<PAGE>
November 18, 1996
Securities & Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir/Madame:
On behalf of Oneida Ltd., I transmit for filing the following Form
8-K. Please do not hesitate to contact me at (315) 361-3694 if you
have any questions or concerns.
Very truly yours,
/s/ ERIN L. MARKEY
Erin L. Markey
Corporate Attorney
Oneida Ltd.
163-181 Kenwood Avenue
Oneida, New York 13421
(315) 361-3694
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 4, 1996
ONEIDA LTD.
(Exact name of Registrant as specified in its charter)
NEW YORK 1-5452 15-0405700
(State or other (Commission (I.R.S Employer
jurisdiction File Number) Identification
of incorporation) Number)
ONEIDA NEW YORK 13421
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (315)361-3000
Former name or former address, if changed since last report N/A
<PAGE>
Item 2 Acquisition and Disposition of Assets
On November 4, 1996, Oneida Ltd., a New York corporation
(the "Registrant"), purchased substantially all of the assets, and
assumed certain liabilities, of THC Systems, Inc., a New York
corporation ("THC"), pursuant to the Asset Purchase Agreement, dated
as of August 29, 1996, as amended on November 4, 1996 (the "Asset
Purchase Agreement"), among THC, Eugene Goldberg, Robert Goldberg and
Oneida Community China, Inc., a New York corporation and a direct
wholly-owned subsidiary of the Registrant ("Oneida Community China").
Copies of the Asset Purchase Agreement and the Amendment to Asset
Purchase Agreement, dated as of November 4, 1996, among THC. Eugene
Goldberg, Robert Goldberg and Oneida Community China (the "Amendment
to Asset Purchase Agreement"), are attached hereto as Exhibits 2.1 and
2.2, respectively, and are incorporated herein by reference.
The purchase price of $44.6 million in cash paid by Oneida
Community China to THC pursuant to the Asset Purchase Agreement is
subject to adjustment based on the Net Assets (as defined in the Asset
Purchase Agreement) of the acquired business as of November 4, 1996.
To provide for a potential downward adjustment in the purchase price,
$2 million of the purchase price was placed in escrow with The Chase
Manhattan Bank ("Chase") pursuant to an Escrow Agreement, dated as of
November 4, 1996 (the "Escrow Agreement"), among THC, Eugene Goldberg,
Robert Goldberg, Oneida Community China and Chase. The Escrow
Agreement is in substantially the form of Exhibit 2.08 to the Asset
Purchase Agreement.
The Registrant has guaranteed all of the obligations of
Oneida Community China to THC, Eugene Goldberg and Robert Goldberg
under the Asset Purchase Agreement and the Escrow Agreement pursuant
to the Guarantee, dated as of August 29, 1996, delivered by the
Registrant to THC, Eugene Goldberg and Robert Goldberg, a copy of
which is attached hereto as Exhibit 2.3 and incorporated herein by
reference.
The assets purchased by Oneida Community China from THC
include (i) various registered or pending patents, trademarks and
copyrights, (ii) contractual and noncontractual relationships with
suppliers, customers and marketing representatives and (iii) physical
inventory used in the conduct of THC's business.
The cash purchase price was borrowed under the Registrant's
established lines of credit at Chase Manhattan Bank, N.A., Bank of
Nova Scotia, Manufacturers and Traders Trust Company, Fleet Bank,
Marine Midland Bank, N.A. and San Paolo Bank. The purchase price was
arrived at through arm's length negotiations between THC, Eugene
Goldberg, Robert Goldberg and the Registrant, and was determined after
consideration of THC's audited financial statements and a review of
THC's assets and business.
<PAGE>
No prior relationship existed between THC, Eugene Goldberg or
Robert Goldberg, on the one hand, and the Registrant, Oneida Community
China and their respective affiliates, directors or officers, on the
other hand. For a period of three years commencing on November 4,
1996, Eugene Goldberg will render non-exclusive consulting and
advisory services to Oneida Community China and will be paid an annual
fee of $100,000 plus expenses, pursuant to a Consulting Agreement,
dated as of August 29, 1996, between Oneida Community China and Eugene
Goldberg, a copy of which is attached hereto as Exhibit 2.4 and
incorporated herein by reference.
