreement at any time upon written notice to us, provided that as of such
termination date all Obligations (as defined in the Agreement) owing to us are
paid in full, except and to the extent that such Obligations are covered by an
indemnity agreement, substantially in the form of the industry standard
indemnity agreement attached hereto as Exhibit A, that is supplied to us in
connection with such termination from a financial institution reasonably
acceptable to us to cover any such remaining Obligations, whether contingent or
absolute; and provided further, that you shall pay to us a fee in the amount of
$150,000.00, which fee shall be due and charged to your account as of such
termination date. It is understood that unless the conditions set forth above
are met, the Agreement may only be terminated as of the Anniversary Date in the
manner set forth in the Agreement.
This shall also confirm our mutual understanding and agreement that if you
should seek and obtain a lending facility from another financial institution in
substitution of any advances that we may make pursuant to the Agreement, we
shall execute any and all documents reasonably necessary and appropriate under
the circumstances, in such form and substance as is in accordance with standard
industry practice.
Except as herein specifically provided, the Agreement remains in full force and
effect in accordance with its terms.
If the foregoing is in accordance with your understanding of our agreement,
kindly so indicate by signing and returning to us the enclosed copy of this
letter.
Very truly yours,
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By:
--------------------------------
Read and Agreed to: Name:
Title:
LCL INTERNATIONAL TRADERS, INC.
By:
--------------------------
Name:
Title:
EXHIBIT A
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, 19
--
LETTER OF INDEMNITY
===================
============================
Re:
(herein the "Company")
Gentlemen:
l. To induce you to terminate your factoring arrangements with the above-named
Company as of (herein the "termination date"), and
-----------------------
to limit your security interest in the accounts receivable of the Company,
all as more fully set forth hereinafter, and in consideration of your doing
the following as of said termination date:
(if credit balance) transferring to us any balance standing
to the credit of the Company on your books, which you
estimate will be approximately $ ;
---------------
or
(if debit balance) accepting our payment for the amount of
any debit balance of the Company on your books which you
estimate will be approximately $ , we agree to
---------------
pay to you on demand:
a. all amounts relating to accounts receivable
factored by you on or prior to the termination
date, and all amounts of interest, fees, expenses
and any additions arising out of clerical errors
and omissions, which you are or may hereafter be
entitled to charge to the Company in accordance
with your factoring contract with the Company;
b. all amounts paid by you after the termination date
pursuant to the guarantees, letters of credit and
drafts, none of which may be amended in any way
without our prior written consent in each
instance, listed on the attached Schedule (if
----
none, so state); and
c. all amounts owing by the Company to you as of the
termination date by reason of the Company's
purchases of goods or services from any concern
for whom you act as factor, as invoices therefore
become due (herein "ledger debt").
Subject to the following provisions, your demands for any of the aforesaid
amounts shall be conclusive upon us.
2. Our obligations under this letter do not extend to:
a. any accounts receivable approved by you as to
credit which remain unpaid solely because of the
financial inability of the customer to pay at
maturity; or
b. spurious accounts receivable which did not in fact
arise from the actual sale of merchandise or the
rendering of services, provided, however, that if
you notify us promptly of any losses attributable
to your factoring of any such spurious accounts,
we shall pay you the amount thereof up to the
amount of any credit balance transferred by you to
us, less any other payments made or to be made by
us to you under this letter.
3. This agreement is entered into by us in reliance upon your representations
that to your knowledge as of : (a) outstanding accounts
---------------
receivable total approximately $ ; (b) of these accounts,
---------------
approximately $ are with full recourse to the Company; (c)
---------------
of these accounts approximately $ represent known bill and
---------------
hold sales and known consignment, sale on approval, or sale or return
transactions; and (d) outstanding ledger debt does not exceed approximately
$ . In addition, you have further represented to us that to
---------------
your knowledge (other than for discounts permitted by the payment terms of
the accounts receivable) all disputes, claims, defenses, offsets or
counterclaims which exist with respect to the outstanding accounts
receivable are routine in nature, do not in any one instance involve more
than $ , and do not exceed $ in aggregate,
--------------- ---------------
except as listed on the attached Schedule (if none, so state).
----
4. You hereby release, as of the termination date, any and all security
interests and liens which have heretofore been granted to you by the
Company except as to accounts receivable factored by you on or prior to the
termination date, any merchandise represented thereby (delivered or
undelivered) and any proceeds thereof. Appropriate releases and
termination statements are delivered herewith.
5. You agree to remit to us any amounts which the Company may be entitled to
receive from you, from time to time, upon the adjustment of its account
with you. If we so request, you agree to assign to us, without recourse,
your rights in any accounts receivable for which we have made payment to
you hereunder and any merchandise represented thereby, and you will supply
us with appropriate supporting details thereof in your possession,
including but not limited to copies of invoices, proofs of shipment and
statements.
6. We agree to remit to you any collections that we may subsequently receive
on any accounts receivable factored by you on or prior to the termination
date; and you agree to remit to us any collections that you may
subsequently receive on any other accounts receivable. Furthermore, you
agree to remit to us any collections that you may subsequently receive on
any accounts for which payment has been made by us to you. These
obligations shall be irrevocable and shall survive the date set forth in
Paragraph 8 below.
7. In the event that any payment which is the subject of remittance by one of
us (the "Remitter") to the other (the "Recipient") pursuant to Paragraph 6
above is sought to be recovered by the payor or a representative thereof
(including a trustee in bankruptcy or assignee for the benefit of
creditors) on the grounds of preference, then the Remitter shall promptly
so advise the Recipient in writing. Following the aforementioned written
notice, the Recipient shall have the exclusive right and obligation, at its
sole cost and expense, to contest, defend or settle such claim. The
Recipient hereby indemnifies and holds the Remitter harmless from any loss
or expense arising out of the assertion of such claim. This
indemnification shall be irrevocable and survive the date set forth in
Paragraph 8 below.
8. Our liability hereunder shall embrace only claims in writing received by us
on or prior to . Your monthly account current shall
----------------
constitute such claim provided that you shall furnish us with such
additional information and supporting details as we may reasonably request
with respect thereto.
If the above correctly sets forth our agreement, please sign the enclosed copy
of this letter below to so indicate.
Very truly yours,
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By
--------------------------------------
Name:
Title:
Read and Agreed to:
By
----------------------------
Name:
Title:
To: THE CIT GROUP/COMMERCIAL SERVICES, INC.
In consideration of your executing and delivering to
(hereinafter referred to as the "Old Factor"), the
- -----------------------------
aforesaid letter substantially in the form set forth above, or with such changes
in form as may be required to make it acceptable to Old Factor, we hereby agree
to indemnify you and save you harmless from any loss, claim or liability in
connection therewith and to pay you on demand any amount you pay pursuant to the
provisions of such letter. Your obligation to make such payments shall be
determined exclusively by you, notwithstanding any judgement we may express to
the contrary, and all such payments shall be conclusive upon us insofar as you
are concerned, but shall not prejudice our rights against Old Factor should we
question the propriety of any demands made by it under the factoring contract or
otherwise. Our signature hereon will further authorize Old Factor to transfer
to you: any balance standing to our credit on its books, any assets of ours
presently held by it and any payments to which you are entitled pursuant to the
letter.
(Client)
By
--------------------------------------
Name:
Title:
