<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8--K
CURRENT REPORT
Filed Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported) August 31, 1995
TRISTAR CORPORATION
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-13099 13-3129318
--------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
12500 San Pedro Avenue, Suite 500, San Antonio, Texas 78216
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (210) 402-2200
----------------------------
Not Applicable
--------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On August 31, 1995, Eurostar Perfumes, Inc., a Texas corporation
("Eurostar"), was merged (the "Merger") with and into TRISTAR CORPORATION, a
Delaware corporation ("Tristar"), with Tristar as the surviving corporation.
The Merger was consummated pursuant to an Agreement and Plan of Merger (the
"Agreement") dated as of July 1, 1995, by and among Tristar, Eurostar and
Transvit Manufacturing Corporation, a British Virgin Islands corporation
("Transvit") owned by the Core Sheth Families. As provided in the Agreement,
all the issued and outstanding shares of Eurostar Common Stock, $.001 par value
("Eurostar Common Stock"), were converted into the right to receive an
aggregate of 9,977,810 shares of Tristar Common Stock, $.01 par value ("Tristar
Common Stock"). The number of shares of Tristar Common Stock received by the
Core Sheth Families in exchange for the Eurostar Common Stock was based on a
valuation of Eurostar and Tristar at approximately 60% and 40%, respectively,
of the value of the combined entities. In addition, the exercise price of
certain warrants held by an affiliate of the Core Sheth Families may be reduced
in connection with the Merger.
The Core Sheth Families is a group which, prior to the Merger, owned
60.5% of the outstanding shares of Tristar Common Stock (71% assuming the
exercise of all outstanding warrants) and all of the outstanding shares of
Eurostar Common Stock. The Core Sheth Families consist of Shashikant S. Sheth,
a director of Tristar, Jamnadas Sheth, Kirit Sheth and Mahendra Sheth. Viren
S. Sheth, a director of Tristar and its President and Chief Executive Officer,
is Shashikant S. Sheth's brother. Although Viren S. Sheth is not a member of
the Core Sheth Families, he is related by blood to certain members of the Core
Sheth Families. Viren S. Sheth also served as President, Chief Executive
Officer and a director of Eurostar. Following the Merger approximately 16.6
million shares of Tristar Common Stock are outstanding, of which approximately
14 million shares, representing approximately 84% of the total, are held by the
Core Sheth Families. The Core Sheth Families also hold warrants to acquire an
additional 2,400,000 shares of Tristar Common Stock, which, if exercised, would
increase their beneficial ownership to approximately 86% of the outstanding
shares of Tristar Common Stock.
Tristar engages in numerous transactions with entities owned by the
Core Sheth Families. Prior to the Merger, Tristar was purchasing virtually all
of its fragrance products from Eurostar. From 1989 until September 1992,
Tristar purchased virtually all of its fragrance products from another single
supplier, S&J Perfume Company, Ltd. ("S&J Perfume"), which, since January 1991,
has also been controlled by the Core Sheth Families. During fiscal 1994 and
for the six months ended February 28, 1995, fragrance products supplied by
Eurostar represented approximately 79% and 78%, respectively, of Tristar's net
sales, and cosmetics supplied by Emicos International, Ltd. ("Emicos"), another
affiliate of the Core Sheth Families, accounted for approximately 12% and 12%,
respectively, of Tristar's net sales. For fiscal 1994 and for the six months
ended February 28, 1995, purchases from Eurostar amounted to $27,282,000 and
$13,200,000, respectively, and purchases from Emicos amounted to $4,254,000 and
$1,238,000, respectively. At August 31, 1994 and at February 28, 1995, Tristar
owed outstanding payables to Eurostar in the amounts of $1,162,000 and
$1,167,000, respectively, and owed outstanding payables to Emicos in the
amounts of $726,000 and
<PAGE> 3
$792,000, respectively. During fiscal 1994 and for the six months ended March
31, 1995, approximately 85% and 66%, respectively, of Eurostar's sales were to
Tristar.
In October 1992, Tristar entered into a three-year distribution
agreement with Eurostar and S&J Perfume, also an entity owned and controlled by
the Core Sheth Families, for the purchase of fragrance products. Under the
terms of the agreement, during fiscal 1994, Eurostar supplied virtually all of
Tristar's requirements for fragrance products for exclusive distribution by
Tristar in the United States, Mexico, Canada and Puerto Rico. This agreement
was amended in August 1993 to assure Tristar of a supply of fragrance products
from Eurostar through August 1999. No purchases have been made by Tristar from
S&J Perfume or its successor company, Starion International Limited, a United
Kingdom corporation, since fiscal 1993. This distribution agreement was
terminated in connection with the Merger.
During fiscal 1994, Tristar sold cosmetic pencils to Emicos in the
amount of $343,000. At August 31, 1994, Tristar had a receivable outstanding
from Emicos of $126,000.
Eurostar purchases various products from Tristar for resale to
Eurostar's customers in Central and South America. These purchases were
$114,000 in fiscal 1994. At August 31, 1994, Tristar had a receivable
outstanding from Eurostar of $248,000.
In October 1993, Tristar became a party to a one-year design and
consulting agreement with Eurostar pursuant to which Eurostar and other
entities of the Core Sheth Families provide marketing concepts and design
services to Tristar for the production of marketing and advertising material.
The agreement, renewable each calendar year, provides for a fixed annual fee to
be renegotiated at the end of each calendar year. The agreement was renewed
for calendar 1995, but was terminated as a result of the Merger. The fee for
calendar 1995 was $150,000.
Tristar was a party to a Computer Services and Support Agreement with
Eurostar pursuant to which Tristar paid Eurostar approximately $132,000 per
year for access to hardware and software which was used to maintain Tristar's
inventory and accounting systems. This agreement was terminated as a result of
the Merger.
In May 1995, Tristar sold its cosmetic pencil manufacturing business,
including all related equipment and inventory, to Eurostar in consideration for
the cost of inventories payable upon utilization of such inventories and a
seven-year note for approximately $600,000. In connection with the sale,
Eurostar agreed to supply all of Tristar's requirements for cosmetic pencils at
contractual prices such that, under fiscal 1994 volume levels and selling
prices, Tristar would achieve in future periods the same contribution from
cosmetic pencil sales as was achieved in fiscal 1994. Tristar intends to sell
or lease its manufacturing plant facilities in South Carolina.
-2-
<PAGE> 4
The Core Sheth Families have also loaned Tristar funds in connection
with the settlement of certain stockholder litigation. On December 17, 1993,
Tristar announced court approval of a settlement agreement, on behalf of
Tristar and certain other parties, of the previously disclosed stockholder
class action litigation for a cash payment of $9.5 million. To finance the
settlement agreement, the Core Sheth Families loaned Tristar $9 million and
purchased and extended common stock warrants for a price of $500,000. The last
portion of the settlement amount was paid by Tristar on December 16, 1994.
The loans from the Core Sheth Families mature in ten years, with
interest payable annually and principal payable 20% at the end of year eight,
20% at the end of year nine and the remaining 60% at the end of year ten, with
the exception of $1 million which was paid in December 1994 with a court
approved distribution of the proceeds of an executive liability and
indemnification policy owned by Tristar. These loans bear interest at the
long-term federal rate and are subordinated to indebtedness of Tristar owed to
its senior lenders.
The common stock warrants were purchased by the Core Sheth Families on
December 14, 1994, pursuant to an agreement entered into in connection with the
settlement agreement. The warrants grant the Core Sheth Families the right to
purchase up to 2,000,000 shares of Tristar's Common Stock within ten years of
the date of issuance. The initial per-share price of the common stock under
the warrants is $5.34 and it increases by 10% per year beginning December 15,
2001. As discussed below, the exercise price of such warrants may be reduced
in connection with the Merger.
In connection with the Merger, Tristar has agreed with the Core Sheth
Families that the exercise price of the outstanding 10-year warrants held by
the Core Sheth Families to purchase an aggregate of 2,000,000 shares of Tristar
Common Stock will be repriced at an amount, if lower than the current exercise
price, equal to the lowest average Closing Sales Price of the Tristar Common
Stock for any twenty (20) consecutive trading days during the period beginning
September 1, 1995 and ending on August 31, 1996. The current exercise price of
such warrants is $5.34 per share and such price is scheduled to increase 10%
per year beginning December 15, 2001.
The operations acquired from Eurostar included a plant, equipment and
other physical property used to manufacture designer alternative fragrances,
cosmetics and bath and body products. Tristar intends to continue to use such
plant, equipment and other physical property in the same manner as used prior
to the Merger.
-3-
<PAGE> 5
Item 7. Financial Statements and Exhibits.
(a) Financial Statements.
-4-
<PAGE> 6
Independent Auditors' Report
The Board of Directors and Stockholder
Eurostar Perfumes, Inc.:
We have audited the accompanying consolidated balance sheets of Eurostar
Perfumes, Inc. and subsidiaries as of September 30, 1994 and 1993, and the
related consolidated statements of income and retained earnings and cash flows
for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As discussed in note 3 to the consolidated financial statements, approximately
85% and 99% of the Company's 1994 and 1993 sales, respectively, are to Tristar
Corporation, a related party.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Eurostar Perfumes,
Inc. and subsidiaries as of September 30, 1994 and 1993, and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
As discussed in note 1(c) to the consolidated financial statements, the Company
changed its method of accounting for inventories in 1994.
KPMG Peat Marwick LLP
San Antonio, Texas
November 18, 1994
-5-
<PAGE> 7
Independent Accountants' Review Report
The Board of Directors and Stockholder
Eurostar Perfumes, Inc.:
We have reviewed the accompanying consolidated balance sheet of Eurostar
Perfumes, Inc. and subsidiaries as of March 31, 1995, and the related
consolidated statements of income and retained earnings and cash flows for the
six-month periods ended March 31, 1995 and 1994, and for the period from March
5, 1992 (inception) through September 30, 1992. These consolidated financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquires of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
San Antonio, Texas
July 14, 1995
-6-
<PAGE> 8
EUROSTAR PERFUMES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, September 30, September 30,
1995 1994 1993
----------- ------------- -------------
(unaudited)
<S> <C> <C> <C>
Current assets:
Cash $ 740,058 $ 1,430,924 $ 420,523
U.S. treasury note, resticted (note 2) - - 100,156
Trade accounts receivable:
Affiliate (note 3) 1,893,490 1,881,614 5,856,190
Non-affiliate 1,675,858 868,560 31,450
Inventories (notes 3 and 4) 4,987,599 6,644,423 5,275,121
Deferred income taxes (note 7) 294,000 203,092 88,322
Other current assets 152,805 167,186 113,858
----------- ----------- -----------
Total current assets 9,743,810 11,195,799 11,885,620
Deferred income taxes (note 7) - - 75,255
Net property, plant and equipment (note 5) 8,001,663 8,440,174 7,952,906
----------- ----------- -----------
$17,745,473 $19,635,973 $19,913,781
=========== =========== ===========
Current liabilities:
Current installments of note payable
to parent company (note 6) $ 1,500,000 $ 2,050,000 $ 2,500,000
Trade accounts payable:
Non-affiliate accounts 1,044,227 2,288,209 2,970,136
Affiliate accounts (note 3) 147,408 1,137,156 1,771,144
Customer advances 192,765 83,169 122,589
Income taxes payable 602,737 2,027,666 2,247,244
Accrued expenses (note 6) 888,442 853,069 259,271
----------- ----------- -----------
Total current liabilities 4,375,579 8,439,269 9,870,384
Note payable to parent company, excluding
current installments (note 6) 5,015,701 4,165,701 6,468,684
Deferred income taxes (note 7) 409,000 159,092 -
Other liabilities 223,057 269,118 134,545
----------- ----------- -----------
Total liabilities 10,023,337 13,033,180 16,473,613
----------- ----------- -----------
Stockholder's equity:
Common stock, $.001 par value.
Authorized, issued and outstanding
1,000,000 shares 1,000 1,000 1,000
Additional paid-in capital 99,000 99,000 99,000
Retained earnings 7,622,136 6,502,793 3,340,168
----------- ----------- -----------
Total stockholder's equity 7,722,136 6,602,793 3,440,168
Commitments and contingencies (notes 3 and 8)
----------- ----------- -----------
$17,745,473 $19,635,973 $19,913,781
=========== =========== ===========
</TABLE>
-7-
See accompanying notes to consolidated financial statements.
<PAGE> 9
EUROSTAR PERFUMES, INC. AND SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings
<TABLE>
<CAPTION>
Six months ended March 31, Years ended September 30, Period from
---------------------------- ----------------------------- March 5, 1992 through
3/31/95 3/31/94 1994 1993 September 30, 1992
----------- ----------- ----------- ----------- ---------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Net sales (notes 3 and 9) $17,410,449 $16,371,092 $31,481,083 $28,144,851 $ 216,038
Cost of goods sold (note 3) 12,139,545 9,397,860 19,932,841 17,687,588 198,755
----------- ----------- ----------- ----------- ---------
Gross profit 5,270,904 6,973,232 11,548,242 10,457,263 17,283
Selling, general and administrative
expenses (note 3) 3,369,615 2,749,953 5,944,374 3,935,640 743,069
----------- ----------- ----------- ----------- ---------
Operating income (loss) 1,901,289 4,223,279 5,603,868 6,521,623 (725,786)
Other income (expense):
Interest expense (144,933) (161,199) (337,712) (341,630) (38,173)
Other income 33,257 1,846 41,046 7,801 -
----------- ----------- ----------- ----------- ---------
Income (loss) before income taxes 1,789,613 4,063,926 5,307,202 6,187,794 (763,959)
Income tax expense (benefit) (note 7) 670,270 1,631,227 2,144,577 2,349,011 (265,344)
----------- ----------- ----------- ----------- ---------
Net income (loss) 1,119,343 2,432,699 3,162,625 3,838,783 (498,615)
Retained earnings (deficit) at
beginning of period 6,502,793 3,340,168 3,340,168 (498,615) -
----------- ----------- ----------- ----------- ---------
Retained earnings (deficit) at
end of period $ 7,622,136 $ 5,772,867 $ 6,502,793 $ 3,340,168 (498,615)
=========== ============ =========== =========== =========
Net Income (loss) per common share $ 1.11 $ 2.43 $ 3.16 $ 3.83 (.49)
=========== ============ =========== =========== =========
Number of common shares outstanding 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
=========== ============ =========== =========== =========
</TABLE>
-8-
See accompanying notes to consolidated financial statements.
<PAGE> 10
EUROSTAR PERFUMES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Period from
March 5, 1992
Six months ended March 31, Years ended September 30, through
1995 1994 1994 1993 September 30, 1992
(unaudited) (unaudited) (unaudited)
----------- ----------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,119,343 $ 2,432,699 $ 3,162,625 $ 3,838,783 $ (498,615)
Adjustments to reconcilie net income (loss) to net
cash provided by (used in) operating activities:
Allowance for obsolescence and other adjustments 242,388 56,254 239,774 110,000 -
Deferred income tax expense 159,000 70,577 119,577 101,767 (265,344)
Depreciation 531,635 447,899 968,607 685,258 -
Changes in operating assets and liabilities:
Trade accounts receivable (819,174) 3,277,607 3,137,466 (5,671,110) (216,530)
Inventories 1,414,436 (241,698) (1,609,076) (3,870,813) (1,514,308)
Other current assets 14,381 (10,642) (53,328) (47,402) (66,456)
Trade accounts payable (2,233,730) (2,576,959) (1,315,915) 2,097,425 2,643,855
Customer advances 109,596 (122,589) (39,420) 122,589 -
Income taxes payable (1,424,929) (194,036) (219,578) 2,247,244 -
Accrued expenses 35,373 387,560 593,798 243,566 15,705
Other liabilities (46,061) 166,781 134,573 - -
----------- ----------- ----------- ----------- ------------
Net cash provided by (used in) operating
activities (897,742) 3,693,453 5,119,103 (142,693) 98,307
----------- ----------- ----------- ----------- ------------
Cash flows from investing activities:
Acquisition of property, plant and equipment (93,124) (953,937) (1,455,875) (3,211,640) (5,291,979)
Acquisition of U.S. Treasury note - - - (100,156)
Proceeds from sale of U.S. Treasury note - - 100,156 - -
----------- ----------- ----------- ----------- ------------
Net cash used in investing activities (93,124) (953,937) (1,355,719) (3,211,640) (5,392,135)
----------- ----------- ----------- ----------- ------------
Cash flows from financing activities:
Proceeds from note payable to bank - - - 2,000,000 4,500,000
Repayment of note payable to bank - - - (6,500,000) -
Proceeds from issuance of common stock - - - - 100,000
Proceeds from note payable to parent company 2,000,000 171,984 - 7,658,691 1,309,993
Payments of note payable to parent company (1,700,000) (2,500,000) (2,752,983) - -
----------- ----------- ----------- ----------- ------------
Net cash provided by (used in) financing
activities 300,000 (2,328,016) (2,752,983) 3,158,691 5,909,993
----------- ----------- ----------- ----------- ------------
Net increase (decrease) in cash (690,866) 411,500 1,010,401 (195,642) 616,165
Cash at beginning of year 1,430,924 420,523 420,523 616,165 -
----------- ----------- ----------- ----------- ------------
Cash at end of year $ 740,058 $ 832,023 $ 1,430,924 $ 420,523 $ 616,165
=========== =========== =========== =========== ============
Supplemental disclosure of cash flow information:
Income taxes paid $ 1,905,650 $ 1,465,000 $ 2,295,775 $ - $ -
=========== =========== =========== =========== ============
Interest paid $ 15,580 $ 37,870 $ 304,915 $ 237,493 $ -
=========== =========== =========== =========== ============
</TABLE>
-9-
See accompanying notes to consolidated financial statements.
<PAGE> 11
EUROSTAR PERFUMES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Data with respect to March 31, 1995 and for the six month periods ended March
31, 1995 and 1994, and for the period from March 5, 1992 (inception) to
September 30, 1992 is unaudited)
(1) Summary of Significant Accounting Policies
(a) Description of Business
Eurostar Perfumes, Inc. (the "Company"), is a wholly-owned
subsidiary of Transvit Manufacturing Corporation ("Transvit"), a
foreign company owned by the Core Sheth Families. The Company was
incorporated on March 5, 1992. The primary business of the Company
is to manufacture perfumes at its plant located in Pleasanton,
Texas. The Company purchases significant amounts of inventory
from various European companies, and the Company is not dependent
on a single supplier or only a few suppliers. As discussed in
note 3, the Company has significant transactions with related
parties.
(b) Principles of Consolidation
The consolidated financial statements include the financial
statements of Eurostar Perfumes, Inc. and its wholly-owned
subsidiaries, American Star Corporation, which in 1993 marketed
the Company's products to customers located primarily in South
America, and Southern Star Sales, Inc. (Southern Star), a foreign
sales corporation which markets the Company's products
internationally. American Star Corporation became dormant in
fiscal year 1994 as its sales activity was transferred to Southern
Star. All significant intercompany balances and transactions have
been eliminated in consolidation.
(c) Interim Financial Statements (Unaudited)
The consolidated financial statements as of March 31, 1995 and for
the six month periods ended March 31, 1995 and 1994 and for the
period from March 5, 1992 (inception) through September 30, 1992
are unaudited. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the
six month period ended March 31, 1995 are not necessarily
indicative of the results that may be expected for the year ending
September 30, 1995.
The unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for
interim financial information pursuant to the Securities and
Exchange Commission's Proxy Rules (Regulation 14A).
(d) Inventories
Inventories are valued at the lower of cost or market.
In 1994, the Company adopted the last in, first-out (LIFO) method
of costing inventory. Previously, the first-in, first-out (FIFO)
method of costing inventory was used. Management believes that
the LIFO method has the effect of minimizing the impact of price
level changes on inventory valuations and generally matches
current costs against current revenues in the consolidated
statement of income. The effect of the change was to reduce net
income by approximately $185,000, net of income taxes, from that
which would otherwise have been reported. There is no cumulative
effect on prior years since the ending inventory as previously
reported is the beginning inventory for LIFO purposes.
Accordingly, proforma results of operations for the prior year had
LIFO been followed is not determinable.
-10-
<PAGE> 12
EUROSTAR PERFUMES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies (continued)
(e) Other Current Assets
Other current assets consist principally of deposits for Texas
worker's compensation insurance.
(f) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is
calculated on the straight-line method over the following
estimated useful lives:
Buildings and improvements 40 years
Computer equipment and software 5 years
Machinery and equipment 5 - 7 years
Office equipment, fixtures and vehicle 3 - 7 years
Maintenance and repairs are charged to operations
(g) Foreign Currency Transactions
The Company purchases significant amounts of inventory from
foreign suppliers. Such inventory is recorded using currency
exchange rates in effect on the date of purchase. Gains and
losses on the settlement of accounts payable for such purchases
are recorded based upon the currency exchange rates in effect on
the date of settlement. Gains and losses on accounts payable to
be settled subsequent to September 30, 1994 and 1993 have been
provided based upon the currency exchange rates in effect on
September 30, 1994 and 1993. The net gain (loss) on transactions
in foreign currencies for the years ended September 30, 1994 and
1993 was $(59,058) and $5,205.
(h) Revenue Recognition
Revenue is recognized at the time of shipment for all products.
(i) Income Taxes
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
(j) Net (Loss) Income Per Share
Net (loss) income per share is computed based on the number of
common shares outstanding during each period.
-11- (Continued)
<PAGE> 13
EUROSTAR PERFUMES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(2) U.S. Treasury Note
U.S. treasury note represented a deposit held by the Bureau of Alcohol,
Tobacco and Firearms for the permit maintained by the Company to store
and dispense the alcohol used in production. The security consisted of a
$100,000 face value U.S. treasury note bearing interest at 4.25% per
annum. The deposit was returned and sold in 1994.
(3) Related Party Transactions
In May 1995, the Company purchased Tristar Corporation's ("Tristar")
cosmetic pencil manufacturing business, including all related equipment
and inventory, in consideration for a seven year $600,000 note payable
and cash equal to the cost of inventories payable upon utilization of
such inventories.
Tristar, a major customer of the Company, is located in the United States
and is principally engaged in the marketing and wholesale distribution of
alternatives to designer fragrances in North America. Tristar is a
publicly traded company in which the Core Sheth Families have a majority
ownership interest. Additionally, Tristar and the Company have the same
president and chief executive officer. Included in affiliate trade
accounts receivable at September 30, 1994 and 1993 and March 31, 1995, is
$1,437,466, $5,380,990 and $1,629,164, respectively, due from Tristar.
For the years ended September 30, 1994 and 1993 and the six months ended
March 31, 1995 and 1994, approximately 85%, 99%, 66%, and 94%,
respectively, of the Company's sales were to Tristar.
Approximately 2% of the Company's sales for the year ended September 30,
1994 and the six months ended March 31, 1995 were to foreign based
affiliates located principally in South America. Such sales were not
significant for the year ended September 30, 1993 and the six months
ended March 31, 1994.
For the years ended September 30, 1994 and 1993 and the six months ended
March 31, 1995 and 1994, the Company purchased approximately $5,788,000,
$6,605,000, $3,241,000, and $3,290,000, respectively, of inventory and
other items from affiliates.
In accordance with a design/consultant fee contract with Tristar whereby
the Company provides certain graphics and design consulting services, the
Company charged Tristar $150,000, $112,500, $75,000, and $75,000, for the
years ended September 30, 1994 and 1993 and the six months ended March
31, 1995 and 1994, respectively. The Company entered into a computer
services and support agreement with Tristar whereby the Company provides
access to hardware and software. The company charged Tristar $55,000 and
$55,000 for the year ended September 30, 1994 and the six months ended
March 31, 1995, respectively. These amounts have been offset against
selling, general and administrative expenses in the accompanying
consolidated statements of income and retained earnings.
Included in trade accounts receivable at September 30, 1993 is $475,200
of net advances due from Eurostar Corporation ("Corp."), a wholly-owned
subsidiary of Transvit, which employed certain executives of the Company
and provided management services to the Company. Management fees paid to
Corp. for the year ended September 30, 1993 totaled $978,896 and are
included in selling, general and administrative expenses in the
accompanying consolidated statements of income and retained earnings.
Management fees were equal to the costs incurred by Corp., which include
primarily payroll and related items. Effective October 1, 1993, the
employees of Corp. were transferred to the Company.
-12- (Continued)
<PAGE> 14
EUROSTAR PERFUMES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(3) Related Party Transactions (continued)
On October 23, 1992, the Company and a certain affiliate entered into a
distribution agreement with Tristar under which the Company is obligated
to supply Tristar with fragrance products. The distribution agreement
extends two years beyond any notice of termination given by the Company.
In August 1993, the Company agreed that it will not provide any notice of
termination of its distribution agreement with Tristar for a period of
four years. The effect of this agreement is to assure the continuation
of the relationship between the Company and Tristar through at least
1999. As a major customer of the Company, Tristar's ability to meet its
obligations will significantly impact the level of operations of the
Company.
(4) Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, September 30,
------------- ----------------------
1995 1994 1993
------------- --------- ---------
(unaudited)
<S> <C> <C> <C>
Raw Materials $ 4,584,444 5,813,830 4,939,036
Finished Goods 1,493,102 1,144,802 99,444
Work-in-process 283,215 316,565 346,641
------------- --------- ---------
6,360,761 7,275,197 5,385,121
Less: Allowance for obsolescence
and other adjustments 592,162 349,774 110,000
Allowance for LIFO valuation 781,000 281,000 -
------------- --------- ---------
$ 4,987,599 6,644,423 5,275,121
============= ========= =========
</TABLE>
(5) Property, Plant and Equipment
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
March 31, September 30,
------------- ----------------------
1995 1994 1993
------------- --------- ---------
(unaudited)
<S> <C> <C> <C>
Machinery and equipment $ 4,721,822 4,728,847 4,059,594
Building and improvements 3,783,373 3,783,373 3,755,198
Computer equipment and software 1,199,047 1,110,158 468,340
Office equipment, fixtures and vehicle 450,382 438,990 322,362
Land 32,670 32,670 32,670
------------- --------- ---------
10,187,294 10,094,038 8,638,164
Less: Accumulated depreciation 2,185,632 1,653,864 685,258
------------- --------- ---------
$ 8,001,662 8,440,174 7,952,906
============= ========= =========
</TABLE>
(6) Notes Payable
On August 1, 1993, the Company entered into a line of credit promissory
note agreement (the "LOC") with its parent company, Transvit, whereby
funds of up to $9,000,000 were made available to the Company. Proceeds
from the LOC in 1993 were used to pay certain bank debt and the
outstanding balance of a $2,000,000 line of credit demand promissory note
with Transvit. Interest is payable annually and bears interest at 4.5%
per annum. The total amount outstanding on the LOC at September 30, 1994
and 1993 is $6,215,701 and $8,968,684, respectively.
-13- (Continued)
<PAGE> 15
EUROSTAR PERFUMES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) Notes Payable- (continued)
The current installments of the LOC as of September 30, 1994 and 1993,
$2,050,000 and $2,500,000, respectively, are based on management's best
estimate of amounts to be paid during the next fiscal year. As discussed
below, the Company recently entered into a secured credit facility which
under its terms resticts the repayment of the Transvit line of credit to
payments no more than the greater of (i) $3,500,000 in the first fiscal
year or $1,500,000 per fiscal year thereafter, or (ii) fifty percent
(50%) of the Company's cash flow for fiscal years after the first year.
Accrued interest payable to Transvit of $48,471 and $58,312 as of
September 30 1994 and 1993, respectively, is included in accrued expenses
in the accompanying consolidated balance sheets.
On June 27, 1995, the Company entered into a $5,200,000 credit facility
which consists of term loans totaling $3,700,000 and a revolving credit
commitment of $1,500,000 bearing interest at the prime rate plus 1.75%
(9% at June 27, 1995) per annum and additional fees. In early July
1995, a $3,500,000 term loan was drawn down. The term loan calls for
equal monthly installments and matures in 2002. Borrowings under the
revolving line of credit are limited to forty (40%) of eligible inventory
as define therein. The revolving line of credit expires in June 1997
with options to renew annually thereafter. The credit facility is secured
by substantially all of the Company's assets. The agreement contains a
material adverse change provision, as well as certain restrictions and
conditions among which are limitations on cash dividends, capital
expenditures and repayments to Transvit under the Company's other line of
credit.
(7) Income Taxes
Income tax expense consists of the following:
<TABLE>
<CAPTION>
Current Deferred Total
------- -------- -----
<S> <C> <C> <C>
Year Ended September 30,
1994
U.S. Federal $1,776,000 110,955 1,886,955
State 249,000 8,622 257,622
---------- ------- ---------
$2,025,000 119,577 2,144,577
========== ======= =========
Year Ended September 30,
1993
U.S. Federal $1,987,642 94,430 2,082,072
State 259,602 7,337 266,939
---------- ------- ---------
$2,247,244 101,767 2,349,011
========== ======= =========
</TABLE>
Income tax expense for the years ended September 30, 1994 and 1993
differed from the amounts computed by applying the U.S. federal income
tax rate of 35 percent to income before income taxes as a result of the
following:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Computed expected tax expense $1,857,521 2,165,728
Increase (decrease) in income taxes
resulting from:
State income taxes, net of federal income
tax benefit 161,850 171,337
Penalty 60,000 68,374
Foreign sales corporation commissions
not subject to income taxes (37,000) -
Other, net 102,306 (563428)
---------- ---------
Total income tax expense $2,144,577 2,349,011
========== =========
</TABLE>
-14- (Continued)
<PAGE> 16
EUROSTAR PERFUMES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) Income Taxes - (continued)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
September 30, 1993 and 1994 are presented below:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Deferred tax assets:
Inventories, principally due to allowance
for obsolescence $143,759 40,304
Start-up and organizational costs 162,257 214,428
Compensated absences, principally due
to accrual for financial reporting
purposes 41,573 -
Related party interest, principally due to
accrual for financial reporting purposes 17,760 48,018
Other 683 -
------- -------
Total deferred tax assets 366,032 302,750
Deferred tax liabilities:
Plant and equipment, principally due to
differences in deprecation and
capitalized interest 322,032 139,173
------- -------
Net deferred tax asset $44,000 163,577
======= =======
</TABLE>
Based upon the level of historical taxable income and projections for
future taxable income, including the reversal of existing taxable
temporary differences, over the periods which the deferred tax assets are
deductible, management believes it is more likely than not the Company
will realize the benefits of these deductible differences.
(8) Operating Leases
The Company has several noncancelable operating leases, primarily for
equipment, office space, and office furniture that expire over the next
three years. Rental expense for operating leases for the year ended
September 30, 1994 and 1993 was $97,838 and $69,653, respectively.
Future minimum lease payments under noncancellable operating leases (with
initial or remaining lease terms in excess of one year) as of September
30, 1994 are:
<TABLE>
<CAPTION>
<S> <C>
Year ending September 30:
1995 $ 75,020
1996 50,955
1997 8,973
----------
$ 134,948
==========
</TABLE>
(9) Export Sales and Related Receivables
Export sales, primarily to South America, for the year ended September
30, 1994 and for the six months ended March 31, 1995 and 1994 were
approximately $4,756,000, $6,000,000, and $500,000, respectively.
Included in trade accounts receivable at September 30, 1994 and for the
six months ended March 31, 1995 and 1994 is approximately $1,125,000,
$2,000,000, and $330,000, respectively, due from foreign customers.
Export sales for the year ended September 30, 1993 were not significant.
-15-
<PAGE> 17
Item 7. Financial Statements and Exhibits. (Continued)
(b) Pro Forma Financial Information.
-16-
<PAGE> 18
UNAUDITED PRO FORMA CONSOLIDATED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated combined financial statements
give effect to the merger of Tristar and Eurostar accounted for in a manner
similar to that in a pooling of interests as the companies are considered
entities under common control. The pro forma consolidated combined balance sheet
as of May 31, 1995 is presented as though the Merger had occurred on May 31,
1995 using Tristar's consolidated balance sheet as of May 31, 1995 and
Eurostar's consolidated balance sheet as of March 31, 1995. The pro forma
consolidated combined statements of income for the fiscal years ended August 31,
1994, 1993 and 1992 and for the nine month periods ended May 31, 1995 and 1994
are presented as though the acquisition had occurred as of March 5, 1992
(Eurostar's date of inception) using Tristar's consolidated statements of income
for the fiscal years ended August 31, 1994, 1993, and 1992 and the nine month
periods ended May 31, 1995 and 1994, and Eurostar's consolidated statements of
income for the fiscal years ended September 30, 1994 and 1993, the period from
March 5, 1992 (date of inception) through September 30, 1992 and the nine month
periods ended March 31, 1995 and 1994. The pro forma consolidated combined
financial statements have been prepared for illustrative purposes only and do
not purport to be indicative of the results that actually would have been
obtained if the Merger had been effected on the dates indicated or of the
results which may be obtained in the future.
-17-
<PAGE> 19
TRISTAR CORPORATION AND EUROSTAR PERFUMES, INC.
UNAUDITED PRO FORMA CONSOLIDATED
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
Historical
-------------------------
Eurostar
Tristar Perfumes, Pro Forma
Corporation Inc. Combined
May 31, March 31, Pro Forma May 31,
ASSETS 1995 1995 Adjustments 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 249,000 $ 740,000 $ 989,000
Accounts receivable 4,952,000 1,676,000 6,628,000
Accounts receivable - related parties, net - 1,893,000 $(1,629,000) (A) 264,000
Current portion note receivable - related party 50,000 - (50,000) (G)
Accounts receivable - insurance reimbursement 815,000 - 815,000
Inventories 8,549,000 4,987,000 (2,063,000) (C) 11,473,000
Prepaid expenses and other current assets 297,000 153,000 450,000
Refundable income taxes 52,000 - 52,000
Deferred income taxes - 294,000 701,000 (E) 995,000
----------- ----------- ----------- -----------
Total current assets 14,964,000 9,743,000 (3,041,000) 21,666,000
----------- ----------- ----------- -----------
Note receivable - related party 550,000 - (550,000) (G)
Assets held for sale 648,000 - 648,000
Property, plant and equipment 714,000 8,002,000 600,000 (G) 9,316,000
----------- ----------- ----------- -----------
Other assets:
Warrant valuation 1,532,000 (698,000) (D) 834,000
Other assets 56,000 56,000
Deferred income taxes - 2,714,000 (E) 2,714,000
----------- ----------- ----------- -----------
Total other assets 1,588,000 - 2,016,000 3,604,000
----------- ----------- ----------- -----------
Total assets $18,464,000 $17,745,000 $ (975,000) $35,234,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Combined Financial
Statements.
-18-
<PAGE> 20
TRISTAR CORPORATION AND EUROSTAR PERFUMES, INC.
UNAUDITED PRO FORMA CONSOLIDATED
COMBINED BALANCE SHEET, Continued
<TABLE>
<CAPTION>
Historical
--------------------------
Eurostar
Tristar Perfumes, Pro Forma
Corporation Inc. Combined
May 31, March 31, Pro Forma May 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1995 Adjustments 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Current liabilities:
Short-term borrowings $ 3,964,000 $ - $ 3,964,000
Accounts payable--trade 474,000 1,044,000 1,518,000
Accounts payable--related parties, net 2,857,000 147,000 $(1,629,000) (A) 1,375,000
Accrued expenses 1,592,000 1,081,000 2,673,000
Income taxes payable - 603,000 603,000
Current portion of long-term obligations 35,000 1,500,000 1,535,000
----------- ----------- ----------- -----------
Total current liabilities 8,922,000 4,375,000 (1,629,000) 11,668,000
----------- ----------- ----------- -----------
Obligations under capital leases, less current portion 31,000 - 31,000
Subordinated long term debt, related parties 8,000,000 - 8,000,000
Net payable to parent company - 5,016,000 5,016,000
Deferred income taxes - 409,000 (409,000) (E) -
Other liabilities - 223,000 223,000
----------- ----------- ----------- -----------
Total liabilities 16,953,000 10,023,000 (2,038,000) 24,938,000
----------- ----------- ----------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred stock - - -
Common stock 67,000 1,000 99,000 (F) 167,000
Additional paid-in-capital 10,281,000 99,000 (99,000) (F) 10,281,000
Retained earnings (accumulated deficit) (8,837,000) 7,622,000 (698,000) (D)
(2,063,000) (C)
3,824,000 (E) (152,000)
----------- ----------- ----------- -----------
Total shareholders' equity 1,511,000 7,722,000 1,063,000 10,296,000
----------- ----------- ----------- -----------
Total liabilities and shareholders' equity $18,464,000 $17,745,000 $ (975,000) $35,234,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Combined Financial
Statements.
-19-
<PAGE> 21
TRISTAR CORPORATION AND EUROSTAR PERFUMES, INC.
UNAUDITED PRO FORMA CONSOLIDATED
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Historical
--------------------------------
Tristar Eurostar Pro Forma
Corporation Perfumes, Inc. Combined
Nine Months Nine Months Nine Months
Ended Ended Ended
May 31, March 31, Pro Forma May 31,
1995 1995 Adjustments 1995
----------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales $24,091,000 $25,708,000 $(17,636,000) (B) $32,163,000
(17,636,000) (B)
Cost of sales 19,821,000 17,670,000 (131,000) (C) 19,724,000
----------- ----------- ------------ -----------
Gross profit 4,270,000 8,038,000 131,000 12,439,000
Selling, general and administrative expenses 6,576,000 5,323,000 11,899,000
----------- ----------- ------------ -----------
(Loss) income from operations (2,306,000) 2,715,000 131,000 540,000
Other income (expense):
Interest expense (961,000) (249,000) (1,210,000)
Interest and other (expense) income (419,000) 36,000 123,000 (D) (260,000)
Insurance reimbursement 2,065,000 - 2,065,000
----------- ----------- ------------ -----------
(Loss) income before (benefit) provision for
income taxes (1,621,000) 2,502,000 254,000 1,135,000
(Benefit) provision for income taxes - 969,000 (442,000) (E) 527,000
----------- ----------- ------------ -----------
Net (loss) income $(1,621,000) $ 1,533,000 $ 696,000 $ 608,000
=========== =========== ============ ===========
Net (loss) income per common share:
Primary $ (.24) $ 1.53 $ .04
=========== =========== ===========
Fully diluted $ (.24) $ 1.53 $ .04
=========== =========== ===========
Weighted average number of shares outstanding:
(1,000,000) (F)
9,977,810 (F)
Primary 6,646,067 1,000,000 235,418 (F) 16,859,295
=========== =========== ============ ===========
(1,000,000) (F)
9,977,810 (F)
Fully diluted 6,646,067 1,000,000 244,643 (F) 16,868,520
=========== =========== ============ ===========
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Combined Financial
Statements.
-20-
<PAGE> 22
TRISTAR CORPORATION AND EUROSTAR PERFUMES, INC.
UNAUDITED PRO FORMA CONSOLIDATED
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Historical
--------------------------------
Tristar Eurostar Pro Forma
Corporation Perfumes, Inc. Combined
Nine Months Nine Months Nine Months
Ended Ended Ended
May 31, March 31, Pro Forma May 31,
1994 1994 Adjustments 1994
----------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales $35,861,000 $24,605,000 $(22,867,000) (B) $37,599,000
(22,867,000) (B)
Cost of sales 29,290,000 14,907,000 (155,000) (C) 21,175,000
----------- ----------- ------------ -----------
Gross profit 6,571,000 9,698,000 155,000 16,424,000
Selling, general and administrative expenses 8,298,000 3,840,000 12,138,000
----------- ----------- ------------ -----------
(Loss) income from operations (1,727,000) 5,858,000 155,000 4,286,000
Other income (expense):
Interest expense (859,000) (248,000) (1,107,000)
Interest and other income 12,000 4,000 16,000
----------- ----------- ------------ -----------
(Loss) income before (benefit) provision for
income taxes (2,574,000) 5,614,000 155,000 3,195,000
(Benefit) provision for income taxes - 2,268,000 (659,000) (E) 1,609,000
----------- ----------- ------------ -----------
Net (loss) income (2,574,000) $ 3,346,000 $ 814,000 $ 1,586,000
=========== =========== ============ ===========
Net (loss) income per common share:
Primary $ (.39) $ 3.34 $ .09
=========== =========== ===========
Fully diluted $ (.39) $ 3.34 $ .09
=========== =========== ===========
Weighted average number of shares outstanding:
(1,000,000) (F)
9,977,810 (F)
Primary 6,629,837 1,000,000 259,780 (F) 16,867,427
=========== =========== ============ ===========
(1,000,000) (F)
9,977,810 (F)
Fully diluted 6,629,837 1,000,000 259,780 (F) 16,867,427
=========== =========== ============ ===========
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Combined Financial
Statements.
-21-
<PAGE> 23
TRISTAR CORPORATION AND EUROSTAR PERFUMES, INC.
UNAUDITED PRO FORMA CONSOLIDATED
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Historical
-------------------------------
Tristar Eurostar Pro Forma
Corporation Perfumes, Inc. Combined
Year Year Year
Ended Ended Ended
August 31, September 30, Pro Forma August 31,
1994 1994 Adjustments 1994
----------- -------------- ---------------- -----------
<S> <C> <C> <C> <C>
Net sales $46,488,000 $31,481,000 $(27,282,000)(B) $50,687,000
(27,282,000)(B)
Cost of sales 38,457,000 19,933,000 (1,155,000)(C) 29,953,000
----------- ----------- ------------ -----------
Gross profit 8,031,000 11,548,000 1,155,000 20,734,000
Selling, general and administrative expenses 10,662,000 5,944,000 16,606,000
----------- ----------- ------------ -----------
(Loss) income from operations (2,631,000) 5,604,000 1,155,000 4,128,000
Other income (expense):
Interest expense (1,195,000) (338,000) (1,533,000)
Interest and other (expense) income (352,000) 41,000 164,000 (D) (147,000)
Litigation expenses (208,000) - (208,000)
----------- ----------- ------------ -----------
(Loss) income before (benefit) provision for
income taxes (4,386,000) 5,307,000 1,319,000 2,240,000
(Benefit) provision for income taxes (95,000) 2,145,000 (820,000)(E) 1,230,000
----------- ----------- ------------ -----------
Net (loss) income $(4,291,000) $ 3,162,000 $ 2,139,000 $ 1,010,000
=========== =========== ============ ===========
Net (loss) income per common share:
Primary $ (.65) $ 3.16 $ .06
=========== =========== ===========
Fully diluted $ (.65) $ 3.16 $ .06
=========== =========== ===========
Weighted average number of shares outstanding:
(1,000,000)(F)
9,977,810 (F)
Primary 6,631,948 1,000,000 241,886 (F) 16,851,664
=========== =========== ============ ===========
(1,000,000)(F)
9,977,810 (F)
Fully diluted 6,631,948 1,000,000 241,886 (F) 16,851,664
=========== =========== ============ ===========
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Combined Financial
Statements.
-22-
<PAGE> 24
TRISTAR CORPORATION AND EUROSTAR PERFUMES, INC.
UNAUDITED PRO FORMA CONSOLIDATED
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Historical
---------------------------------
Tristar Eurostar Pro Forma
Corporation Perfumes, Inc. Combined
Year Year Year
Ended Ended Ended
August 31, September 30, Pro Forma August 31,
1993 1993 Adjustments 1993
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 51,409,000 $ 28,145,000 $ (25,104,000)(B) $ 54,450,000
(25,104,000)(B)
Cost of sales 40,367,000 17,688,000 3,349,000 (C) 36,300,000
------------- ------------ ------------- -------------
Gross profit 11,042,000 10,457,000 (3,349,000) 18,150,000
Selling, general and administrative expenses 8,753,000 3,935,000 12,688,000
------------- ------------ ------------- -------------
(Loss) income from operations 2,289,000 6,522,000 (3,349,000) 5,462,000
Other income (expense):
Interest expense (248,000) (342,000) (590,000)
Interest and other (expense) income 25,000 8,000 33,000
Litigation expenses (2,758,000) - (2,758,000)
Shareholders litigation settlement (9,500,000) - (9,500,000)
------------- ------------ ------------- -------------
(Loss) income before (benefit) provision for
income taxes (10,192,000) 6,188,000 (3,349,000) (7,353,000)
(Benefit) provision for income taxes (2,033,000) 2,349,000 (2,562,000)(E) (2,246,000)
------------- ------------ ------------- -------------
Net (loss) income $ (8,159,000) $ 3,839,000 $ (787,000) $ (5,107,000)
============= ============ ============= =============
Net (loss) income per common share:
Primary $ (1.23) $ 3.83 $ (.31)
============= ============ =============
Fully diluted $ (1.23) $ 3.83 $ (.31)
============= ============ =============
Weighted average number of shares outstanding:
(1,000,000)(F)
Primary 6,623,238 1,000,000 9,977,810 (F) 16,601,048
============= ============ ============= =============
(1,000,000)(F)
Fully diluted 6,623,238 1,000,000 9,977,810 (F) 16,601,048
============= ============ ============= =============
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Combined Financial
Statements.
-23-
<PAGE> 25
TRISTAR CORPORATION AND EUROSTAR PERFUMES, INC.
UNAUDITED PRO FORMA CONSOLIDATED
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Historical
----------------------------------
Tristar Eurostar Pro Forma
Corporation Perfumes, Inc. Combined
Year Period Year
Ended Ended Ended
August 31, September 30, Pro Forma August 31,
1992 1992 Adjustments 1992
------------ -------------- ----------- ------------
<S> <C> <C> <C>
Net sales $ 47,519,000 $ 216,000 $47,735,000
Cost of sales 35,129,000 199,000 35,328,000
------------ ---------- ----------- -----------
Gross profit 12,390,000 17,000 12,407,000
Selling, general and administrative expenses 5,492,000 743,000 6,235,000
------------ ---------- ----------- -----------
Income (loss) from operations 6,898,000 (726,000) 6,172,000
Other income (expense):
Interest expense (236,000) (38,000) (274,000)
Interest and other income 36,000 36,000
Litigation expenses (1,650,000) - (1,650,000)
------------ ---------- ----------- -----------
Income (loss) before provision (benefit) for
income taxes 5,048,000 (764,000) 4,284,000
Provision (benefit) for income taxes 1,761,000 (265,000) 1,496,000
------------ ---------- ----------- -----------
Net income (loss) $ 3,287,000 $ (499,000) $ 2,788,000
============ ========== =========== ===========
Net income (loss) per common share:
Primary $ .46 $ (.49) $ .22
============ ========== ===========
Fully diluted $ .46 $ (.49) $ .22
============ ========== ===========
Weighted average number of shares outstanding:
(1,000,000)(F)
Primary 7,072,844 1,000,000 5,820,389 (F) 12,893,233
============ ========== =========== ===========
(1,000,000)(F)
Fully diluted 7,072,844 1,000,000 5,820,389 (F) 12,893,233
============ ========== =========== ===========
See accompanying notes to Unaudited Pro Forma Consolidated Combined Financial
Statements.
</TABLE>
-24-
<PAGE> 26
TRISTAR CORPORATION
Notes to Unaudited Pro Forma Consolidated Combined Financial Statements
The following pro forma adjustments are reflected in the accompanying unaudited
pro forma consolidated combined balance sheet and statements of income.
(A) To eliminate intercompany balances between Tristar and Eurostar.
(B) To eliminate intercompany sales between Tristar and Eurostar.
(C) To eliminate the impact of intercompany profit in Tristar's
ending inventory on items purchased from Eurostar.
(D) To reflect the write-off of the unamortized portion of the value
assigned to the distribution agreement between Tristar and
Eurostar in connection with the valuation of warrants issued to
the Core Sheth Families and the extension of the expiration date
of warrants previously issued to the Core Sheth Families (see
Note 6 of Notes to Consolidated Financial Statements) and to
reflect the resultant reduction in amortization expense. At the
Merger date, the unamortized portion of this value will be
written off as a charge through the statement of operations. This
charge, which should approximate $657,000 if the merger is
consummated in August 1995 as currently planned, is not reflected
in the accompanying pro forma statements of operations.
(E) To eliminate Tristar's deferred tax asset valuation and to tax
effect the pro forma adjustments at 34%. Based upon the combined
Tristar and Eurostar's level of historical taxable income and
projections for future taxable income, including the reversal of
existing taxable temporary differences, over the periods which
the deferred tax assets are deductible, management believes it is
more likely than not the Company will realize the benefits of
these deductible differences.
(F) To reflect the issuance of 9,977,810 shares of Tristar Common
Stock in exchange for Eurostar's outstanding shares and to
reflect the impact of Tristar's common equivalent shares from
dilutive stock options and warrants.
The pro forma consolidated combined balance sheet does not
reflect the possible future accounting impact of the potential
reduction in the exercise price of the warrants held by the Core
Sheth Families to purchase an aggregate of 2,000,000 shares of
Tristar Common Stock as the effect of repricing is currently
unknown. A valuation of the repricing provisions will be
completed at the date of consummation of the merger utilizing the
Black Scholes Method. The value related to the repricing
provisions, if any, will be accounted for through a reduction in
Retained Earnings in a manner similar to that for a dividend,
with a corresponding increase in Additional Paid-In Capital to
reflect the corresponding increase in warrant value. See "The
Merger -- Description of the Merger -- Repricing of Certain
Warrants."
(G) To reclassify the note receivable from Eurostar related to the
May 1995 pencil plant sale to property, plant and equipment.
Substantial charges will be incurred by the combined company in connection with
the Merger. The investment banking, legal, accounting, printing, mailing and
similar expenses are expected to approximate $1,000,000. Such costs will be
reflected in the combined company's fiscal 1995 statement of operations yet are
not reflected in the pro forma consolidated combined financial statements except
for the approximately $92,000 which has been accrued for as of May 31, 1995.
-25-
<PAGE> 27
Item 7. Financial Statements and Exhibits. (Continued)
(c) Exhibit Index.
Exhibit 3.1 Certificate of Incorporation, as amended
Exhibit 10.1 Agreement and Plan of Merger dated as of July
1, 1995, among TRISTAR CORPORATION, Eurostar
Perfumes, Inc. and Transvit Manufacturing
Corporation
Exhibit 10.2 Amendment to Common Stock Purchase Warrant
dated August 31, 1995, between TRISTAR
CORPORATION and Starion International, Ltd.
Exhibit 10.3 Agreement dated August 31, 1995, among
TRISTAR CORPORATION, Eurostar Perfumes, Inc.
and Starion International Ltd.
-26-
<PAGE> 28
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.
TRISTAR CORPORATION
By /s/ Loren M. Eltiste
-----------------------------------
Loren M. Eltiste
Vice President, Chief Financial
Officer, Assistant Secretary and
Principal Accounting Officer
DATE: August 31, 1995
-27-
<PAGE> 29
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
Exhibit 3.1 Certificate of Incorporation, as amended
Exhibit 10.1 Agreement and Plan of Merger dated as of July
1, 1995, among TRISTAR CORPORATION, Eurostar
Perfumes, Inc. and Transvit Manufacturing
Corporation
Exhibit 10.2 Amendment to Common Stock Purchase Warrant
dated August 31, 1995, between TRISTAR
CORPORATION and Starion International, Ltd.
Exhibit 10.3 Agreement dated August 31, 1995, among
TRISTAR CORPORATION, Eurostar Perfumes, Inc.
and Starion International Ltd.
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF MERGER
OF
EUROSTAR PERFUMES, INC.
(a Texas corporation)
INTO
TRISTAR CORPORATION
(a Delaware corporation)
Pursuant to Section 252(c) of the
State of Delaware General Corporation Law
TRISTAR CORPORATION, a Delaware corporation, hereby certifies as
follows:
FIRST: The names of the constituent corporations to the
merger are TRISTAR CORPORATION, whose State of incorporation is Delaware, and
Eurostar Perfumes, Inc., whose State of incorporation is Texas.
SECOND: An Agreement and Plan of Merger has been approved,
adopted, certified, executed and acknowledged by each constituent corporation
in accordance with Section 252 of the General Corporation Law of the State of
Delaware.
THIRD: TRISTAR CORPORATION shall be the surviving corporation.
FOURTH: The Certificate of Incorporation of the surviving
corporation shall be its Certificate of Incorporation, except that paragraph IV
of the Certificate of Incorporation of TRISTAR CORPORATION, as the surviving
corporation, which sets forth the authorized capital stock of TRISTAR
CORPORATION, is hereby amended to read in its entirety as follows:
"ARTICLE IV
CAPITAL STOCK
Section 1. Classes and Shares Authorized. The authorized
capital stock of the Corporation shall consist of 30,000,000 shares of
Common Stock, $.01 par value per share (hereinafter referred to as
either the "Common Shares" or "Common Stock") and 1,000,000 shares of
Preferred Stock, $.05 par value per share (hereinafter referred to as
either the "Preferred Shares" or "Preferred Stock").
Section 2. Preferred Stock. The shares of Preferred Stock
shall be issuable from time to time in one or more series, with
respect to each of which series the Board of Directors shall be
authorized, without further approval from the shareholders of the
Corporation, to fix:
(a) the designation of the series;
<PAGE> 2
(b) the number of shares of each series, which number the
Board of Directors may increase or decrease (but not below the number
of shares thereof then outstanding);
(c) the annual dividend rate of the series;
(d) the dates at which dividends, if declared, shall be
payable, and the dates from which the dividends shall be cumulative;
(e) the redemption rights, if any, for shares of the series;
(f) the terms and amount of any sinking fund provided for the
purchase or redemption of shares of the series;
(g) the amounts payable on shares of the series in the event
of any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Corporation;
(h) whether the shares of the series shall be convertible
into Common Stock or other securities, and, if so, the conversion
price or prices, any adjustments thereof, and all other terms and
conditions upon which such conversion may be made;
(i) restrictions on the issuance of the shares of the same
series or of any other class or series; and
(j) the voting rights, if any, exercisable by the holders of
the shares of such series. Shareholders shall have no preemptive
rights."
FIFTH: The executed Agreement and Plan of Merger is on file
at the principal place of business of the surviving corporation; the address of
said principal place of business is as follows:
TRISTAR CORPORATION
12500 San Pedro Avenue, Suite 500
San Antonio, Texas 78216
Attn: Secretary
SIXTH: A copy of the Agreement and Plan of Merger will be
furnished by the surviving corporation, TRISTAR CORPORATION, on request and
without cost, to any stockholder of any constituent corporation.
SEVENTH: The authorized capital stock of the non-surviving
corporation, which is incorporated under the laws of the State of Texas, is
1,000,000 shares of Common Stock, $.001 par value.
EIGHTH: This Certificate of Merger shall become effective at
11:59 P.M. Central Daylight Savings Time on August 31, 1995.
-2-
<PAGE> 3
IN WITNESS WHEREOF, this certificate is hereby executed 30th
day of August, 1995.
TRISTAR CORPORATION
By: /s/ Viren S. Sheth
---------------------------------
Viren S. Sheth,
President and Chief Executive
Officer
ATTEST:
/s/ Loren M. Eltiste
----------------------------------
Loren M. Eltiste,
Assistant Secretary
-3-
<PAGE> 4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Ross Cosmetics Distribution Centers, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware.
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting
duly held, adopted the following resolution proposing and declaring advisable
an amendment to the certificate of Incorporation of said corporation:
RESOLVED, that the Board recommends to the shareholders of the
Company that, at the Annual Meeting of the Company, they approve the
amendment to the Company's Certificate of Incorporation changing the
Company's corporate name to TRISTAR CORPORATION;
SECOND: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Sections 242 of the General Corporation Law
of Delaware.
THIRD: Accordingly, Article I of the Company's Certificate of
Incorporation is hereby amended to read as follows:
"The name of the corporation is TRISTAR CORPORATION."
IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by Richard P. Rifenburgh, its Chairman of the Board of Directors, and
attested by James M. Shoemaker, Jr., its Secretary, this 16th day of March,
1993.
Ross Cosmetics Distribution Centers, Inc.
By /s/ Richard P. Rifenburgh
----------------------------------
Richard P. Rifenburgh
Chairman of the Board of Directors
ATTEST:
By /s/ James M. Shoemaker, Jr.
--------------------------------
James M. Shoemaker, Jr.
Secretary
-4-
<PAGE> 5
CERTIFICATE OF OWNERSHIP AND MERGER
(ARTICLES OF MERGER)
MERGING
ROSS COSMETICS DISTRIBUTION CENTER S.W., INC.,
A TEXAS CORPORATION
INTO
ROSS COSMETICS DISTRIBUTION CENTERS, INC.
A DELAWARE CORPORATION
Pursuant to Section 253 of the General Corporation Law of the State of Delaware
and Article 5.16 of the Texas Business Corporation Act.
Ross Cosmetics Distribution Centers, Inc. (hereinafter referred to as
the "Corporation"), a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Delaware GCL"), does hereby
certify that:
1. The Corporation was incorporated on June 5, 1987, pursuant to
the Delaware GCL and is existing under such Law. The address of the
Corporation's registered office in Delaware is 32 Loockerman Square, Suite
L-100, Dover, Delaware 19901.
2. Ross Cosmetics Distribution Center S.W., Inc. ("RCDCSW") was
incorporated on May 10, 1985, pursuant to the Texas Business Corporation Act
and is existing under such Law.
3. RCDCSW has only one class of shares outstanding (Common Stock
$.001 par value per share) and the number of outstanding shares of RCDCSW
Common Stock is 1,000, all of which is owned by the Corporation.
4. The Corporation, by the following resolutions of its Board of
Directors, duly adopted on the 25th day of January 1993, determined to merge
into itself RCDCSW on the conditions set forth in such resolutions.
WHEREAS the Corporation lawfully owns all the outstanding
stock of RCDCSW, a corporation organized and existing under the laws
of Texas; and
WHEREAS the Corporation desires to merge into itself RCDCSW,
and to be processed of all the estate, property, rights, privileges
and franchises of said corporation.
NOW, THEREFORE, BE IT RESOLVED, that the Corporation merge
into itself, and it does hereby merge into itself RCDCSW and assumes
all of its liabilities and obligations, and
FURTHER RESOLVED, that the president or a vice-president, and
the secretary or treasurer of the Corporation be and they hereby are
directed to make and execute, under the corporate seal of the
Corporation, a certificate of ownership setting forth a copy of the
resolution, to merge RCDCSW and assume its liabilities and
obligations, and the date of adoption thereof, and to file the same in
the offices of the Secretary of the State of Delaware and Texas, and a
certified copy thereof in the office of the Recorder of Deeds in Kent
County, Delaware, and in such other places as may be proper; and
FURTHER RESOLVED, that the officers of the Corporation be and
they hereby are authorized and directed to do all acts and things
whatsoever, whether within or
-5-
<PAGE> 6
without the State of Delaware and Texas, which may be in any way
necessary or proper to effect said merge.
IN WITNESS WHEREOF, the authorized officers of the below named
corporations have herewith set their hands and seals this 25th day of January
1993.
ROSS COSMETICS DISTRIBUTION CENTERS,
INC.
ATTEST:
/s/ James M. Shoemaker, Jr. By: /s/ Richard P. Rifenburgh
------------------------------------ --------------------------------
Secretary Title: Chairman
--------------------------------
ROSS COSMETICS DISTRIBUTION CENTER
S.W., INC.
ATTEST:
/s/ James M. Shoemaker, Jr. By: /s/ Eugene H. Karam
------------------------------------ --------------------------------
Secretary Title: President
--------------------------------
-6-
<PAGE> 7
Certificate of Restoration and Revival of
Certificate of Incorporation
of
Ross Cosmetics Distribution Centers, Inc.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
Ross Cosmetic Distribution Centers, Inc.
2. The corporation was organized under the provisions of the General
Corporation Law of the State of Delaware. The date of filing of its
original certificate of incorporation with the Secretary of State of
the State of Delaware is June 5, 1987.
3. The address, including the street, city, and county, of the registered
office of the corporation in the State of Delaware and the name of the
registered agent at such address as follows: The Prentice-Hall
Corporation System, Inc., 32 Loockerman Square, Suite L-100, Dover,
Delaware 19901, County of Kent.
4. The corporation hereby procures a restoration and revival of its
certificate of incorporation, which became inoperative by law on March
1, 1991 for failure to file annual reports and non-payment of taxes
payable to the State of Delaware.
5. The certificate of incorporation of the corporation, which provides
for and will continue to provide for, perpetual duration, shall, upon
the filing of this Certificate of Restoration and Revival of the
Certificate of Incorporation in the Department of State of the State
of Delaware, be restored and revived and shall become fully operative
on February 28, 1991.
6. This Certificate of Restoration and Revival of the Certificate of
Incorporation is filed by authority of the duly elected directors and
prescribed by Section 312 of the General Corporation Law of the State
of Delaware.
Signed and attested to on April 8, 1991.
/s/ Eugene H. Karam
---------------------------------------
Vice President
Attest:
/s/ Michael E. Emery
----------------------------------
Assistant Secretary
-7-
<PAGE> 8
REGISTERED OFFICE AND OF REGISTERED AGENT
PURSUANT TO SECTION 134 OF TITLE 8 OF THE DELAWARE CODE
TO: DEPARTMENT OF STATE
Division of Corporations
Townsend Building
Federal Street
Dover, Delaware 19903
Pursuant to the provisions of Section 134 of Title 8 of the Delaware
Code, the undersigned Agent for service of process, in order to change the
address of the registered office of the corporations for which it is registered
agent, hereby certifies that:
1. The name of the agent is Corporate Filing Service, Inc.
2. The address of the old registered office was 229 South State
Street, Kent County, Delaware 19901.
3. The address to which the registered office is to be changed is
32 Loockerman Square, Suite L-100, Dover, Kent County, Delaware 19901. The
new address will be effective on October 27, 1989.
4. The names of the corporations represented by said agent are
set forth on the list annexed to this certificate and made a part hereof by
reference.
IN WITNESS WHEREOF, said agent has caused this certificate to be
signed on its behalf by its Vice President and Assistant Secretary this 10th
day of October 1989.
CORPORATE FILING SERVICE, INC.
/s/ Alan E. Spiewak
---------------------------------------
Alan Spiewak, Vice President
ATTEST:
/s/ Richard L. Kushay
--------------------------------------
Richard L. Kushay, Assistant Secretary
-8-
<PAGE> 9
Certificate
for Renewal and Revival of Charter
Ross Cosmetics Distribution Centers, Inc., a corporation organized under the
laws of Delaware, the charter of which was voided for non-payment of taxes, now
desires to procure a restoration, renewal and revival of its charter, and
hereby certifies as follow:
1. The name of this corporation is Ross Cosmetics Distribution
Centers, Inc.
2. Its registered office in the State of Delaware is located at
229 South State Street, City of Dover, Zip Code 19901, County of Dover, the
name and address of its registered agent is Corporate Filing Services, Inc.
(#9007630).
3. The date of filing of the original Certificate of
Incorporation in Delaware was June 5, 1987.
4. The date when restoration, renewal, and revival of the charter
of this company is to commence is the 28th day of February, same being prior to
the date of the expiration of the charter. This renewal and revival of the
charter of this corporation is to be perpetual.
5. This corporation was duly organized and carried on the
business authorized by its charter until the 1st day of March, 1989 A.D. 19___
at which time its charter became inoperative and void for non-payment of taxes
and this certificate for renewal and revival is filed by authority of the duly
elected directors of the corporation in accordance with the laws of the State
of Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section
312 of the General Corporation Law of the State of Delaware, as amended,
providing for the renewal, extension and restoration of charters, Ross A.
Freitas the last and acting President, and Carolyn S. Kenner, the last and
acting Secretary of Ross Cosmetics Distribution Centers, Inc., have hereunto
set their hands to this certificate this 28th day of May, 1989.
/s/ Ross A. Freitas
---------------------------------------
Last and Acting President
ATTEST:
/s/ Carolyn S. Kenner
---------------------------------------
Last and Acting Secretary
-9-
<PAGE> 10
CERTIFICATE OF CHANGE OF ADDRESS OF
REGISTERED OFFICE AND OF REGISTERED AGENT
PURSUANT TO SECTION 134 OF TITLE 8 OF THE DELAWARE CODE
TO: DEPARTMENT OF STATE
Division of Corporations
Townsend Building
Federal Street
Dover, Delaware 19903
Pursuant to the provisions of Section 134 of Title 8 of the Delaware
Code, the undersigned Agent for service of process, in order to change the
address of the registered office of the corporations for which it is registered
agent, hereby certifies that:
1. The name of the agent is CORPORATE FILING SERVICE, INC.
2. The address of the old registered office was 410 South State
Street, Dover, Delaware 19901.
3. The address to which the registered office is to be changed is
229 South State Street, Dover, Delaware 19901. The new address will be
effective on September 1, 1987.
4. The names of the corporations represented by said agent are
set forth on the list annexed to this certificate and made a part hereof by
reference.
IN WITNESS WHEREOF, said agent has caused this certificate to be
signed on its behalf by its Vice President and Secretary this 27th day of
September 1987.
CORPORATE FILING SERVICE, INC.
/s/
---------------------------------------
ATTEST:
/s/
----------------------------------------
Secretary
-10-
<PAGE> 11
CERTIFICATE OF MERGER
OF
ROSS COSMETICS DISTRIBUTION CENTERS, INC.
(a New York Corporation)
INTO
ROSS COSMETICS DISTRIBUTION CENTERS, INC.
(a Delaware Corporation)
Under Section 252 of the Business Corporation Law
of the State of Delaware
--------------------------------------------------------------------------------
The undersigned, Ross Freitas, being the President of Ross Cosmetics
Distribution Centers, Inc., a domestic corporation duly organized and existing
under and by virtue of the laws of the State of Delaware and being, the
President of Ross Cosmetics Distribution Centers, Inc., a foreign corporation
duly organized and existing by virtue of the laws of the State of New York, do
hereby certify that:
1. The name of each constituent corporation is as follows: (i)
Ross Cosmetics Distribution Centers, Inc. (hereinafter "RCDC"), (a New York
corporation); and (ii) Ross Cosmetics Distribution Centers, Inc. (the
"Surviving Corporation"), (a Delaware corporation).
2. The Agreement of Merger has been approved, adopted, certified,
executed and acknowledged by each of the constituent corporations in accordance
with Section 252.
3. The name of the surviving corporation is Ross Cosmetics
Distribution Centers, Inc., a Delaware corporation.
4. An Agreement of Merger has been adopted by the Board of
Directors of the Surviving Corporation and thereafter was duly ratified by
shareholders of the Surviving Corporation in accordance with Section 252 of the
Delaware Corporation Law.
5. The authorized capital stock of RCDC is 10,000,000 shares of
Common Stock.
-11-
<PAGE> 12
6. The designation and number of outstanding shares of RCDC
entitled to vote on the merger is 2,144,231 shares of Common Stock, $.01 par
value per share.
7. The merger of RCDC and the Surviving Corporation into the
Surviving Corporation was authorized by RCDC at a meeting of shareholders by a
vote of the holders of a minimum of sixty-seven (67%) per cent of all
outstanding shares of RCDC entitled to vote thereon pursuant to New York
Business Corporation Law and Delaware Corporation Law.
8. An executed copy of the Agreement of Merger is on file at the
principal place of business of the Surviving Corporation at 135 Canal Street,
Staten Island, New York 10304, and shall be furnished to any stockholder of a
constituent corporation requesting such without cost.
9. The Certificate of Incorporation of the constituent Delaware
corporation shall be the Certificate of Incorporation of the Surviving
Corporation and shall not be amended or changed.
-12-
<PAGE> 13
IN WITNESS WHEREOF, I have executed and subscribed this Certificate of
Merger and do affirm the foregoing statements made herein are true under the
penalties of perjury this 17th day of September, 1987.
ROSS COSMETICS DISTRIBUTION CENTERS,
INC., (a New York Corporation)
ATTEST:
By: /s/ Carolyn Safer Kenner By: /s/ Ross Freitas
------------------------------- ---------------------------------
CAROLYN SAFER KENNER, ROSS FREITAS, President
Secretary
ROSS COSMETICS DISTRIBUTION CENTERS,
INC., (a Delaware Corporation)
ATTEST:
By: /s/ Carolyn Safer Kenner By: /s/ Ross Freitas
------------------------------- ---------------------------------
CAROLYN SAFER KENNER, ROSS FREITAS, President
Secretary
-13-
<PAGE> 14
CERTIFICATE OF INCORPORATION
OF
ROSS COSMETICS DISTRIBUTION CENTERS, INC.
* * * * * * * * * * * * * * *
ARTICLE I
NAME
The name of the corporation is Ross Cosmetics Distribution Centers, Inc.
ARTICLE II
REGISTERED OFFICE AND AGENT
The registered office of the Corporation in the State of Delaware is
located at 410 South State Street in the City of Dover, County of Kent. The
name of its registered agent at that address is Corporate Filing Services, Inc.
ARTICLE III
PURPOSE
To conduct, carry on and engage in the wholesale distribution
of cosmetic products, perfumes, colognes, beauty aids and health care
products; and in connection therewith to manufacture, buy, sell, job,
import, export and otherwise deal in and with cosmetics, chemicals and
pharmaceutical products, lipsticks, rouges, powders, soaps, colognes,
perfumes, toilet waters, hair bleaches, henna, hair rinses and washes,
hair dressings, lotions, fresheners, shadow and eyebrow pencils,
massage creams, cold cream, vanishing cream, balms, ointments, drugs,
medicines, pharmaceutical and chemical products, preparations and
compounds, sanitary and hygienic goods and products, nail polishes,
bleaches, cuticle removers, baby oils, deodorants, depilatories, witch
hazel, rubbing alcohol, astringents, dentifrices, mouth washes,
gargles, shaving creams, shaving stocks, shaving soaps, mineral oils,
smelling salts, tooth brushes, combs, brushes, vanities, nail files,
cuticle scissors, paper towels and tissues, jars, bottles, tubes,
perfume bases, oils, extracts, flavors and other cosmetics, perfumes,
toilet preparations, beauty preparations, chemicals and
pharmaceuticals of every kind and description; and all products,
by-products, materials, supplies, machinery, tools, packaging
materials, applicators and devices used or useful in connection with
or resulting from the manufacture, sale, marketing, distribution or
use thereof.
To purchase, lease, copyright, produce, construct and
otherwise acquire, and to use, operate, repair, maintain, develop and
improve and to sell, trade, exchange, rent, lease, create security
interests in and otherwise dispose of any and all materials,
facilities, appliances, articles, products, equipment or supplies
proper for or adapted to be used in connection with or incidental to
the business and affairs of the corporation as the same pertain to the
conduct and operation of the corporation's principal or ancillary
business activities and to do any and
-14-
<PAGE> 15
all things incidental thereto, or necessary to expedient or proper to
be done in connection with the matters set out herein.
To take, buy, sell, exchange, rent, lease, sublease or
otherwise acquire, and to erect, construct, maintain, improve,
rebuild, enlarge, alter, manage, control, develop, assign, transfer,
convey, pledge, alienate or otherwise dispose and to mortgage or
otherwise encumber, and to generally deal in real and personal
property wherever situated, either directly or through ownership of
shares in any corporation, and to acquire, buy, hold, sell, assign,
transfer, mortgage, pledge, exchange or otherwise encumber or dispose
of the securities of any corporation, domestic or foreign, including
but not limited to shares, scrip, bonds, notes, evidences of
indebtedness, debentures, commercial paper, whether such corporation
be public or private, and to do any other lawful acts necessary,
incidental or proper thereto, not prohibited by law, and while the
holder of any securities, to exercise all rights and privileges of
ownership, and to collect all dividends, and interest payable thereon,
and to do all things not prohibited by law, to protest, conserve, or
increase the value of all property and of all securities held by it.
To have as part of the corporate purposes, all of the powers
conferred upon corporations organized under the General Corporation
Law subject to any limitations thereof contained in the Certificates
of Incorporation or in the laws of the State of Delaware.
ARTICLE IV
CAPITAL STOCK
Section 1. Classes and Shares Authorized. The authorized capital
stock of the Corporation shall consist of 10,000,000 shares of Common Stock,
$.01 par value per share (hereinafter referred to as either the "Common Shares"
or "Common Stock") and 1,000,000 shares of Preferred Stock, $.05 par value per
share (hereinafter referred to as either the "Preferred Shares" or "Preferred
Stock").
Section 2. Preferred Stock. The shares of Preferred Stock shall be
issuable from time to time in one or more series, with respect to each of which
series the Board of Directors shall be authorized, without further approval
from the shareholders of the Corporation, to fix:
(a) the designation of the series;
(b) the number of shares of each series, which number the
Board of Directors may increase or decrease (but not below the number
of shares thereof then outstanding);
(c) the annual dividend rate of the series;
(d) the dates at which dividends, if declared, shall be
payable, and the dates from which the dividends shall be cumulative;
(e) the redemption rights, if any, for shares of the
series;
(f) the terms and amount of any sinking fund provided for
the purchase or redemption of shares of the series;
-15-
<PAGE> 16
(g) the amounts payable on shares of the series in the
event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation;
(h) whether the shares of the series shall be convertible
into Common Stock or other securities, and, if so, the conversion
price or prices, any adjustments thereof, and all other terms and
conditions upon which such conversion may be made;
(i) restrictions on the issuance of the shares of the
same series or of any other class or series; and
(j) the voting rights, if any, exercisable by the holders
of the shares of such series. Shareholders shall have no pre-emptive
rights.
ARTICLE V
PRE-EMPTIVE RIGHTS
Stockholders of the Corporation shall not have pre-emptive rights to
acquire unissued or treasury shares of the Corporation or securities
convertible into such shares of carrying a right to subscribe to or acquire
such shares.
ARTICLE VI
PLACE OF BUSINESS
Part or all of the business of the Corporation may be conducted in the
City of Dover, County of Kent, or any place in the State of Delaware or outside
of the State of Delaware, in other states or territories of the United States
and in foreign countries.
ARTICLE VII
BOARD OF DIRECTORS
Section 1. Board of Directors: Number. The governing board of the
Corporation shall be known as the Board of Directors, shall consist of a
minimum of three and a maximum of nine members, subject, however, to the number
being from time to time increased or decreased in such manner as shall be
provided in the By-laws of the Corporation, provided that the number of
directors shall not be reduced to less than three except that there need be
only as many directors as there are stockholders in the event that the
outstanding shares are held of record by fewer than three stockholders.
Section 2. Classification of Directors. The Board of Directors may,
but need not be divided into three classes, Class 1, Class 2 and Class 3, each
class to be as nearly equal in number as possible. In the event the
Corporation elects to adopt a "staggered" Board, the term of office of Class 1
directors shall expire at the first annual meeting of stockholders after their
election, that of Class 2 directors shall expire at the second annual meeting
after their election, and that of Class 3 directors shall expire at the third
annual meeting after their election. At each annual meeting after such
classification, the number of directors equal to the number of the class whose
term expires at the time of such meeting shall be elected to hold office until
the third succeeding annual meeting. No classification of directors shall be
effective prior to the first annual meeting of stockholders or at any time when
the Board of Directors consists of less than six members. Notwithstanding the
foregoing, and except as otherwise required by
-16-
<PAGE> 17
law, whenever the holders of any one or more series of Preferred Stock shall
have the right, voting separately as a class, to elect one or more directors of
the Corporation, the terms of the director or directors elected by such holders
shall expire at the next succeeding annual meeting of stockholders.
Section 3. Nomination of Directors. (a) Nominations for the
election of directors may be made by the Board of Directors, by a committee of
the Board of Directors or by any stockholder entitled to vote for the election
of directors. Nominatings by stockholders shall be made by notice, in writing,
delivered or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days prior
to any meeting of the stockholders called for the election of directors;
provided, however, that if less than 21 days notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed, as prescribed,
to the Secretary of the Corporation not later than the close of the seventh day
following the day on which notice of the meeting was mailed to stockholders.
(b) Each notice under subsection (a) shall set forth: (i) the
name, age, business address and, if known, residence address after each nominee
proposed in such notice; (ii) the principal occupation or employment of each
such nominee, and (iii) the number of shares of stock of the Corporation which
are beneficially owned by each such nominee.
(c) The chairman of the stockholders' meeting may, if the facts
warrant, determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so determine, he
shall so declare to the meeting and the defective nomination shall be
disregarded.
Section 4. Certain Powers of the Board of Directors. In furtherance
and not in limitation of the powers conferred by statute, and subject to the
rights of the holders of the Corporation's Preferred Stock as specified in
Section 5 of Article IV, the Board of Directors is expressly authorized:
(a) to manage and govern the Corporation by majority vote of
members present at any regular or special meeting at which a quorum shall be
present, to make, alter, or amend the By-laws of the Corporation at any regular
or special meeting, to fix the amount to be reserved as working capital over
and above its capital stock paid in, to authorize and cause to be executed
mortgages and liens upon the real and personal property of this Corporation,
and to designate one or more of committees, each committee to consist of two or
more of the directors of the Corporation, which, to the extent provided in the
resolution or in the By-laws of the Corporation, shall have and may exercise
the powers of the Board of Directors in the management of the business and
affairs of the Corporation (such committee or committees shall have such name
or names as may be stated in the By-laws of the Corporation or as may be
determined from time to time by resolution adopted by the Board of Directors);
(b) to sell, lease, exchange, or otherwise dispose of all of or
substantially all of the property and assets of the Corporation in the ordinary
course of its business upon such terms and conditions as the Board of Directors
may determine without vote or consent of the stockholders;
(c) to sell, pledge, lease, exchange, liquidate, or otherwise
dispose of all or substantially all the property or assets of the Corporation,
including its goodwill, if not in the ordinary course of its business, upon
such terms and conditions as the Board of Directors may determine; provided,
however, that such transaction is authorized or ratified by the affirmative
vote of the holders of at least a majority to the shares entitled to vote
thereon at a stockholders' meeting duly called for such purpose, or is
authorized or ratified by the written
-17-
<PAGE> 18
consent of the holders of all of the shares entitled to vote thereon; and
provided, further, that any such transaction with any substantial stockholder
or affiliate of the corporation shall be authorized or ratified by the
affirmative vote of the holders of at least two-thirds of shares entitled to
vote thereon at a stockholders' meeting duly called for that purpose, unless
such transaction is with any subsidiary of the Corporation or is approved by
the affirmative vote of a majority of the continuing directors of the
Corporation, or is authorized or ratified by the written consent of the holders
of all the shares entitled to vote thereon;
(d) to merge, consolidate, or exchange all of the issued and
outstanding shares of one or more classes of the Corporation upon such terms
and conditions as the Board of Directors may authorize; provided, however, that
such merger, consolidation, or exchange is approved or ratified by the
affirmative vote of the holders of at least a majority of the shares entitled
to vote thereon at a stockholders' meeting duly called for that purpose, or is
authorized or ratified by the written consent of the holders of all of the
shares entitled to vote thereon; and provided, further, that any such merger,
consolidation or exchange with any substantial stockholder or affiliate of the
Corporation shall be authorized or ratified by the vote of the holders of at
least two-thirds of the shares entitled to vote thereon at a stockholders'
meeting duly called for that purpose, unless such merger, consolidation or
exchange is with any subsidiary of the Corporation or is approved by the
affirmative vote of a majority of the continuing directors of the Corporation,
or is authorized or ratified by the written consent of the holders of all the
shares entitled to vote thereon; and
(e) to distribute to the stockholders of the Corporation, without
the approval of the stockholders, in partial liquidation, out of stated capital
or capital surplus of the Corporation, a portion of its assets, in cash or in
property, so long as the partial liquidation is in compliance with the Delaware
General Corporation Law.
(f) as used in this Section 5, the following terms shall have the
following meanings:
(i) an "affiliate" shall mean any person or entity which
is an affiliate within the meaning of Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended;
(ii) a "continuing director" shall mean a director who was
elected before the substantial stockholder or affiliate of the Corporation
which is to be a party to a proposed transaction within the scope of
subsections (c) and (d) of this Section 5 became such a substantial stockholder
or affiliate of the Corporation, as the case may be, or is designated at or
prior to his first election or appointment to the Board of Directors by the
affirmative vote of a majority of the Board of Directors who are continuing
directors;
(iii) a "subsidiary" shall mean any corporation in which
the Corporation owns the majority of each class of equity security; and
(iv) a "subsidiary stockholder" shall mean any person or
entity which is the beneficial owner, within the meaning of Rule 13d-3 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, of 10% or more of the outstanding capital stock of the Corporation.
ARTICLE VIII
CONFLICTS OF INTEREST
Section 1. Related Party Transactions. No contract or other
transaction of the Corporation with any other person, firm or corporation, or
in which the corporation is
-18-
<PAGE> 19
interested, shall be affected or invalidated by (a) the fact that any one or
more of the directors or officers of this Corporation is interested in or is a
director or officer of such other firm or corporation; or (b) the fact that any
director or officer of this Corporation, individually or jointly with others,
may be a party to or may be interested in any such contract or transaction, so
long as the contract or transaction is authorized, approved or ratified at a
meeting of the Board of Directors by sufficient vote thereon by directors not
interested therein, to which such fact of relationship or interest has been
disclosed, or the contract or transaction has been approved or ratified by vote
or written consent of the stockholders entitled to vote, to whom such fact of
relationship or interest has been disclosed, or so long as the contract or
transaction is fair and reasonable to the Corporation. Each person who may
become a director or officer of the Corporation is hereby relieved from any
liability that might otherwise arise by reason of his contracting with the
Corporation for the benefit of himself or any firm or corporation in which he
may be in any way interested.
Section 2. Corporate Opportunities. The officers, directors and
other members of management of the Corporation shall be subject to the doctrine
of corporate opportunities only insofar as it applies to business opportunities
in which the Corporation has expressed an interested as determined from time to
time by resolution of the Board of Directors. When such areas of interest are
delineated, all such business opportunities within such areas of interest which
come to the attention of the officers, directors and other members of
management of the Corporation shall be disclosed promptly to the Corporation
and made available to it. The Board of Directors may reject any business
opportunity presented to it, and thereafter any officer, director, or other
member of management may avail himself of such opportunity. Until such time as
the Corporation, through its Board of Directors, has designated an area of
interest, the officers, directors, and other members of management of the
Corporation shall be free to engage in such areas of interest on their own and
the provisions hereof shall not limit the rights of any officer, director, or
other member of management of the Corporation to continue a business existing
prior to the time that such area of interest is designated by the Corporation.
This provision shall not be construed to release any employee of the
Corporation (other than an officer, director or member of management) from any
duties which such employee may have to the Corporation.
ARTICLE IX
INDEMNIFICATION
Section 1. Liability of Directors. No Director shall be personally
liable to the Corporation or any stockholder for monetary damages for breach of
fiduciary duty as a director, except for any matter is respect of which such
director shall be liable under Section 174 of Title 8 of the Delaware Code
(relating to the Delaware General Corporation Law) or any amendment thereto or
successor provision thereto as shall be liable for reason that, in addition to
any and all other requirements for such liability, he: (i) shall have breached
his duty of loyalty to the Corporation or its stockholders; (ii) shall not have
acted in good faith, or in failing to act, shall not have acted in good faith;
(iii) shall have acted in a manner involving intentional misconduct or a
knowing violation of law or, in failing to act, shall have acted in a manner
involving intentional misconduct or a knowing violation of law; or (iv) shall
have derived an improper personal benefit. Neither the amendment nor repeal of
this Article IX, nor the adoption of any provision of the Certificate of
Incorporation inconsistent with this Article IX, shall eliminate or reduce the
effect of this Article IX in respect to any matter occurring, or any cause of
action, suit or claim that, but for this Article IX would accrue or arise,
prior to such amendment, repeal or adoption of an inconsistent provision.
Section 2. Insurance. The Board of Directors may exercise the
Corporation's power to purchase and maintain insurance on behalf of any person
who is or was a director, officer,
-19-
<PAGE> 20
employee, fiduciary or agent of the Corporation, or is or was serving at the
request of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such
liability under this Article X.
Section 3. Miscellaneous. The indemnification provided by this
Article X shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under these Articles of Incorporation,
the By-laws, agreements, vote of the stockholders or disinterested directors,
or otherwise, both as to action in such person's official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee, fiduciary or agent
and shall inure to the benefit of the heirs and personal representatives of
such person.
ARTICLE X
ARRANGEMENTS WITH CREDITORS
Whenever a compromise or arrangement is proposed by the Corporation
between it and its creditors or any class of them, and/or between the
Corporation and its stockholders or any class of the, any court of equitable
jurisdiction may, on summary application by the Corporation, or by a majority
of its stockholders, or on the application of any receiver or receivers
appointed for the Corporation, or on the application of trustees in
dissolution, order a meeting of the creditors or class of creditors and/or of
the stockholders or class of stockholders of the Corporation, as the case may
be, to be notified in such manner as the court decides. If a majority in
number representing at least three-fourths in amount of the creditors or class
or creditors, and/or the holders of the majority of the stock or class of stock
of the Corporation, as the case may be, agree to any compromise or arrangement
and/or to any reorganization of the Corporation, as a consequence of such
compromise or arrangement and/or said reorganization shall, if sanctioned by
the court to which the application has been made, be binding upon all the
creditors or class of creditors and/or on all the stockholders or class of
stockholders of the Corporation, as the case may be, and also on the
Corporation.
ARTICLE XII
SHAREHOLDERS' MEETINGS
Stockholders' meetings may be held at such time and place as may be
stated or fixed in accordance with the By-laws. At all stockholders' meetings
one-third of all shares entitled to vote shall constitute a quorum.
ARTICLE XII
AMENDMENT
These Articles of Incorporation may be amended by resolution of the
Board of Directors if no shares have been issued, and if shares have been
issued, by the affirmative vote of the holders of at least a majority of the
shares entitled to vote thereon at a meeting duly called for that purpose, or,
when authorized, when such action is ratified by the written consent of all the
stockholders entitled to vote thereon.
-20-
<PAGE> 21
ARTICLE XIII
SHAREHOLDER VOTE
Whenever the laws of the State of Delaware require the vote or
concurrence of the holders of two-thirds of the outstanding shares entitled to
vote thereon, with respect to any action to be taken by the stockholders of the
Corporation, such action may be taken by the vote or concurrence of the holders
of at least a majority of the shares entitled to vote thereon.
ARTICLE XIV
DISSOLUTION
Section 1. Procedure. The Corporation shall be dissolved upon the
affirmative vote of the holders of at least a majority of the shares entitled
to vote thereon at a meeting duly called for that purpose, or when authorized
or ratified by the written consent of the holders of all of the shares entitled
to vote thereon.
Section 2. Revocation. The corporation shall revoke voluntary
dissolution proceedings upon the affirmative vote of the holders of at least a
majority of the shares entitled to vote at a meeting duly called for that
purpose, or when authorized or ratified by the written consent of the holders
of all of the shares entitled to vote thereon.
ARTICLE XV
The names and addresses of each Incorporator are:
Ross A. Freitas
135 Canal Street
Staten Island, New York 10305
Carolyn Safer Kenner
135 Canal Street
Staten Island, New York 10305
IN WITNESS WHEREOF, the undersigned officers for and on behalf of the
Corporation have signed this Certificate of Incorporation this 22nd day of May,
1987.
ROSS COSMETICS DISTRIBUTION
CENTERS, INC.