The Registrant intends to continue the business of THC
through Oneida Community China, which has changed its name to THC
Systems, Inc. A portion of THC's assets purchased by the Registrant
constitute physical inventory that the Registrant intends to sell
or dispose of in the ordinary course of its business.
Item 7 Financial Statements and Exhibits
(c) Exhibits
2.1 Asset Purchase Agreement, dated as of August
29, 1996, among THC, Eugene Goldberg, Robert Goldberg and Oneida
Community China.
2.2 Amendment to Asset Purchase Agreement,
dated as of November 4, 1996, among THC, Eugene Goldberg, Robert
Goldberg and Oneida Community China.
2.3 Guarantee for Asset Purchase Agreement,
dated as of August 29, 1996, delivered by the Registrant to THC,
Eugene Goldberg and Robert Goldberg
2.4 Consulting Agreement, dated as of August 29,
1996, between Oneida Community China and Eugene Goldberg
99.1 Press Release of the Registrant, dated
November 4, 1996.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
ONEIDA LTD.
Dated: November 18, 1996 By:/s/CATHERINE H. SUTTMEIER
Catherine H. Suttmeier
Vice President, Secretary
and General Counsel
<PAGE>
EXHIBIT 2.1
_________________________________________
ASSET PURCHASE AGREEMENT
_________________________________________
Among
THC SYSTEMS, INC.,
EUGENE GOLDBERG,
ROBERT GOLDBERG
and
ONEIDA COMMUNITY CHINA, INC.
Dated as of August 29, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS
SECTION 1.01. Certain Defined Terms 2
ARTICLE II - PURCHASE AND SALE
SECTION 2.01. Assets to Be Sold 10
SECTION 2.02. Assumption and Exclusion of Liabilities 13
SECTION 2.03. Purchase Price; Allocation of Purchase Price 13
SECTION 2.04. Closing 14
SECTION 2.05. Closing Deliveries by the Seller and the
Shareholders 14
SECTION 2.06. Closing Deliveries by the Purchaser 15
SECTION 2.07. Adjustment of Purchase Price 15
SECTION 2.08. Escrow 18
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND THE SHAREHOLDERS
SECTION 3.01. Organization of the Seller and Authority of
the Seller and the Shareholders 19
SECTION 3.02. Shareholders; Subsidiaries 20
SECTION 3.03. Books and Records 20
SECTION 3.04. No Conflict 20
SECTION 3.05. Governmental Consents and Approvals 20
SECTION 3.06. Financial Information; Books and Records 21
SECTION 3.07. No Undisclosed Liabilities 21
SECTION 3.08. Receivables 21
SECTION 3.09. Inventories 22
SECTION 3.10. Acquired Assets 23
SECTION 3.11. Sales and Purchase Order Backlog 23
<PAGE>
SECTION 3.12. Conduct in the Ordinary Course; Absence
of Certain Changes, Events and Conditions 23
SECTION 3.13. Litigation 26
SECTION 3.14. Compliance with Laws; Permits 26
SECTION 3.15. Environmental Matters 27
SECTION 3.16. Material Contracts 27
SECTION 3.17. Intellectual Property 29
SECTION 3.18. Real Property 30
SECTION 3.19. Tangible Personal Property 31
SECTION 3.20. Assets 31
SECTION 3.21. Customers 32
SECTION 3.22. Suppliers 32
SECTION 3.23. Employee Benefit Matters 32
SECTION 3.24. Labor Matters 34
SECTION 3.25. Key Employees 35
SECTION 3.26. Certain Interests 35
SECTION 3.27. Taxes 36
SECTION 3.28. Insurance 37
SECTION 3.29. Accounts; Lockboxes; Safe Deposit Boxes;
Powers of Attorney 39
SECTION 3.30. Affiliated Parties 39
SECTION 3.31. Full Disclosure 39
SECTION 3.32. Brokers 40
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01. Organization and Authority of the Purchaser 40
SECTION 4.02. No Conflict 40
SECTION 4.03. Governmental Consents and Approvals 41
SECTION 4.04. Brokers 41
<PAGE>
ARTICLE V - ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing 41
SECTION 5.02. Access to Information 42
SECTION 5.03. Confidentiality 43
SECTION 5.04. Regulatory and Other Authorizations; Notices