By: /s/ Ross Freitas
----------------------------------
Ross Freitas, Incorporator
By: /s/ Carolyn Safer Kenner
----------------------------------
Carolyn Safer Kenner, Incorporator
-21-
<PAGE> 1
EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
Among
EUROSTAR PERFUMES, INC.,
TRANSVIT MANUFACTURING CORPORATION
and
TRISTAR CORPORATION
July 1, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Certificate of Incorporation; Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Conversion of Securities; Exchange; Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Taking of Necessary Action; Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
II
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 3
2.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Representations and Warranties of Eurostar and Parent . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Organization and Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) No Approvals or Notices Required; No Conflict with Instruments to which Eurostar or
Parent is a Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(e) Eurostar Financial Statements; Material Agreements . . . . . . . . . . . . . . . . . . . . 5
(f) Conduct of Business in the Ordinary Course; Absence of Certain Changes and Events . . . . . 5
(g) Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(h) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(i) Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(j) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(k) Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(l) No Severance Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(m) Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(n) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(o) Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Representations and Warranties of Tristar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Organization and Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(d) No Approvals or Notices Required; No Conflict with Instruments to which Tristar or any
of the Tristar Subsidiaries is a Party . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Commission Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 11
(f) Conduct of Business in the Ordinary Course; Absence of Certain Changes and Events . . . . . 12
(g) Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(h) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(i) Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(j) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(k) Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(l) No Severance Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(m) Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(n) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(o) Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
III
COVENANTS OF EUROSTAR PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . . . . . 16
3.1 Conduct of Business by Eurostar Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
IV
COVENANTS OF TRISTAR PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . . . . . . 18
4.1 Conduct of Business by Tristar Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.3 NASDAQ/NMS Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
V
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 19
5.1 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Approval of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3 Filings; Consents; Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.4 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5 Agreement to Defend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.7 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.8 Termination of Distribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
VI
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.1 Conditions to Obligation of Each Party to Effect the Merger . . . . . . . . . . . . . . . . . . . . 21
6.2 Additional Conditions to Obligations of Tristar . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Additional Conditions to Obligations of Eurostar . . . . . . . . . . . . . . . . . . . . . . . . . . 22
VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 Waiver and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.4 Survival of Representations, Warranties, Covenants and Agreements . . . . . . . . . . . . . . . . . 24
7.5 Public Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.12 Entire Agreement; Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement"), executed the 31st
day of July, 1995 (the "Date Hereof"), to be effective July 1, 1995 (the
"Effective Date"), is among Eurostar Perfumes, Inc., a Texas corporation
("Eurostar"), Transvit Manufacturing Corporation, a British Virgin Islands
corporation and the sole stockholder of Eurostar ("Parent"), and TRISTAR
CORPORATION, a Delaware corporation ("Tristar").
WHEREAS, subject to and in accordance with the terms and conditions of
this Agreement, as of the Date Hereof, the respective Boards of Directors of
Eurostar and Tristar, and Parent as sole stockholder of Eurostar, have approved
the merger of Eurostar with and into Tristar (the "Merger"), whereby each
issued and outstanding share of common stock, par value $.001 per share, of
Eurostar ("Eurostar Common Stock") not owned directly or indirectly by Eurostar
will be converted into the right to receive common stock, par value $.01 per
share, of Tristar ("Tristar Common Stock"), as provided herein;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Merger is intended to be accounted for in a manner
similar to a "pooling of interests" for accounting purposes; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the consummation of the Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to and in accordance with the terms and
conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), and the Texas Business Corporation Act (the
"TBCA"), at the Effective Time (as defined in Section 1.3) Eurostar shall be
merged with and into Tristar. As a result of the Merger, the separate
corporate existence of Eurostar shall cease and Tristar shall continue as the
surviving corporation (sometimes referred to herein as the "Surviving
Corporation") and shall succeed to and assume all of the rights and obligations
of Eurostar in accordance with the DGCL and the TBCA.
1.2 Closing Date. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Fulbright &
Jaworski L.L.P., 300 Convent Street, Suite 2200, San Antonio, Texas, as soon as
practicable after the satisfaction or waiver of the conditions set forth in
Article VI or at such other time and place and on such other date as Eurostar
and Tristar shall agree; provided, that the closing conditions set forth in
Article VI shall have been satisfied or waived at or prior to such time. The
date on which the Closing occurs is herein referred to as the "Closing Date".
1.3 Consummation of the Merger. As soon as practicable on the
Closing Date, the parties hereto will cause the Merger to be consummated by
filing with the Secretary of State of the State of Delaware a certificate of
merger in such form as required by, and executed in accordance with, the
relevant provisions of the DGCL, and by filing with the Secretary of State of
the State of Texas articles of merger in such form as required by, and executed
in accordance with, the Texas Business Corporation Act (the "TBCA"). The
"Effective Time" of the Merger as that term is used in this Agreement shall
mean the later to occur of the filing of such certificate of merger or articles
of merger.
1.4 Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of the DGCL and the TBCA and as set forth
herein.
<PAGE> 5
1.5 Certificate of Incorporation; Bylaws. The Certificate of
Incorporation and bylaws of Tristar, as in effect immediately prior to the
Effective Time and as amended as described in the Preliminary Proxy Statement
(hereinafter defined), shall be the Certificate of Incorporation and bylaws of
the Surviving Corporation and thereafter shall continue to be its Certificate
of Incorporation and bylaws until amended as provided therein and under the
DGCL.
1.6 Directors and Officers. The directors of Tristar immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and bylaws of the Surviving Corporation, and the officers of
Tristar immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors
are duly elected or appointed and qualified.
1.7 Conversion of Securities; Exchange; Fractional Shares.
Subject to the terms and conditions of this Agreement, at the Effective Time,
by virtue of the Merger and without any action on the part of Eurostar, Tristar
or their respective stockholders:
(a) Each share of Eurostar Common Stock issued and
outstanding immediately prior to the Effective Time (the "Shares"),
other than any Shares to be canceled pursuant to Section 1.7(b), shall
be converted, subject to the provisions of this Section 1.7, into the
right to receive 9.97781 shares of Tristar Common Stock; provided,
however, that no fractional shares of Eurostar Common Stock shall be
issued, and, in lieu thereof, the number of shares shall be rounded
downward to the next whole number.
(b) Each share of Eurostar Common Stock held in the
treasury of Eurostar immediately prior to the Effective Time shall be
canceled and extinguished at the Effective Time without any conversion
thereof and no payment shall be made with respect thereto.
(c) As soon as practicable after the Effective Time, each
holder of an outstanding certificate that prior thereto represented
Shares shall be entitled, upon surrender thereof to the transfer agent
for the Tristar Common Stock, to receive in exchange therefor a
certificate or certificates representing the number of whole shares of
Tristar Common Stock into which the Shares so surrendered shall have
been converted as aforesaid, of such denominations and registered in
such names as such holder may request. Until so surrendered, each
outstanding certificate that, prior to the Effective Time, represented
Shares shall be deemed from and after the Effective Time, for all
corporate purposes, other than the payment of earlier dividends and
distributions, to evidence the ownership of the number of full shares
of Tristar Common Stock into which such Shares shall have been
converted pursuant to this Section 1.7. Unless and until any such
outstanding certificates shall be surrendered, no dividends or other
distributions payable to the holders of Tristar Common Stock, as of
any time on or after the Effective Time, shall be paid to the holders
of such outstanding certificates which prior to the Effective Time
represented Shares; provided, however, that, upon surrender and
exchange of such outstanding certificates, there shall be paid to the
record holders of the certificates issued and exchanged therefor the
amount, without interest thereon, of dividends and other
distributions, if any, that theretofore were declared and became
payable since the Effective Time with respect to the number of full
shares of Tristar Common Stock issued to such holders.
(d) All shares of Tristar Common Stock into which the
Shares shall have been converted pursuant to this Section 1.7 shall be
issued in full satisfaction of all rights pertaining to such converted
Shares.
1.8 Taking of Necessary Action; Further Action. The parties
hereto shall take all such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Merger as promptly as possible. If, at
any time after the Effective Time, any such further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Eurostar or Tristar, such
corporations shall direct their respective officers and directors to take all
such lawful and necessary action.
-2-
<PAGE> 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Unless stated otherwise, all representations and warranties are as of
the Effective Date.
2.1 Certain Definitions. As used in this Agreement, the following
terms shall have the meanings ascribed to them below:
(a) "Environmental Laws" shall mean all federal, state,
local or municipal laws, rules, regulations, statutes, ordinances or
orders of any governmental entity relating to (i) the control of any
potential pollutant or protection of the air, water or land, (ii)
solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation, and (iii) exposure to hazardous,
toxic or other substances alleged to be harmful. The term
"Environmental Laws" shall include, but not be limited to, the Clean
Air Act, 42 U.S.C. Section 7401 et seq., the Clean Water Act, 33
U.S.C. Section 1251 et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., the Toxic Substances Control
Act, 15 U.S.C. Section 2601 et seq., the Safe Drinking Water Act, 42
U.S.C. Section 300f et seq. and the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section
9601 et seq.
(b) "Environmental Permit" shall mean any permit,
license, approval, registration, identification number or other
authorization with respect to any business or other operations
conducted by Eurostar or any Eurostar Subsidiary (as defined in
Section 2.2(a)) or Tristar or any Tristar subsidiary (as defined in
Section 2.3(a)).
(c) "Hazardous Materials" shall mean any (i) petroleum or
petroleum products, (ii) hazardous substances as defined by Section
101(14) of CERCLA or (iii) any other chemical, substance or waste that
is regulated under any Environmental Law.
(d) "Knowledge" of any party shall mean the collective
knowledge of such party's officers, directors and key employees.
(e) "Material Adverse Change" with respect to any party
shall mean a material adverse change in the business, financial
condition or results of operations of such party and its subsidiaries,
taken as a whole; provided, however, that in no event shall the term
"Material Adverse Change" be deemed to include (a) changes in national
economic conditions or industry conditions generally, (b) changes, or
possible changes, in federal, state or local statutes and regulations
applicable to Eurostar, Tristar or the Surviving Corporation.
(f) "Material Adverse Effect" on any party shall mean any
material adverse effect on the business, financial condition or
results of operations of such party and its subsidiaries, taken as a
whole or on such party's ability to consummate the Merger;
(g) "Permitted Liens" shall mean (A) liens for taxes not
due and payable or which are being contested in good faith, (B)
mechanics', warehousemen's and other statutory liens incurred in the
ordinary course of business, and (C) defects and irregularities in
title and encumbrances which are not substantial in character or
amount and do not materially impair the use of the property or asset
in question.
2.2 Representations and Warranties of Eurostar and Parent.
Eurostar and Parent hereby, jointly and severally, represent and warrant to
Tristar that, except as set forth in the Preliminary Proxy Statement or in the
disclosure letter delivered by Eurostar to Tristar on the Date Hereof (the
"Eurostar Disclosure Letter") that as of the Effective Date:
(a) Organization and Compliance with Law. Eurostar and
each of its corporate subsidiaries (the "Eurostar Subsidiaries") is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized and has
all requisite corporate power and authority and all necessary
governmental authorizations to own, lease and
-3-
<PAGE> 7
operate all of its properties and assets and to carry on its business
as now being conducted, except where the failure to have such
governmental authority would not, either individually or in the
aggregate, have a Material Adverse Effect. Eurostar and each of the
Eurostar Subsidiaries is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be duly qualified does not and
would not, either individually or in the aggregate, have a Material
Adverse Effect. Neither Eurostar nor any of the Eurostar
Subsidiaries, nor any employee or, to the Knowledge of Eurostar, any
agent of Eurostar or any of the Eurostar Subsidiaries, has made any
payment or transfer of funds or assets to any person or conferred any
benefit on any person or received any funds, assets or personal
benefit in violation of any applicable law, rule or regulation.
Eurostar and each of the Eurostar Subsidiaries is in compliance with
all applicable laws, judgments, orders, rules and regulations,
domestic and foreign, except where failure to be in such compliance
would not, either individually or in the aggregate, have a Material
Adverse Effect. Eurostar has heretofore delivered to Tristar true and
complete copies of the articles of incorporation and bylaws of
Eurostar. The Eurostar Disclosure Letter sets forth each of the
Eurostar Subsidiaries and their respective jurisdictions of
incorporation.
(b) Capitalization.
(i) The authorized capital stock of Eurostar
consists of 1,000,000 shares of Eurostar Common Stock, par
value $.001 per share, all of which are issued and
outstanding. All issued shares of Eurostar Common Stock are
validly issued, fully paid and nonassessable and were not
issued in violation of the preemptive rights of any person.
Eurostar is not a party to, and has no Knowledge of, any
agreement or arrangement providing for registration rights
with respect to any capital stock or other securities of
Eurostar. All issued shares of Eurostar Common Stock are
owned by Parent free and clear of all liens, charges,
encumbrances, adverse claims and options of any nature. All
outstanding shares of capital stock of Eurostar Subsidiaries
are owned by Eurostar free and clear of all liens, charges,
encumbrances, adverse claims and options of any nature.
(ii) Other than as set forth in this Section
2.2(b), there are not as of the Effective Date, and at the
Effective Time there will not be, any (A) shares of capital
stock or other equity securities of Eurostar outstanding or
(B) outstanding options, warrants, scrip, rights to subscribe
for, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into or exchangeable
for, shares of any class of capital stock of Eurostar, or
contracts, understandings or arrangements to which Eurostar is
a party, or by which it is or may be bound, to issue
additional shares of its capital stock or options, warrants,
scrip or rights to subscribe for, or securities or rights
convertible into or exchangeable for, any additional shares of
its capital stock.
(c) Authorization and Validity of Agreement. Eurostar
and Parent have all requisite corporate power and authority to enter
into this Agreement and to perform their respective obligations
hereunder. As of the Date hereof, the execution and delivery by
Eurostar and Parent of this Agreement and the consummation by each of
them of the transactions contemplated hereby have been duly authorized
by all necessary corporate action. As of the Date hereof, this
Agreement has been duly executed and delivered by Eurostar and Parent
and is the valid and binding obligation of Eurostar and Parent,
enforceable against Eurostar and Parent in accordance with its terms,
except as such enforceability may be limited or affected by (i)
bankruptcy, insolvency, reorganization, moratorium, liquidation,
arrangement, fraudulent transfer, fraudulent conveyance and other
similar laws (including court decisions) now or hereafter in effect
and affecting the rights and remedies of creditors generally or
providing for the relief of debtors, (ii) the refusal of a particular
court to grant equitable remedies, including, without limitation,
specific performance and injunctive relief, and (iii) general
principles of equity (regardless of whether such remedies are sought
in a proceeding in equity or at law) and except as the
-4-
<PAGE> 8
enforceability of any indemnification provision contained in this
Agreement may be limited by applicable federal or state securities
laws.
(d) No Approvals or Notices Required; No Conflict with
Instruments to which Eurostar or Parent is a Party. Neither the
execution and delivery of this Agreement nor the performance by
Eurostar or Parent of its obligations hereunder, nor the consummation
of the transactions contemplated hereby by Eurostar or Parent, will
(i) conflict with the charter or bylaws of Eurostar or Parent; (ii)
assuming satisfaction of the requirements set forth in clause (iii)
below, violate any provision of law applicable to Eurostar or Parent;
(iii) except for (A) requirements of Federal and state securities law,
and (B) the filing of articles of merger by Eurostar in accordance
with the TBCA, require any consent or approval of, or filing with or
notice to, any public body or authority, domestic or foreign, under
any provision of law applicable to Eurostar or Parent; or (iv) require
any consent, approval or notice under, or violate, breach, be in
conflict with or constitute a default (or an event that, with notice
or lapse of time or both, would constitute a default) under, or permit
the termination of any provision of, or result in the creation or
imposition of any lien upon any properties, assets or business of
Eurostar or Parent under, any note, bond, indenture, mortgage, deed of
trust, lease, franchise, permit, authorization, license, contract,
instrument or other agreement or commitment or any order, judgment or
decree to which Eurostar or Parent is a party or by which Eurostar or
Parent or any of their respective assets or properties are bound or
encumbered, except those that have already been given, obtained or
filed and except in any of the cases enumerated in clauses (ii)
through (iv), those that, in the aggregate, would not have a Material
Adverse Effect.
(e) Eurostar Financial Statements; Material Agreements.
Eurostar has delivered to Tristar copies of the consolidated balance
sheet of Eurostar and the Eurostar Subsidiaries as of September 30,
1992, 1993 and 1994, and March 31, 1995, and consolidated statements
of income and consolidated statements of shareholders' equity of
Eurostar and the Eurostar Subsidiaries for the fiscal periods then
ended. The financial statements delivered by Eurostar pursuant to
this Section 2.2(e) are collectively referred to herein as the
"Eurostar Consolidated Financial Statements." The Eurostar
Consolidated Financial Statements do not include the pro forma
financial statements of Tristar and Eurostar included in the
Preliminary Proxy Statement or to be included in the Proxy Statement
(hereinafter defined).
Each of the Eurostar Consolidated Financial Statements
(including any related notes or schedules) was, and each of the
Eurostar Consolidated Financial Statements to be included in the Proxy
Statement will be, prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be
noted therein or in the notes or schedules thereto), and fairly
presents or will fairly present, as the case may be, the consolidated
financial position of Eurostar and the Eurostar Subsidiaries as of the
dates thereof and the statements of income, cash flows (or changes in
financial position prior to the approval of Statement of Financial
Accounting Standards Number 95) and stockholders' equity for the
periods then ended (subject, in the case of the unaudited interim
financial statements, to normal year-end audit adjustments on a basis
comparable with past periods in accordance with generally accepted
accounting principles). As of the Effective Date, neither Eurostar
nor any of the Eurostar Subsidiaries has any material liabilities,
absolute or contingent, not reflected in the Eurostar Consolidated
Financial Statements, except for (i) liabilities not required under
generally accepted accounting principles to be reflected on such
financial statements or the notes thereto and (ii) liabilities
incurred in the ordinary course of business since March 31, 1995,
consistent with past operations and not relating to the borrowing of
money. The Eurostar Disclosure Letter contains a list of all material
contracts of Eurostar and the Eurostar Subsidiaries, true and correct
copies of which have been made available to Tristar.
(f) Conduct of Business in the Ordinary Course; Absence
of Certain Changes and Events. Since March 31, 1995, except as
contemplated by this Agreement, Eurostar and the Eurostar Subsidiaries
have conducted their business only in the ordinary and usual course,
and there has not been (i) any Material Adverse Change in Eurostar or
any condition, event or development that reasonably may be expected to
result in any such Material Adverse Change; (ii) any change by
Eurostar in its accounting methods, principles or practices; or (iii)
any
-5-
<PAGE> 9
declaration, setting aside or payment of any dividends or
distributions in respect of the Eurostar Common Stock or any
redemption, purchase or other acquisition of any of its securities or
any securities of any of the Eurostar Subsidiaries.
(g) Certain Fees. With the exception of the engagement
of Principal Financial Services, Inc. and Duncan-Smith Co., by
Eurostar, neither Eurostar nor any of its officers, directors or
employees, on behalf of Eurostar or any of the Eurostar Subsidiaries
or its or their respective Boards of Directors (or any committee
thereof), has employed any financial advisor, broker or finder or
incurred any liability for any financial advisory, brokerage or
finders' fees or commissions in connection with the transactions
contemplated hereby.
(h) Litigation. There are no claims, actions, suits,
investigations or proceedings pending or, to the knowledge of Eurostar
or any of the Eurostar Subsidiaries, threatened against or affecting
Eurostar or any of the Eurostar Subsidiaries or any of their
respective properties at law or in equity, or any of their respective
employee benefit plans or fiduciaries of such plans, or before or by
any federal, state, municipal or other governmental agency or
authority, or before any arbitration board or panel, wherever located,
that individually or in the aggregate if adversely determined would
have a Material Adverse Effect, or that involve the risk of criminal
liability.
(i) Employee Benefit Plans. The Eurostar Disclosure
Letter sets forth a complete and accurate list of:
(i) each "employee welfare benefit plan" (as such
term is defined in Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (the
"Eurostar Welfare Plans");
(ii) each "employee pension benefit plan" (as such
term is defined in Section 3(2) of ERISA) (the "Eurostar
Pension Plans"); and
(iii) all other employee benefit agreements or
arrangements, including, but not limited to, deferred
compensation plans, incentive plans, bonus plans or
arrangements, stock option plans, stock purchase plans, golden
parachute agreements, severance pay plans, dependent care
plans, cafeteria plans, employee assistance programs,
scholarship programs, employment contracts and other similar
plans, agreements and arrangements (collectively, with the
Eurostar Welfare Plans and the Eurostar Pension Plans, the
"Eurostar Benefit Plans"),
that were in effect as of the Effective Date or were maintained within
three years of the Closing Date, or were approved before the Effective
Date but are not yet effective, for the benefit of directors,
officers, employees or former employees (or their beneficiaries) of
Eurostar, any of the Eurostar Subsidiaries incorporated in the United
States (the "Eurostar U.S. Subsidiaries") or any member of a
controlled group or affiliated service group (as defined in Section
414(b), (c) or (m) of the Code) that is incorporated or domiciled in
the United States of which Eurostar or any of the Eurostar U.S.
Subsidiaries is a member (collectively, the "Eurostar Group").
Eurostar and the Eurostar U.S. Subsidiaries have provided to Tristar,
as to each Eurostar Benefit Plan, as applicable, access to a complete
and accurate copy of (i) such plan, agreement or arrangement; (ii) the
trust, group annuity contract or other document that provides the
funding for such plan; (iii) the most recent annual Form 5500, 990 and
1041 reports; (iv) the most recent actuarial report or valuation
statement; (v) the most current summary plan description, booklet or
other descriptive written materials, and any summary of material
modifications prepared after each such summary plan description; (vi)
the most recent Internal Revenue Service ("IRS") determination letter
and all rulings or determinations requested from the IRS subsequent to
the date of such determination letter; and (vii) all other pending
correspondence from the IRS or the Department of Labor that relates to
such plan received by Eurostar.
Each Eurostar Welfare Plan and each Eurostar Pension Plan (i)
is in compliance with ERISA, including, but not limited to, all
reporting and disclosure requirements of Part 1 of Subtitle B of Title
I of ERISA, except where the failure to be in compliance would not,
either
-6-
<PAGE> 10
individually or in the aggregate, have a Material Adverse Effect; (ii)
is in compliance with the Code, except where the failure to be in
compliance would not, either individually or in the aggregate, have a
Material Adverse Effect; (iii) has had the appropriate Form 5500
timely filed for any Eurostar Pension Plan for each year of its
existence and for any Eurostar Welfare Plan for each year of its
existence after 1987; (iv) has not engaged in any transaction
described in Section 406 or 407 of ERISA or Section 4975 of the Code
unless it received an exemption under Section 408 of ERISA or Section
4975 of the Code, as applicable, or unless such transaction has been
corrected and all applicable excise taxes paid or waived; (v) has at
all times complied with the bonding requirements of Section 412 of
ERISA; (vi) has no issue pending (other than the payment of benefits
in the normal course or the qualification of the plan pursuant to an
application pending before the IRS) nor any issue resolved adversely
to the Eurostar Group that may subject the Eurostar Group to the
payment of a penalty, interest, tax or other amount; and (vii) can be
unilaterally terminated or amended on no more than 90 days' notice.
No notice has been received by the Eurostar Group of an increase or
proposed increase in any premium relative to any Eurostar Benefit
Plan, and no amendment to any Eurostar Benefit Plan within the last
twelve months has increased the rate of employer contributions
thereunder.
Each Eurostar Benefit Plan that is intended to be a voluntary
employee benefit association has been submitted to and approved by the
IRS as exempt from federal income tax under Section 501(c)(9) of the
Code, or the applicable submission period relating to any such plan
will not have ended prior to the Closing. No Eurostar Benefit Plan
will cause the Eurostar Group to have liability for severance pay as a
result of this Agreement. The Eurostar Group does not provide
employee post-retirement medical or health coverage or contribute to
or maintain any employee welfare benefit plan that provides for health
benefit coverage following termination of employment except as
required by Section 4980B(f) of the Code or other applicable statute,
nor has the Eurostar Group made any representations, agreements,
covenants or commitments to provide that coverage. All group health
plans maintained by the Eurostar Group have been operated in
compliance with Section 4980B(f) of the Code.
Each Eurostar Pension Plan has been submitted to and approved
as qualifying under Section 401(a) of the Code by the IRS or the
applicable remedial amendment period relating to such plan will not
have ended prior to the Closing. No facts have occurred which, if
known by the IRS, could cause disqualification of any Eurostar Pension
Plan. Each Eurostar Pension Plan to which Section 412 of the Code is
applicable fully complies with the funding requirements of that
Section and there is no accumulated funding deficiency as defined in
Section 302(a)(2) of ERISA (whether or not waived) in any such plan.
The Eurostar Group has paid all premiums (including interest, charges
and penalties for late payment) due the Pension Benefit Guaranty
Corporation (the "PBGC") with respect to each Eurostar Pension Plan
for which premiums are required. No Eurostar Pension Plan has been
terminated under circumstances that would result in liability to the
PBGC or the Eurostar Group. There has been no "reportable event" (as
defined in Section 4043(b) of ERISA and the regulations under that
Section) with respect to any Eurostar Pension Plan subject to Title IV
of ERISA. With respect to each Eurostar Pension Plan, the Eurostar
Group has not (i) ceased operations at a facility so as to become
subject to the provisions of Section 4062(e) of ERISA, (ii) withdrawn
as a substantial employer so as to become subject to the provisions of
Section 4063 of ERISA or (iii) ceased making contributions on or
before the Closing Date to any such plan subject to Section 4064(a) of
ERISA to which the Eurostar Group made contributions at any time
during the six years prior to the Closing Date. Neither the Eurostar
Group nor any member thereof has made a complete or partial withdrawal
from a multiemployer plan (as defined in Section 3(37) of ERISA) so as
to incur withdrawal liability as defined in Section 4201 of ERISA.
Eurostar's subsidiaries incorporated outside of the United
States and any benefit plans maintained by any of them for the benefit
of their directors, officers, employees or former employees (or any of
their beneficiaries) are in compliance with applicable laws pertaining
to such plans in the jurisdictions of such subsidiaries, except where
such failure to be in compliance would not, either individually or in
the aggregate, have a Material Adverse Effect.
-7-
<PAGE> 11
(j) Taxes. All returns and reports, including, without
limitation, information and withholding returns and reports ("Tax
Returns") of or relating to any foreign, federal, state or local tax,
assessment or other governmental charge ("Taxes" or a "Tax") that are
required to be filed on or before the Closing Date by or with respect
to Eurostar or any of the Eurostar Subsidiaries, or any other
corporation that is or was a member of an affiliated group (within the
meaning of Section 1504(a) of the Code) of corporations of which
Eurostar was a member for any period ending on or prior to the Closing
Date, have been or will be duly and timely filed (including any
applicable extensions), and all Taxes, including interest and
penalties, due and payable pursuant to such Tax Returns have been paid
or adequately provided for in reserves established by Eurostar, except
where the failure to file, pay or provide for would not, either
individually or in the aggregate, have a Material Adverse Effect. No
Tax Returns of or with respect to Eurostar or any of the Eurostar
Subsidiaries have been audited by the applicable governmental
authority. There is no material claim against Eurostar or any of the
Eurostar Subsidiaries with respect to any Taxes, and no material
assessment, deficiency or adjustment has been asserted or proposed
with respect to any Tax Return of or with respect to Eurostar or any
of the Eurostar Subsidiaries that has not been adequately provided for
in reserves established by Eurostar. The total amounts set up as
liabilities for current and deferred Taxes in the balance sheet dated
March 31, 1995, included in the Eurostar Consolidated Financial
Statements have been prepared in accordance with generally accepted
accounting principles and are sufficient to cover the payment of all
material Taxes, including any penalties or interest thereon and
whether or not assessed or disputed, that are, or are hereafter found
to be, or to have been, due with respect to the operations of Eurostar
and the Eurostar Subsidiaries through the periods covered thereby.
(k) Environmental. Except such matters which would not,
either individually or in the aggregate, have a Material Adverse
Effect:
(i) Neither Eurostar nor any Eurostar Subsidiary
has caused or, to the Knowledge of Eurostar, permitted the
release or disposal of Hazardous Materials onto, at or near
any property owned or operated by Eurostar or any Eurostar
Subsidiary.
(ii) To the Knowledge of Eurostar, neither
Eurostar nor any Eurostar Subsidiary has caused or allowed the
generation, use, treatment, storage or disposal of Hazardous
Materials in connection with any business or other operations
conducted by Eurostar or any Eurostar Subsidiary except in
accordance with all applicable Environmental Laws.
(iii) To the Knowledge of Eurostar, Eurostar and
the Eurostar Subsidiaries have obtained and are in substantial
compliance with all Environmental Permits required with
respect to the business or other operations conducted by
Eurostar or any Eurostar Subsidiary.
(iv) To the Knowledge of Eurostar, Eurostar and
the Eurostar Subsidiaries have filed all reports required by
Environmental Laws.
(v) Eurostar and the Eurostar Subsidiaries have
provided Tristar access to all environmental audits or
assessments prepared by or for, or received by, Eurostar or
any Eurostar Subsidiary with respect to any business or other
operations conducted by Eurostar or any Eurostar Subsidiary.
(vi) Eurostar has no Knowledge of any facts,
conditions or circumstances that could cause Eurostar or any
Eurostar Subsidiary to incur any loss, liability, damage,
costs or expenses, with respect to any individual event in
excess of $50,000, or in the aggregate in excess of $250,000,
over Eurostar's accrued liabilities related to environmental
matters reflected on Eurostar's most recent consolidated
balance sheet contained in the Eurostar Consolidated Financial
Statements, for (A) violations of United States or foreign
Environmental Laws, (B) failure to obtain a United States or
foreign Environmental Permit, (C) response or remedial costs
under any Environmental Law or (D) personal
-8-
<PAGE> 12
injury or property damage resulting from exposure to or
releases of Hazardous Materials under United States or foreign
Environmental Laws.
(vii) Neither Eurostar nor any Eurostar Subsidiary
has received any inquiry or notice, nor does Eurostar have any
reason to suspect or believe any of them will receive any
inquiry or notice, of any actual or potential proceeding,
claim, lawsuit or loss that arises under or relates to any
Environmental Law.
(viii) Neither Eurostar nor any Eurostar Subsidiary
is currently operating or required to be operating under any
compliance order, schedule, decree or agreement, any consent
decree, order or agreement, or any corrective action decree,
order or agreement issued or entered into under any
Environmental Law.
(ix) No underground storage tanks are present on
the properties owned or operated by either Eurostar or any
Eurostar U.S. Subsidiary and, to the Knowledge of Eurostar,
any underground storage tanks previously removed from any
properties owned or operated by either Eurostar or any
Eurostar U.S. Subsidiary were removed in accordance with
applicable Environmental Laws.
(x) To the Knowledge of Eurostar, all prior
operations conducted by Eurostar or any Eurostar Subsidiary
have been conducted in compliance with all applicable
limitations, restrictions, conditions, standards,
prohibitions, requirements and obligations established under
applicable Environmental Laws.
(l) No Severance Payments. None of Eurostar or the
Eurostar Subsidiaries will owe a severance payment or similar
obligation to any of their respective employees, officers or directors
as a result of the Merger or the transactions contemplated by this
Agreement, nor will any of such persons be entitled to an increase in
severance payments or other benefits as a result of the Merger or the
transactions contemplated by this Agreement in the event of the
subsequent termination of their employment.
(m) Voting Requirements. The consent of the holders of
at least a majority of the outstanding shares of Eurostar Common Stock
is the only action of the holders of any class or series of the
capital stock of Eurostar necessary to approve this Agreement and the
Merger.
(n) Insurance. The Eurostar Disclosure Letter sets forth
all policies of insurance in effect as of the Effective Date relating
to the business or operations of Eurostar and the Eurostar
Subsidiaries.
(o) Title to Property. Eurostar and each of the Eurostar
Subsidiaries have good and indefeasible title to all of their
respective real properties purported to be owned in fee and good title
to all their respective other material assets, free and clear of all
mortgages, liens, charges and encumbrances other than Permitted Liens.
2.3 Representations and Warranties of Tristar. Tristar hereby
represents and warrants to Eurostar that, except as set forth in the
Preliminary Proxy Statement or in the disclosure letter delivered by Tristar to
Eurostar on the Date Hereof (the "Tristar Disclosure Letter") that as of the
Effective Date:
(a) Organization and Compliance with Law. Tristar and
each of its subsidiaries (the "Tristar Subsidiaries") is a corporation
duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has all requisite
corporate power and authority and all necessary governmental
authorizations to own, lease and operate all of its properties and
assets and to carry on its business as now being conducted, except
where the failure to have such governmental authority would not,
either individually or in the aggregate, have a Material Adverse
Effect. Tristar and each of the Tristar Subsidiaries is duly
qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes
such qualification necessary, except in such jurisdictions where the
failure to be duly qualified does not
-9-
<PAGE> 13
and would not, either individually or in the aggregate, have a
Material Adverse Effect. Tristar and each of the Tristar Subsidiaries
is in compliance with all applicable laws, judgments, orders, rules
and regulations, domestic and foreign, except where failure to be in
such compliance would not, either individually or in the aggregate,
have a Material Adverse Effect. Neither Tristar nor any of the
Tristar Subsidiaries, nor any employee or, to the Knowledge of
Tristar, any agent of Tristar or any of the Tristar Subsidiaries, has
made any payment or transfer of funds or assets to any person or
conferred any benefit on any person or received any funds, assets or
personal benefit in violation of any applicable law, rule or
regulation. Tristar has heretofore delivered to Eurostar true and
complete copies of the certificate or articles of incorporation and
bylaws of Tristar and each Tristar Subsidiary. The Tristar Disclosure
Letter sets forth each of the Tristar Subsidiaries and their
respective jurisdictions of incorporation.
(b) Capitalization.
(i) The authorized capital stock of Tristar
consists of 10,000,000 shares of Tristar Common Stock, par
value $.01 per share, and 1,000,000 shares of preferred stock,
par value $.05 per share. As of June 15, 1995, there were
issued and outstanding 6,648,996 shares of Tristar Common
Stock and no shares of preferred stock, and no shares of
Tristar Common Stock were held as treasury shares. As of June
15, 1995, there were reserved for issuance 2,666,634 shares of
Tristar Common Stock pursuant to the stock option plan and
warrants described in Section 2.3(b)(ii). All issued shares
of Tristar Common Stock are validly issued, fully paid and
nonassessable and no holder thereof is entitled to preemptive
rights. Tristar is not a party to, and has no Knowledge of,
any voting agreement, voting trust or similar agreement or
arrangement relating to any class or series of its capital
stock, or any agreement or arrangement providing for
registration rights with respect to any capital stock or other
securities of Tristar. All outstanding shares of capital
stock of the Tristar Subsidiaries are owned by Tristar free
and clear of all liens, charges, encumbrances, adverse claims
and options of any nature.
(ii) As of the Effective Date, there are
outstanding options (the "Tristar Options") issued to
employees and directors to purchase an aggregate of 200,428
shares of Tristar Common Stock under Tristar's 1991 Stock
Option Plan; 66,206 shares of Tristar Common Stock under a
Nonqualified Stock Option Agreement and outstanding warrants
issued to affiliates of Eurostar to purchase an aggregate of
2,400,000 shares of Tristar Common Stock (the "Tristar
Warrants"). Other than as set forth in this Section 2.3(b),
there are not as of the Effective Date, and at the Effective
Time there will not be, any (A) shares of capital stock or
other equity securities of Tristar outstanding (other than
Tristar Common Stock issued pursuant to the exercise of
Tristar Options or Tristar Warrants as described herein) or
(B) outstanding options, warrants, scrip, rights to subscribe
for, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into or exchangeable
for, shares of any class of capital stock of Tristar, or
contracts, understandings or arrangements to which Tristar is
a party, or by which it is or may be bound, to issue
additional shares of its capital stock or options, warrants,
scrip or rights to subscribe for, or securities or rights
convertible into or exchangeable for, any additional shares of
its capital stock.
(c) Authorization and Validity of Agreement. Tristar has
all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution and
delivery by Tristar of this Agreement and the consummation by it of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action (subject only, with respect to the Merger,
to adoption of this Agreement by its stockholders as provided for in
Section 5.2). On or prior to the Date Hereof, the Board of Directors
of Tristar and the Acquisition Committee of the Board of Directors of
Tristar have determined to recommend approval of the Merger to the
stockholders of Tristar, and such determination is in effect as of the
Date Hereof. This Agreement has been duly executed and delivered by
Tristar and is the valid and binding obligation of Tristar,
enforceable against Tristar in accordance with its terms, except as
such enforceability may be limited or affected by (i) bankruptcy,
insolvency, reorganization, moratorium, liquidation, arrangement,
fraudulent transfer, fraudulent conveyance
-10-
<PAGE> 14
and other similar laws (including court decisions) now or hereafter in
effect and affecting the rights and remedies of creditors generally or
providing for the relief of debtors, (ii) the refusal of a particular
court to grant equitable remedies, including, without limitation,
specific performance and injunctive relief, and (iii) general
principles of equity (regardless of whether such remedies are sought
in a proceeding in equity or at law) and except as the enforceability
of any indemnification provision contained in this Agreement may be
limited by applicable federal or state securities laws.
(d) No Approvals or Notices Required; No Conflict with
Instruments to which Tristar or any of the Tristar Subsidiaries is a
Party. Neither the execution and delivery of this Agreement nor the
performance by Tristar of its obligations hereunder, nor the
consummation of the transactions contemplated hereby by Tristar, will
(i) conflict with the Certificate of Incorporation or bylaws of
Tristar or the charter or bylaws of any of the Tristar Subsidiaries;
(ii) assuming satisfaction of the requirements set forth in clause
(iii) below, violate any provision of law applicable to Tristar or any
of the Tristar Subsidiaries; (iii) except for (A) requirements of
Federal and state securities law, and (B) the filing of a certificate
of merger in accordance with the DGCL, require any consent or approval
of, or filing with or notice to, any public body or authority,
domestic or foreign, under any provision of law applicable to Tristar
or any of the Tristar Subsidiaries; or (iv) require any consent,
approval or notice under, or violate, breach, be in conflict with or
constitute a default (or an event that, with notice or lapse of time
or both, would constitute a default) under, or permit the termination
of any provision of, or result in the creation or imposition of any
lien upon any properties, assets or business of Tristar or any of the
Tristar Subsidiaries under, any note, bond, indenture, mortgage, deed
of trust, lease, franchise, permit, authorization, license, contract,
instrument or other agreement or commitment or any order, judgment or
decree to which Tristar or any of the Tristar Subsidiaries is a party
or by which Tristar or any of the Tristar Subsidiaries or any of its
or their respective assets or properties are bound or encumbered,
except those that have already been given, obtained or filed and
except in any of the cases enumerated in clauses (ii) through (iv),
those that, in the aggregate, would not have a Material Adverse
Effect.
(e) Commission Filings; Financial Statements. Since
August 31, 1991, Tristar and each of the Tristar Subsidiaries have
filed all reports, registration statements and other filings, together
with any amendments required to be made with respect thereto, that
they have been required to file with the Commission under the
Securities Act and the Exchange Act. All reports, registration
statements and other filings (including all notes, exhibits and
schedules thereto and documents incorporated by reference therein)
filed by Tristar with the Commission since August 31, 1991 through the
Date Hereof, together with any amendments thereto, are sometimes
collectively referred to as the "Tristar Commission Filings". Tristar
has heretofore delivered to Eurostar copies of the Tristar Commission
Filings. As of the respective dates of their filing with the
Commission, except as otherwise disclosed in later filings with the
Commission, the Tristar Commission Filings complied, and the Proxy
Statement (as defined in Section 5.1) (except with respect to
information concerning Eurostar and the Eurostar Subsidiaries
furnished by or on behalf of Eurostar to Tristar specifically for use
therein) will comply, in all material respects with the Securities
Act, the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and did not or will not, as the case may be,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which
they were made, not misleading.
All material contracts of Tristar and the Tristar Subsidiaries
have been included in the Tristar Commission Filings, except for those
contracts not required to be filed pursuant to the rules and
regulations of the Commission, and copies of all such contracts have
been made available to Eurostar.
Each of the consolidated financial statements (including any
related notes or schedules) included in the Tristar Commission Filings
was, and each of the consolidated financial statements to be included
in the Proxy Statement (except for those financial statements of
Eurostar and the Eurostar Subsidiaries furnished by or on behalf of
Eurostar to Tristar specifically for use therein)
-11-
<PAGE> 15
will be, prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be noted
therein or in the notes or schedules thereto), and fairly presents or
will fairly present, as the case may be, the consolidated financial
position of Tristar and the Tristar Subsidiaries as of the dates
thereof and the statements of income, cash flows (or changes in
financial position prior to the approval of Statement of Financial
Accounting Standards Number 95) and stockholders' equity for the
periods then ended (subject, in the case of the unaudited interim
financial statements, to normal year-end audit adjustments on a basis
comparable with past periods in accordance with generally accepted
accounting principles). As of the Date Hereof, Tristar has no
material liabilities, absolute or contingent, not reflected in the
Tristar Commission Filings, except for (i) liabilities not required
under generally accepted accounting principles to be reflected on such
financial statements or the notes thereto and (ii) liabilities
incurred in the ordinary course of business since May 31, 1995,
consistent with past operations and not relating to the borrowing of
money.
(f) Conduct of Business in the Ordinary Course; Absence
of Certain Changes and Events. Since February 28, 1995, except as
contemplated by this Agreement or disclosed in the Tristar Commission
Filings filed with the Commission since that date, Tristar and the
Tristar Subsidiaries have conducted their business only in the
ordinary and usual course, and there has not been (i) any Material
Adverse Change in Tristar or any condition, event or development that
reasonably may be expected to result in any such Material Adverse
Change; (ii) any change by Tristar in its accounting methods,
principles or practices; (iii) any revaluation by Tristar or any of
the Tristar Subsidiaries of any of its or their assets, including,
without limitation, writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of
business; (iv) any entry by Tristar or any of the Tristar Subsidiaries
into any commitment or transaction material to Tristar and the Tristar
Subsidiaries, taken as a whole; (v) any declaration, setting aside or
payment of any dividends or distributions in respect of the Tristar
Common Stock or any redemption, purchase or other acquisition of any
of its securities or any securities of any of the Tristar
Subsidiaries; (vi) any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting the properties or
business of Tristar and the Tristar Subsidiaries, taken as a whole;
(vii) any increase in excess of $100,000 in indebtedness for borrowed
money; (viii) any granting of a security interest or lien on any
material property or assets of Tristar and the Tristar Subsidiaries,
taken as a whole, other than Permitted Liens; or (ix) any increase in
or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards),
stock purchase or other employee benefit plan or any other increase in
the compensation payable or to become payable to any officers or key
employees of Tristar or any of the Tristar Subsidiaries.
(g) Certain Fees. With the exception of the engagement
of Howard Frazier Barker Elliott by Tristar, neither Tristar nor any
of its officers, directors or employees, on behalf of Tristar or any
of the Tristar Subsidiaries or its or their respective Boards of
Directors (or any committee thereof), has employed any financial
advisor, broker or finder or incurred any liability for any financial
advisory, brokerage or finders' fees or commissions in connection with
the transactions contemplated hereby.
(h) Litigation. Except as disclosed in the Tristar
Commission Filings, there are no claims, actions, suits,
investigations or proceedings pending or, to the Knowledge of Tristar
or any of the Tristar Subsidiaries, threatened against or affecting
Tristar or any of the Tristar Subsidiaries or any of their respective
properties at law or in equity, or any of their respective employee
benefit plans or fiduciaries of such plans, or before or by any
federal, state, municipal or other governmental agency or authority,
or before any arbitration board or panel, wherever located, that
individually or in the aggregate if adversely determined would have a
Material Adverse Effect, or that involve the risk of criminal
liability.
(i) Employee Benefit Plans. The Tristar Disclosure
Letter sets forth a complete and accurate list of:
-12-
<PAGE> 16
(i) each "employee welfare benefit plan" (as such
term is defined in Section 3(1) of ERISA) (the "Tristar
Welfare Plans");
(ii) each "employee pension benefit plan" (as such
term is defined in Section 3(2) of ERISA) (the "Tristar
Pension Plans"); and
(iii) all other employee benefit agreements or
arrangements, including, but not limited to, deferred
compensation plans, incentive plans, bonus plans or
arrangements, stock option plans, stock purchase plans, golden
parachute agreements, severance pay plans, dependent care
plans, cafeteria plans, employee assistance programs,
scholarship programs, employment contracts and other similar
plans, agreements and arrangements (collectively, with the
Tristar Welfare Plans and the Tristar Pension Plans, the
"Tristar Benefit Plans"),
that were in effect as of the Effective Date or were maintained within
three years of the Closing Date, or were approved before this date but
are not yet effective, for the benefit of directors, officers,
employees or former employees (or their beneficiaries) of Tristar, any
of the Tristar Subsidiaries or any member of a controlled group or
affiliated service group as defined in Sections 414(b),(c),(m) and (o)
of the Code of which Tristar or any of the Tristar Subsidiaries is a
member (collectively, the "Tristar Group"). Tristar has provided to
Eurostar, as to each Tristar Benefit Plan, as applicable, access to a
complete and accurate copy of (i) such plan, agreement or arrangement;
(ii) the trust, group annuity contract or other document that provides
the funding for such plan; (iii) the most recent annual Form 5500, 990
and 1041 reports; (iv) the most recent actuarial report or valuation
statement; (v) the most current summary plan description, booklet or
other descriptive written materials, and any summary of material
modifications prepared after each such summary plan description; (vi)
the most recent IRS determination letter and all rulings or
determinations requested from the IRS subsequent to the date of such
determination letter; and (vii) all other pending correspondence from
the IRS or the Department of Labor received by any member of the
Tristar Group that relates to such plan.
Each Tristar Welfare Plan and each Tristar Pension Plan (i) is
in compliance with ERISA, including, but not limited to, all reporting
and disclosure requirements of Part 1 of Subtitle B of Title I of
ERISA, except where the failure to be in compliance would not, either
individually or in the aggregate, have a Material Adverse Effect; (ii)
is in compliance with the Code, except where the failure to be in
compliance would not, either individually or in the aggregate, have a
Material Adverse Effect; (iii) has had the appropriate Form 5500
timely filed for any Tristar Pension Plan for each year of its
existence and for any Tristar Welfare Plan for each year of its
existence after 1987; (iv) has not engaged in any transaction
described in Section 406 or 407 of ERISA or Section 4975 of the Code
unless it received an exemption under Section 408 of ERISA or Section
4975 of the Code, as applicable, or unless such transaction has been
corrected and all applicable excise taxes paid or waived; (v) has at
all times complied with the bonding requirements of Section 412 of
ERISA; (vi) has no issue pending (other than the payment of benefits
in the normal course or the qualification of the plan pursuant to an
application pending before the IRS) nor any issue resolved adversely
to the Tristar Group that may subject the Tristar Group to the payment
of a penalty, interest, tax or other amount; and (vii) can be
unilaterally terminated or amended on no more than 90 days' notice.
No notice has been received by the Tristar Group of an increase or
proposed increase in any premium relative to any Tristar Benefit Plan,
and no amendment to any Tristar Benefit Plan within the last twelve
months has increased the rate of employer contributions thereunder.
Each Tristar Benefit Plan that is intended to be a voluntary
employee benefit association has been submitted to and approved by the
IRS as exempt from federal income tax under Section 501(c)(9) of the
Code, or the applicable submission period relating to any such plan
will not have ended prior to the Closing. No Tristar Benefit Plan
will cause the Tristar Group to have liability for severance pay as a
result of this Agreement. The Tristar Group does not provide employee
post-retirement medical or health coverage or contribute to or
maintain any employee welfare benefit plan that provides for health
benefit coverage following termination of employment except as
required by Section 4980B(f) of the Code or other applicable statute,
nor
-13-
<PAGE> 17
has the Tristar Group made any representations, agreements, covenants
or commitments to provide that coverage. All group health plans
maintained by the Tristar Group have been operated in compliance with
Section 4980B(f) of the Code.
Except for each Tristar Pension Plan that is an ERISA top-hat
plan, each Tristar Pension Plan has been submitted to and approved as
qualifying under Section 401(a) of the Code by the IRS or the
applicable remedial amendment period relating to such plan will not
have ended prior to the Closing. No facts have occurred which, if
known by the IRS, could cause disqualification of any Tristar Pension
Plan. Each Tristar Pension Plan to which Section 412 of the Code is
applicable fully complies with the funding requirements of that
Section and there is no accumulated funding deficiency as defined in
Section 302(a)(2) of ERISA (whether or not waived) in any such plan.
The Tristar Group has paid all premiums (including interest, charges
and penalties for late payment) due the PBGC with respect to each
Tristar Pension Plan for which premiums are required. No Tristar
Pension Plan has been terminated under circumstances that would result
in liability to the PBGC or the Tristar Group. There has been no
"reportable event" (as defined in Section 4043(b) of ERISA and the
regulations under that Section) with respect to any Tristar Pension
Plan subject to Title IV of ERISA. With respect to each Tristar
Pension Plan, the Tristar Group has not (i) ceased operations at a
facility so as to become subject to the provisions of Section 4062(e)
of ERISA, (ii) withdrawn as a substantial employer so as to become
subject to the provisions of Section 4063 of ERISA or (iii) ceased
making contributions on or before the Closing Date to any such plan
subject to Section 4064(a) of ERISA to which the Tristar Group made
contributions at any time during the six years prior to the Closing
Date. Neither the Tristar Group nor any member thereof has made a
complete or partial withdrawal from a multiemployer plan (as defined
in Section 3(37) of ERISA) so as to incur withdrawal liability as
defined in Section 4201 of ERISA.
(j) Taxes. All Tax Returns of or relating to any Taxes
that are required to be filed on or before the Closing Date by or with
respect to Tristar or any of the Tristar Subsidiaries, or any other
corporation that is or was a member of an affiliated group (within the
meaning of Section 1504(a) of the Code) of corporations of which
Tristar was a member for any period ending on or prior to the Closing
Date, have been or will be duly and timely filed (including any
applicable extensions), and all Taxes, including interest and
penalties, due and payable pursuant to such Tax Returns have been paid
or adequately provided for in reserves established by Tristar, except
where the failure to file, pay or provide for would not, either
individually or in the aggregate, have a Material Adverse Effect. All
Tax Returns of or with respect to Tristar or any of the Tristar
Subsidiaries have been audited by the applicable governmental
authority, or the applicable statute of limitations has expired, for
all periods up to and including the tax year ended August 31, 1986.
There is no material claim against Tristar or any of the Tristar
Subsidiaries with respect to any Taxes, and no material assessment,
deficiency or adjustment has been asserted or proposed with respect to
any Tax Return of or with respect to Tristar or any of the Tristar
Subsidiaries that has not been adequately provided for in reserves
established by Tristar. The total amounts set up as liabilities for
current and deferred Taxes in the balance sheet dated February 28,
1995, included in the Tristar Commission Filings have been prepared in
accordance with generally accepted accounting principles and are
sufficient to cover the payment of all material Taxes, including any
penalties or interest thereon and whether or not assessed or disputed,
that are, or are hereafter found to be, or to have been, due with
respect to the operations of Tristar and the Tristar Subsidiaries
through the periods covered thereby.
(k) Environmental. Except for such matters which would
not, individually or in the aggregate, have a Material Adverse Effect:
(i) Neither Tristar nor any Tristar Subsidiary
has caused or, to the Knowledge of Tristar, permitted the
release or disposal of Hazardous Materials onto, at or near
any property owned or operated by Tristar or any Tristar
Subsidiary.
(ii) To the Knowledge of Tristar, neither Tristar
nor any Tristar Subsidiary has caused or allowed the
generation, use, treatment, storage or disposal of Hazardous
-14-
<PAGE> 18
Materials in connection with any business or other operations
conducted by Tristar or any Tristar Subsidiary except in
accordance with all applicable Environmental Laws.
(iii) To the Knowledge of Tristar, Tristar and the
Tristar Subsidiaries have obtained and are in substantial
compliance with all Environmental Permits required with
respect to the business or other operations conducted by
Tristar or any Tristar Subsidiary.
(iv) To the Knowledge of Tristar, Tristar and the
Tristar Subsidiaries have filed all reports required by
Environmental Laws.
(v) Tristar and the Tristar Subsidiaries have
provided Eurostar access to all environmental audits or
assessments prepared by or for, or received by, Tristar or any
Tristar Subsidiary with respect to any business or other
operations conducted by Tristar or any Tristar Subsidiary.
(vi) Tristar has no Knowledge of any facts,
conditions or circumstances that could cause Tristar or any
Tristar Subsidiary to incur any loss, liability, damage, costs
or expenses, with respect to any individual event, in excess
of $50,000, or in the aggregate in excess of $250,000, for (A)
violations of Environmental Laws, (B) failure to obtain an
Environmental Permit, (C) response or remedial costs under any
Environmental Law or (D) personal injury or property damage
resulting from exposure to or releases of Hazardous Materials.
(vii) Neither Tristar nor any Tristar Subsidiary
has received any inquiry or notice, nor does Tristar have any
reason to suspect or believe any of them will receive any
inquiry or notice, of any actual or potential proceeding,
claim, lawsuit or loss that arises under or relates to any
Environmental Law.
(viii) Neither Tristar nor any Tristar Subsidiary is
currently operating or required to be operating under any
compliance order, schedule, decree or agreement, any consent
decree, order or agreement, or any corrective action decree,
order or agreement issued or entered into under any
Environmental Law.
(ix) No underground storage tanks are present on
the properties owned or operated by either Tristar or any
Tristar Subsidiary and, to the Knowledge of Tristar, any
underground storage tanks previously removed from any
properties owned or operated by either Tristar or any Tristar
Subsidiary were removed in accordance with applicable
Environmental Laws.
(x) To the Knowledge of Tristar, all prior
operations conducted by Tristar or any Tristar Subsidiary have
been conducted in compliance with all applicable limitations,
restrictions, conditions, standards, prohibitions,
requirements and obligations established under applicable
Environmental Laws.
(l) No Severance Payments. None of Tristar or the
Tristar Subsidiaries will owe a severance payment or similar
obligation to any of their respective employees, officers or directors
as a result of the Merger or the transactions contemplated by this
Agreement, nor will any of such persons be entitled to an increase in
severance payments or other benefits as a result of the Merger or the
transactions contemplated by this Agreement in the event of the
subsequent termination of their employment.
(m) Voting Requirements. The consent of the holders of
at least 66 2/3% of the outstanding shares of Tristar Common Stock is
the only action of the holders of any class or series of the capital
stock of Tristar necessary to approve this Agreement and the Merger.
-15-
<PAGE> 19
(n) Insurance. The Tristar Disclosure Letter sets forth
all policies of insurance in effect as of the Effective Date relating
to the business or operations of Tristar and the Tristar Subsidiaries.
(o) Title to Property. As set forth in the Tristar
Commission Filings, Tristar and each of the Tristar Subsidiaries have
good and indefeasible title to all of their real properties purported
to be owned in fee and good title to all their other material assets,
free and clear of all mortgages, liens, charges and encumbrances other
than Permitted Liens.
ARTICLE III
COVENANTS OF EUROSTAR PRIOR TO THE EFFECTIVE TIME
3.1 Conduct of Business by Eurostar Pending the Merger. Eurostar
covenants and agrees that, from the Effective Date of this Agreement until the
Effective Time, unless Tristar shall otherwise provide its prior consent in
writing (which consent shall not be unreasonably withheld) or as disclosed in
the Eurostar Disclosure Letter or the Preliminary Proxy Statement or as
otherwise expressly contemplated by this Agreement:
(a) The business of Eurostar and the Eurostar
Subsidiaries shall be conducted only in, and Eurostar and the Eurostar
Subsidiaries shall not take any action except in, the ordinary course
of business and consistent with past practice;
(b) Eurostar shall not, and shall not permit any of the
Eurostar Subsidiaries to:
(i) split, combine or reclassify any outstanding
capital stock of Eurostar or any of the Eurostar Subsidiaries,
or authorize, declare, set aside or pay any dividend payable
in cash, stock, property or otherwise in respect of the
capital stock of Eurostar or any of the Eurostar Subsidiaries;
(ii) authorize or pay any extraordinary bonuses
to employees;
(iii) grant any stock options or rights to acquire
Eurostar Common Stock or common stock of any of the Eurostar
Subsidiaries to any person or entity;
(iv) authorize or issue, sell, pledge, dispose of
or encumber any shares of capital stock of Eurostar or any of
the Eurostar Subsidiaries;
(v) other than in the ordinary course of business
and consistent with past practice and not relating to the
borrowing of money, sell, pledge, dispose of or encumber any
assets of Eurostar or any of the Eurostar Subsidiaries;
(vi) redeem, purchase, acquire or offer to acquire
any shares of Eurostar Common Stock or common stock of any of
the Eurostar Subsidiaries;
(vii) enter into or grant any material change in
compensation, benefit, severance, consulting or stay-bonus
arrangements applicable to employees generally or applicable
to any employee with an annual salary in excess of $50,000;
(viii) acquire any corporation, partnership, other
business organization or division thereof;
(ix) enter into any contract, agreement,
commitment or arrangement other than in the ordinary course of
business and consistent with past practice;
(x) other than capital expenditures in the
ordinary course of business and consistent with past practice,
authorize any single capital expenditure (including any
-16-
<PAGE> 20
single capital lease) that is in excess of $25,000 or capital
expenditures (including capital leases) that are, in the
aggregate, in excess of $250,000;
(xi) amend or propose to amend the charter or
bylaws of Eurostar or any of the Eurostar Subsidiaries; or
(xii) take, and Eurostar shall use its reasonable
efforts to prevent any affiliate of Eurostar from taking, any
action that would prevent, with the passage of time, the
Merger's qualification for accounting treatment similar to
"pooling of interests" accounting treatment or prevent the
Merger from being treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the
Code.
(c) Eurostar shall use its reasonable efforts (i) to
preserve intact the business organization of Eurostar and each of the
Eurostar Subsidiaries, (ii) to maintain in effect any franchises,
authorizations or similar rights of Eurostar and each of the Eurostar
Subsidiaries, (iii) to keep available the services of the current
officers and key employees of Eurostar and each of the Eurostar
Subsidiaries, (iv) to preserve its goodwill with those having business
relationships with Eurostar and the Eurostar Subsidiaries, (v) to
maintain and keep the properties of Eurostar and each of the Eurostar
Subsidiaries in as good a repair and condition as exists on the
Effective Date, except for deterioration due to ordinary wear and tear
and damage due to casualty; and (vi) to maintain in full force and
effect insurance comparable in amount and scope of coverage to that
maintained on the Effective Date by Eurostar and each of the Eurostar
Subsidiaries;
(d) Eurostar shall, and shall cause the Eurostar
Subsidiaries to, perform their respective obligations under any
contracts and agreements to which any of them is a party or to which
any of their assets is subject, except to the extent such failure to
perform would not have a Material Adverse Effect on Eurostar, and
except for such obligations as Eurostar or the Eurostar Subsidiaries
in good faith may dispute; and
(e) Eurostar shall not, and shall not permit any of the
Eurostar Subsidiaries to, take any action that would, or that
reasonably could be expected to, result in any of the representations
and warranties set forth in this Agreement becoming untrue. Eurostar
promptly shall advise Tristar orally and in writing of any change or
event having, or which, insofar as reasonably can be foreseen, would
have, a Material Adverse Effect on Eurostar.
3.2 Access to Information; Confidentiality. From the Effective
Date to the Effective Time, Eurostar shall, and shall cause the Eurostar
Subsidiaries and its and their officers, directors, employees and
representatives to, afford the representatives of Tristar complete access
during normal business hours to its officers, employees, representatives,
properties, books and records, and shall furnish Tristar all financial,
operating and other data and information as Tristar, through its
representatives, reasonably may request.
Eurostar agrees to hold in confidence, and not to disclose to others
for any reason whatsoever, any non-public information received by it, any of
the Eurostar Subsidiaries or its or their representatives in connection with
the transactions contemplated hereby except (i) as required by law; (ii) for
disclosure to officers, directors, employees, representatives, shareholders and
affiliates of Eurostar and the Eurostar Subsidiaries as necessary in connection
with the transactions and filings contemplated hereby or as necessary to the
operation of Eurostar's business; and (iii) for information which becomes
publicly available other than through Eurostar. If the Merger is not
consummated, Eurostar will return all non-public documents and other material
obtained from Tristar, the Tristar Subsidiaries or its or their representatives
in connection with the transactions contemplated hereby, and all copies,
summaries and extracts thereof, or certify to Tristar that such information has
been destroyed.
-17-
<PAGE> 21
ARTICLE IV
COVENANTS OF TRISTAR PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Tristar Pending the Merger. Tristar
covenants and agrees that, from the Effective Date of this Agreement until the
Effective Time, unless Eurostar shall otherwise provide its prior consent in
writing (which consent shall not be unreasonably withheld) or as disclosed in
the Tristar Disclosure Letter or the Preliminary Proxy Statement or as
otherwise expressly contemplated by this Agreement:
(a) The business of Tristar and the Tristar Subsidiaries
shall be conducted only in, and Tristar and the Tristar Subsidiaries
shall not take any action except in, the ordinary course of business
and consistent with past practice;
(b) Tristar shall not, and shall not permit any of the
Tristar Subsidiaries to:
(i) split, combine or reclassify any outstanding
capital stock of Tristar or Sub, or authorize, declare, set
aside or pay any dividend payable in cash, stock, property or
otherwise in respect of the capital stock of Tristar or any of
the Tristar Subsidiaries;
(ii) authorize or pay any extraordinary bonuses
to employees;
(iii) grant any stock options or rights to acquire
Tristar Common Stock or common stock of any of the Tristar
Subsidiaries to any person or entity, other than options to
purchase Tristar Common Stock issued pursuant to employee
stock option plans in amounts consistent with past practice;
(iv) authorize or issue, sell, pledge, dispose of
or encumber any shares of capital stock of Tristar or any of
the Tristar Subsidiaries except pursuant to the Tristar
Options and other than as contemplated by this Agreement;
(v) other than in the ordinary course of business
and consistent with past practice and not relating to the
borrowing of money, sell, pledge, dispose of or encumber any
assets of Tristar or any of the Tristar Subsidiaries;
(vi) redeem, purchase, acquire or offer to acquire
any shares of Tristar Common Stock or common stock of any of
the Tristar Subsidiaries;
(vii) enter into or grant any material change in
compensation, benefit, severance, consulting or stay-bonus
arrangements applicable to employees generally or applicable
to any employee with an annual salary in excess of $50,000;
(viii) acquire any corporation, partnership, other
business organization or division thereof;
(ix) enter into any contract, agreement,
commitment or arrangement other than in the ordinary course of
business and consistent with past practice;
(x) other than capital expenditures in the
ordinary course of business and consistent with past practice,
authorize any single capital expenditure (including any single
capital lease) that is in excess of $25,000 or capital
expenditures (including capital leases) that are, in the
aggregate, in excess of $250,000;
(xi) amend or propose to amend the charter or
bylaws of Tristar or Sub; or
(xii) take, and Tristar shall use its reasonable
efforts to prevent any affiliate of Tristar from taking, any
action that would prevent, with the passage of time, the
Merger's qualification for accounting treatment similar to
"pooling of interests"
-18-
<PAGE> 22
accounting treatment or prevent the Merger from being treated for
federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code.
(c) Tristar shall use its reasonable efforts (i) to
preserve intact the business organization of Tristar and each of the
Tristar Subsidiaries, (ii) to maintain in effect any franchises,
authorizations or similar rights of Tristar and each of the Tristar
Subsidiaries, (iii) to keep available the services of the current
officers and key employees of Tristar and each of the Tristar
Subsidiaries, (iv) to preserve its goodwill with those having business
relationships with Tristar and the Tristar Subsidiaries, (v) to
maintain and keep the properties of Tristar and each of the Tristar
Subsidiaries in as good a repair and condition as exists on the
Effective Date, except for deterioration due to ordinary wear and tear
and damage due to casualty; and (vi) to maintain in full force and
effect insurance comparable in amount and scope of coverage to that
maintained on the Effective Date by Tristar and each of the Tristar
Subsidiaries;
(d) Tristar shall, and shall cause the Tristar
Subsidiaries to, perform their respective obligations under any
contracts and agreements to which any of them is a party or to which
any of their assets is subject, except to the extent such failure to
perform would not have a Material Adverse Effect on Tristar, and
except for such obligations as Tristar or the Tristar Subsidiaries in
good faith may dispute; and
(e) Tristar shall not, and shall not permit any of the
Tristar Subsidiaries to, take any action that would, or that
reasonably could be expected to, result in any of the representations
and warranties set forth in this Agreement becoming untrue. Tristar
promptly shall advise Eurostar orally and in writing of any change or
event having, or which, insofar as reasonably can be foreseen, would
have, a Material Adverse Effect on Tristar.
4.2 Access to Information; Confidentiality. From the Effective
Date to the Effective Time, Tristar shall, and shall cause the Tristar
Subsidiaries and its and their officers, directors, employees and
representatives to, afford the representatives of Eurostar complete access
during normal business hours to its officers, employees, representatives,
properties, books and records, and shall furnish Eurostar all financial,
operating and other data and information as Eurostar, through its
representatives, reasonably may request.
Tristar agrees to hold in confidence all, and not to disclose to
others for any reason whatsoever, any non- public information received by it,
any of the Tristar Subsidiaries or its or their representatives in connection
with the transactions contemplated hereby except (i) as required by law; (ii)
for disclosure to officers, directors, employees and representatives of Tristar
and the Tristar Subsidiaries as necessary in connection with the transactions
and filings contemplated hereby or as necessary to the operation of Tristar's
business; and (iii) for information which becomes publicly available other than
through Tristar. If the Merger is not consummated, Tristar will return all
non- public documents and other material obtained from Eurostar, the Eurostar
Subsidiaries or its or their representatives in connection with the
transactions contemplated hereby, and all copies, summaries and extracts
thereof, or certify to Eurostar that such information has been destroyed.
4.3 NASDAQ/NMS Listing. Tristar shall use its reasonable efforts
to cause the shares of Tristar Common Stock to be issued upon consummation of
the Merger to be approved for listing on the NASDAQ/National Market System,
subject to official notice of issuance, prior to the Closing Date.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement. Prior to execution of this Agreement,
Tristar prepared and filed with the Commission the preliminary proxy statement
(the "Preliminary Proxy Statement") of Tristar relating to the Merger, and as
promptly as practicable after the execution of this Agreement, Tristar shall
prepare and file with the Commission a definitive proxy statement (the "Proxy
Statement") of Tristar relating to the Merger. Subject to the terms and
conditions set forth in Article VI, the Proxy Statement shall contain
-19-
<PAGE> 23
a statement that the Board of Directors of Tristar and the Acquisition
Committee of the Board of Directors of Tristar recommended that the
stockholders of Tristar approve and adopt the Merger and this Agreement.
5.2 Approval of Stockholders. Tristar shall promptly take all
action reasonably necessary in accordance with the DGCL and its Certificate of
Incorporation and bylaws to obtain the approval and adoption of the Merger and
this Agreement from Tristar stockholders holding at least 66 2/3% of the
Tristar Common Stock. Subject to the terms and conditions set forth in Article
VI, the Board of Directors of Tristar (i) shall recommend to the stockholders
of Tristar to adopt and approve the Merger and this Agreement and (ii) shall
take all action reasonably necessary to obtain the approval and adoption of the
Merger and this Agreement from Tristar stockholders holding at least 66 2/3%
of the Tristar Common Stock.
5.3 Filings; Consents; Reasonable Efforts. Subject to the terms
and conditions of this Agreement, Tristar and Eurostar shall (i) make all
necessary filings with respect to the Merger and this Agreement under the
Securities Act, the Exchange Act and applicable blue sky or similar securities
laws and shall use its reasonable efforts to obtain required approvals and
clearances with respect thereto; (ii) use its reasonable efforts to obtain all
consents, waivers, approvals, authorizations and orders required in connection
with the authorization, execution and delivery of this Agreement and the
consummation of the Merger; and (iii) take, or use its reasonable efforts to
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable to satisfy or cause to be satisfied all
conditions precedent under this Agreement and to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement.
5.4 Notification of Certain Matters. Tristar shall give prompt
notice to Eurostar, and Eurostar shall give prompt notice to Tristar, orally
and in writing, of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate at any time from the
Effective Date to the Effective Time, (ii) any material failure of Tristar or
Eurostar, as the case may be, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder, and (iii) any fact or event that
would make it necessary to amend the Proxy Statement or to render the
statements therein not misleading or to comply with applicable law.
5.5 Agreement to Defend. In the event any claim, action, suit,
investigation or other proceeding by any governmental body or other person or
other legal or administrative proceeding is commenced that questions the
validity or legality of the transactions contemplated hereby or seeks damages
in connection therewith, whether before or after the Effective Time, the
parties hereto agree to cooperate and use their reasonable efforts to defend
against and respond thereto.
5.6 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses.
5.7 Indemnity. Parent shall indemnify and hold harmless Tristar
from and against all damages, costs and expenses (including reasonable
attorneys' fees and costs of investigation) arising out of any breach of any of
the representations, warranties or covenants of Eurostar or Parent in this
Agreement to the extent such damages, costs and expenses exceed in the
aggregate $1,000,000. Tristar shall indemnify and hold harmless Parent from
and against all damages, costs and expenses (including reasonable attorneys'
fees and costs of investigation) arising out of any breach of any of the
representations, warranties or covenants of Tristar in this Agreement to the
extent such damages, costs and expenses exceed in the aggregate $1,000,000.
In the event any claim is made, or any suit or action is commenced,
against any person in respect of which indemnification may be sought by such
person under this Section 5.7 (the "Indemnified Party"), the Indemnified Party
shall promptly give the party against whom indemnification is sought (the
"Indemnifying Party") notice thereof and the Indemnifying Party shall be
entitled to conduct or participate in the defense thereof at the Indemnifying
Party's expense; provided, however, that the failure to give such notice shall
not relieve the Indemnifying Party of its obligations hereunder, except to the
-20-
<PAGE> 24
extent the Indemnifying Party is prejudiced thereby. The Indemnifying Party
may, at its expense, participate in or assume the defense of any such action,
suit or proceeding involving a third party. In such case the Indemnified Party
shall have the right (but not the duty) to participate in the defense thereof,
and to employ counsel, at its own expense, separate from counsel employed by
the Indemnifying Party in any such action and to be liable for the fees and
expenses of one firm as counsel (and appropriate local counsel) employed by the
Indemnified Party if the Indemnifying Party has not assumed the defense
thereof. Whether or not the Indemnifying Party chooses to defend or prosecute
any claim involving a third party, all the parties hereto shall cooperate in
the defense or prosecution thereof and shall furnish such records, information
and testimony, and attend such conferences, discovery proceedings, hearings,
trials and appeals, as may be reasonably requested in connection therewith.
The Indemnifying Party shall not be liable for any settlement effected without
its consent of any claim, litigation or proceedings in respect of which
indemnity may be sought hereunder, unless the Indemnifying Party refuses to
acknowledge liability for indemnification under this Section 5.7 and/or
declines to defend the Indemnified Party in such claim, litigation or
proceeding.
5.8 Termination of Distribution Agreement. On or prior to the
Closing Date, each party shall execute and deliver an instrument sufficient to
terminate the Distribution Agreement dated October 23, 1992 (the "Distribution
Agreement"), among Eurostar, Tristar and Starion International Ltd.
ARTICLE VI
CONDITIONS
6.1 Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment or waiver at or prior to the Closing Date of the following
conditions:
(a) This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of
Tristar as may be required by law and by any applicable provisions of
its Certificate of Incorporation or bylaws;
(b) No order shall have been entered and remain in effect
in any action or proceeding before any foreign, federal or state court
or governmental agency or other foreign, federal or state regulatory
or administrative agency or commission that would prevent or make
illegal the consummation of the Merger;
(c) There shall have been obtained any and all material
permits, approvals and consents of securities or blue sky commissions
of any jurisdiction, and of any other governmental body or agency,
that reasonably may be deemed necessary so that the consummation of
the Merger and the transactions contemplated thereby will be in
compliance with applicable laws, the failure to comply with which
would have a Material Adverse Effect on Tristar or the Surviving
Corporation after the consummation of the Merger;
(d) All approvals of private persons, financial
institutions or corporations, (i) the granting of which is necessary
for the consummation of the Merger or the transactions contemplated in
connection therewith or (ii) the non-receipt of which would have a
Material Adverse Effect on Tristar or the Surviving Corporation after
the consummation of the Merger, shall have been obtained;
(e) Tristar shall have been advised in writing on the
Closing Date by Coopers & Lybrand L.L.P. that, in accordance with
generally accepted accounting principles and applicable rules and
regulations of the Commission, the Merger should be treated
substantially similarly to a "pooling of interests" for accounting
purposes;
(f) Tristar shall have received from Howard Frazier
Barker Elliott a written opinion, dated as of the date of this
Agreement, satisfactory in form and substance to the Board of
Directors of Tristar, to the effect that the terms of the Merger are
fair to the minority
-21-
<PAGE> 25
stockholders of Tristar from a financial point of view, which opinion
shall have been confirmed in writing to such Board of Directors (i)
as of the date the Proxy Statement is first mailed to the stockholders
of Tristar and (ii) as of the Closing Date; and
(g) The Distribution Agreement shall have been terminated.
6.2 Additional Conditions to Obligations of Tristar. The
obligation of Tristar to effect the Merger is, at the option of Tristar, also
subject to the fulfillment or waiver at or prior to the Closing Date of the
following conditions:
(a) The representations and warranties of Eurostar and
Parent contained in Section 2.2 shall be accurate in all material
respects as of the Closing Date as though such representations and
warranties had been made at and as of that time (except where any such
representation or warranty is made as of a date specifically set forth
therein); all of the terms, covenants and conditions of this Agreement
to be complied with and performed by Eurostar on or before the Closing
Date shall have been duly complied with and performed in all material
respects; and a certificate of Eurostar to the foregoing effect dated
the Closing Date and signed by the chief financial officer of Eurostar
shall have been delivered to Tristar;
(b) Since the Effective Date of this Agreement, no
Material Adverse Change of Eurostar shall have occurred, and Eurostar
and the Eurostar Subsidiaries shall not have suffered any damage,
destruction or loss (whether or not covered by insurance) materially
adversely affecting the properties or business of Eurostar and the
Eurostar Subsidiaries, taken as a whole, and Tristar shall have
received a certificate of Eurostar signed by the chief executive
officer of Eurostar dated the Closing Date to such effect;
(c) Tristar shall have received from Akin Gump, Strauss,
Hauer & Feld, L.L.P., counsel to Eurostar, an opinion dated the
Effective Time covering the matters set forth in Exhibit 6.2(d);
(d) Tristar shall have received from Coopers & Lybrand
L.L.P., a written opinion dated as of the date that the Proxy
Statement is first mailed to stockholders of Tristar to the effect
that (i) the Merger will be treated for federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Code,
(ii) Tristar and Eurostar will each be a party to that reorganization
within the meaning of Section 368(b) of the Code and (iii) Tristar and
Eurostar shall not recognize any gain or loss as a result of the
Merger, and such opinion shall not have been withdrawn or modified in
any material respect.
6.3 Additional Conditions to Obligations of Eurostar. The
obligation of Eurostar to effect the Merger is, at the option of Eurostar, also
subject to the fulfillment or waiver at or prior to the Closing Date of the
following conditions:
(a) The representations and warranties of Tristar
contained in Section 2.3 shall be accurate as of the Closing Date in
all material respects as though such representations and warranties
had been made at and as of that time (except where any such
representation or warranty is made as of a date specifically set forth
therein); all of the terms, covenants and conditions of this Agreement
to be complied with and performed by Tristar on or before the Closing
Date shall have been duly complied with and performed in all material
respects; and a certificate of Tristar to the foregoing effect dated
the Closing Date and signed by the chief financial officer of Tristar
shall have been delivered to Eurostar;
(b) Since the Effective Date of this Agreement, no
Material Adverse Change of Tristar shall have occurred, and Tristar
and the Tristar Subsidiaries shall not have suffered any damage,
destruction or loss (whether or not covered by insurance) materially
adversely affecting the properties or business of Tristar and the
Tristar Subsidiaries, taken as a whole, and Eurostar shall have
received a certificate of Tristar signed by the chief executive
officer of Tristar dated the Closing Date to such effect;
-22-
<PAGE> 26
(c) The shares of Tristar Common Stock issuable upon
consummation of the Merger shall have been approved for listing on the
NASDAQ/National Market System, subject to official notice of issuance;
(d) Eurostar shall have received from Fulbright &
Jaworski L.L.P., counsel to Tristar, an opinion dated the Effective
Time covering the matters set forth in Exhibit 6.3(d).
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated and the Merger
and the other transactions contemplated herein may be abandoned at any time
prior to the Effective Time, whether prior to or after approval by the
stockholders of Tristar:
(a) by mutual consent of Eurostar and Tristar;
(b) by either Eurostar or Tristar if the Merger has not
been effected on or before September 30, 1995;
(c) by either Tristar or Eurostar if a final,
unappealable order to restrain, enjoin or otherwise prevent, or
awarding substantial damages in connection with, a consummation of
this Agreement or the transactions contemplated in connection herewith
shall have been entered;
(d) by Tristar or Eurostar if the required approval of
the stockholders of Tristar for the adoption and approval of the
Merger and this Agreement is not received;
(e) by Tristar if (i) since the Effective Date of this
Agreement there has been a Material Adverse Change in Eurostar, taken
as a whole, or (ii) there has been a material breach of any
representation or warranty set forth in this Agreement by Eurostar
which breach has not been cured within ten business days following
receipt by Eurostar of notice of such breach;
(f) by Eurostar if (i) since the Effective Date of this
Agreement there has been a Material Adverse Change in Tristar, taken
as a whole, or (ii) there has been a material breach of any
representation or warranty set forth in this Agreement by Tristar
which breach has not been cured within ten business days following
receipt by Tristar of notice of such breach;
(g) By Tristar or Eurostar, if the Acquisition Committee
of the Board of Directors of Tristar or the Board of Directors of
Eurostar, in its discretion, determines that such termination is
necessary for the Acquisition Committee of the Board of Directors of
Tristar or the Board of Directors of Eurostar, as the case may be, to
comply with their respective fiduciary duties to minority stockholders
(in the case of Tristar) or stockholder (in the case of Eurostar)
under applicable law; or
(h) By Tristar or Eurostar, if there is pending or
threatened any litigation against Tristar or Eurostar, or any of their
respective stockholders, affiliates, directors, officers or employees
(other than litigation disclosed in the Tristar Commission Filings),
which is, in the view of the Board of Directors of Eurostar or the
Acquisition Committee of the Board of Directors of Tristar, reasonably
likely to have a Material Adverse Effect on Tristar or Eurostar,
either prior to or following the consummation of the Merger.
7.2 Effect of Termination. In the event of any termination of
this Agreement pursuant to Section 7.1, Tristar and Eurostar shall have no
obligation or liability to each other except that (i) the provisions of the
second paragraphs of Sections 3.2 and 4.2 and the provisions of Sections 5.6,
and this Article VII shall survive any such termination, and (ii) nothing
herein and no termination pursuant hereto will relieve any party from liability
for any breach of this Agreement.
-23-
<PAGE> 27
7.3 Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is, or whose stockholders are, entitled to
the benefits thereof. This Agreement may not be amended or supplemented at any
time, except by an instrument in writing signed on behalf of each party hereto;
provided that after this Agreement has been approved and adopted by the
stockholders of Tristar, this Agreement may be amended only as may be permitted
by applicable provisions of the DGCL and the TBCA. The waiver by any party
hereto of any condition or of a breach of another provision of this Agreement
shall not operate or be construed as a waiver of any other condition or
subsequent breach. The waiver by any party hereto of any of the conditions
precedent to its obligations under this Agreement shall not preclude it from
seeking redress for breach of this Agreement other than with respect to the
condition so waived.
7.4 Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants or agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive for a period of one year following the Closing Date.
7.5 Public Statements. Tristar and Eurostar agree to consult with
each other prior to issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or applicable stock exchange
policy.
7.6 Assignment. This Agreement shall inure to the benefit of and
will be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. Except as set forth in this
Agreement, this Agreement shall not be assignable by the parties hereto.
7.7 Notices. All notices, requests, demands, claims and other
communications that are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (i)
delivered in person or by courier, (ii) sent by telecopy or facsimile
transmission, answer back requested, or (iii) mailed, certified first class
mail, postage prepaid, return receipt requested, to the parties hereto at the
following addresses:
if to Tristar: Tristar Corporation
12500 San Pedro Avenue, Suite 500
San Antonio, Texas 78216
Attention: President
with a copy to: Fulbright & Jaworski L.L.P.
300 Convent Street, Suite 2200
San Antonio, Texas 78205
Attention: Phillip M. Renfro, Esq.
if to Eurostar Eurostar Perfumes, Inc.
or Parent: 12001 Network, Bldg. E, Suite 110
San Antonio, Texas 78249-3355
Attention: President
with a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P.
300 Convent Street, Suite 1500
San Antonio, Texas 78205
Attention: Cecil Schenker, P.C.
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section 7.7. Such notices shall be
effective, (i) if delivered in person or by courier, upon actual receipt by the
intended recipient, (ii) if sent by telecopy or facsimile transmission, when
the transmission
-24-
<PAGE> 28
is confirmed, or (iii) if mailed, upon the earlier of five days after deposit
in the mail and the date of delivery as shown by the return receipt therefor.
7.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the substantive law of the State of Delaware
without giving effect to the principles of conflicts of law thereof.
7.9 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and
shall in no way be affected, impaired or invalidated.
7.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same agreement.
7.11 Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7.12 Entire Agreement; Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both oral and written, among the parties or any of them, with
respect to the subject matter hereof and neither this nor any documents
delivered in connection with this Agreement confers upon any person not a party
hereto any rights or remedies hereunder.
SIGNATURES ON FOLLOWING PAGE
-25-
<PAGE> 29
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the Date Hereof to be effective on the Effective Date.
EUROSTAR PERFUMES, INC.
By: /s/ Viren S. Sheth
------------------------------------------
Name: Viren S. Sheth
------------------------------------------
Title: President and Chief Executive Officer
------------------------------------------
TRANSVIT MANUFACTURING CORPORATION
By: /s/ Mahendra Sheth
------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
TRISTAR CORPORATION
By: /s/ Loren Eltiste
------------------------------------------
Name: Loren Eltiste
------------------------------------------
Title: Vice President and Chief Financial Officer
------------------------------------------
-26-
<PAGE> 1
EXHIBIT 10.2
AMENDMENT TO COMMON STOCK PURCHASE WARRANT
This Amendment (this "Amendment") to the Common Stock Purchase Warrant
is entered into effective as of August 31, 1995, between Starion International,
Ltd., a British Virgin Island Limited Partnership (the "Holder"), and TRISTAR
CORPORATION, a Delaware corporation (the "Company"). Capitalized terms used
herein but not defined herein have the respective meanings given them in the
Warrant (as defined below).
RECITALS
WHEREAS, the Company and the Holder are parties to a Common Stock
Purchase Warrant (the "Warrant") dated as of December 14, 1994, pursuant to
which the Holder was granted the right to purchase from the Company, at any
time on or before 5 p.m. Eastern Standard Time on December 15, 2004, two
million (2,000,000) shares of the common stock of the Company, $.01 par value
("Common Stock");
WHEREAS, the Company has agreed, subject to certain conditions, to
amend the Warrant as additional consideration in connection with the merger
(the "Merger") of Eurostar Perfumes, Inc., a Texas corporation ("Eurostar"),
with and into the Company;
WHEREAS, the Company and the Holder desire to amend the Warrant to
reflect such agreement;
AGREEMENTS
NOW THEREFORE, in consideration of the foregoing premises and of the
mutual promises contained herein and for other good and valuable consideration,
the adequacy, receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Exercise Price. Subject to the consummation of the Merger and
as of the Effective Time of the Merger (as such term is defined in the
Agreement and Plan of Merger dated as of July 1, 1995, among the Company,
Eurostar and Transvit Manufacturing Corporation, a Panamanian corporation),
Article 4.1 of the Warrant establishing the Exercise Price of the Warrant Stock
shall be amended and replaced with the following:
"4.1 Exercise Price. The Exercise Price for the Warrant Stock
shall be the lessor of (i) $5.34 per share, or (ii) an amount per share equal
to the lowest average Closing Sales Price (as defined below) of the Warrant
Stock for any twenty (20) consecutive trading days during the period beginning
the day after the Effective Time and ending on August 31, 1996. The Exercise
Price shall increase 10% per share on December 15, 2001, on December 15, 2002
and on December 15, 2003, on a cumulative and compounded basis. The "Closing
Sales Price" as of a certain date will mean the average of the closing bid and
asked prices, in the over-the-counter market as reported by the National
Association of Securities Dealers Automated Quotation System, or if not so
reported, as reported by the National Quotation Bureau, Incorporated, or any
successor thereof, or if not so reported, the average of the closing bid and
asked prices as furnished by any member of the National Association of
Securities Dealers, Inc., selected from time to time by the Company for that
purpose, or, if the Warrant Stock is listed or admitted to trading on a
national securities exchange, the average of the reported closing bid and asked
prices, regular way, on the principal national securities exchange on which the
Warrant Stock is listed or admitted to trading."
<PAGE> 2
2. No Adjustment of Warrant Stock. The Holder hereby
acknowledges and agrees that the Merger does not result in an increase in the
number of shares of Warrant Stock subject to the Warrant.
3. Waiver of Notice. The Holder hereby waives its right to
notice of the Merger as provided under Section 5.3 of the Warrant.
4. Further Amendments. Any and all of the terms and conditions
of the Warrant are hereby amended and modified wherever necessary, even though
not specifically addressed herein, so as to conform to the amendments and
modifications contained in this Agreement.
5. Ratification of Warrant. Except as amended hereby, the
Warrant is hereby ratified and confirmed and shall continue in full force and
effect.
IN WITNESS WHEREOF, the Company and the Holder have caused this
Agreement to be executed and delivered as of the date first above written.
STARION INTERNATIONAL, LTD.
By: /s/ Jay Sheth
--------------------------------
Name: Jay Sheth
--------------------------------
Title: Managing Director
--------------------------------
TRISTAR CORPORATION
By: /s/ Viren S. Sheth
--------------------------------
Name: Viren S. Sheth
--------------------------------
Title: Chief Executive Officer
--------------------------------
-2-
<PAGE> 1
EXHIBIT 10.3
AGREEMENT
This Agreement dated effective August 31, 1995, by and between TRISTAR
CORPORATION, a Delaware corporation (formerly Ross Cosmetics Distribution
Centers, Inc.) ("Tristar"), Eurostar Perfumes, Inc., a Texas corporation
("Eurostar"), and Starion International Ltd., a United Kingdom company
("Starion") (successor to S&J Perfume Co., Ltd., a corporation organized under
the laws of the United Kingdom).
W I T N E S S E T H:
WHEREAS, Tristar, Eurostar and Starion (or their respective
predecessor or successor corporations, as applicable) entered into a
Distribution Agreement (the "Distribution Agreement") dated October 23, 1992;
and
WHEREAS, the parties hereto desire to terminate the Distribution
Agreement;
NOW, THEREFORE, Tristar, Eurostar and Starion mutually agree to
terminate the Distribution Agreement in all respects.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date and year first above written.
TRISTAR CORPORATION
(formerly Ross Cosmetics Distribution
Centers, Inc.)
By: /s/ Viren S. Sheth
--------------------------------
Name: Viren S. Sheth
--------------------------------
Title: Chief Executive Officer
--------------------------------
EUROSTAR PERFUMES, INC.
By: /s/ Paul R. Kimmel
--------------------------------
Name: Paul R.Kimmel
--------------------------------
Title: Chief Financial Officer
--------------------------------
STARION INTERNATIONAL LTD.
By: /s/ Jay Sheth
--------------------------------
Name: Jay Sheth
--------------------------------
Title: Managing Director
--------------------------------