and Consents 44
SECTION 5.05. Notice of Developments 45
SECTION 5.06. No Solicitation or Negotiation 45
SECTION 5.07. Use of Intellectual Property 46
SECTION 5.08. Non-Competition 46
SECTION 5.09. Customer and Supplier Lists 47
SECTION 5.10. Further Action 48
SECTION 5.11. Bulk Transfer Laws 48
SECTION 5.12. Filing of Form 5500s 48
SECTION 5.13. Assignment of Rego Lease 49
ARTICLE VI - TAX MATTERS
SECTION 6.01. Indemnity 49
SECTION 6.02. Returns and Payments 50
SECTION 6.03. Refunds 51
SECTION 6.04. Contests 51
SECTION 6.05. Time of Payment 52
SECTION 6.06. Cooperation and Exchange of Information 53
SECTION 6.07. Conveyance Taxes 53
SECTION 6.08. Bulk Transfers 54
SECTION 6.09. Miscellaneous 54
ARTICLE VII - CONDITIONS TO CLOSING
SECTION 7.01. Conditions to Obligations of the Seller and
the Shareholders 55
SECTION 7.02. Conditions to Obligations of the Purchaser 56
<PAGE>
ARTICLE VIII - INDEMNIFICATION
SECTION 8.01. Survival of Representations and Warranties 59
SECTION 8.02. Indemnification by the Seller and the
Shareholders 60
SECTION 8.03. Indemnification by the Purchaser 62
SECTION 8.04. Tax Matters 63
ARTICLE IX - TERMINATION AND WAIVER
SECTION 9.01. Termination 64
SECTION 9.02. Effect of Termination 64
SECTION 9.03. Waiver 64
ARTICLE X - GENERAL PROVISIONS
SECTION 10.01. Expenses 65
SECTION 10.02. Notices 65
SECTION 10.03. Public Announcements 67
SECTION 10.04. Headings 67
SECTION 10.05. Severability 67
SECTION 10.06. Entire Agreement 67
SECTION 10.07. Assignment 67
SECTION 10.08. No Third Party Beneficiaries 68
SECTION 10.09. Amendment 68
SECTION 10.10. Governing Law 68
SECTION 10.11. Counterparts 68
SECTION 10.12. Specific Performance 68
<PAGE>
EXHIBITS
A Persons Entering Into Employment or Consulting Agreements
with the Purchaser
1.01(a) Form of Assumption Agreement
1.01(b) Form of Bill of Sale and Assignment
2.07(d) Methodology for Computing Purchase Price Adjustment
2.08 Form of Escrow Agreement
10.03 Form of Press Release
<PAGE>
ASSET PURCHASE AGREEMENT, dated as of August 29, 1996, among THC
SYSTEMS, INC., a New York corporation (the "Seller"), EUGENE GOLDBERG
and ROBERT GOLDBERG (each a "Shareholder" and, collectively, the
"Shareholders"), and ONEIDA COMMUNITY CHINA, INC., a New York
corporation (the "Purchaser").
WITNESSETH:
WHEREAS, the Seller is engaged in the business of importing and
distributing chinaware, flatware, hollowware and related products to a
diversified base of customers, including hotels, restaurants,
distributors, airlines and institutions (the "Business"); and
WHEREAS, the Shareholders own all of the issued and outstanding
shares of common stock, no par value, of the Seller; and
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, the Business,
including, without limitation, all right, title an interest of the
Seller in and to the property and assets of the Business and, in
connection therewith, the Purchaser is willing to assume certain
liabilities of the Seller relating thereto, all upon the terms and
subject to the conditions set forth herein; and
WHEREAS, the Purchaser has entered into employment or consulting
agreements with the persons listed on Exhibit A hereto, as described
in such Exhibit, which agreements shall become effective upon the
Closing (as hereinafter defined);
WHEREAS, Oneida Ltd., a New York corporation and the ultimate
corporate parent of the Purchaser ("Oneida"), has executed and
delivered (i) to the Seller a guarantee of the Purchaser's obligations
under this Agreement, the Escrow Agreement and the Assumption
Agreement (the "Asset Purchase Agreement Guarantee"), (ii) to Eugene
Goldberg a guarantee of the Purchaser's obligations under a certain
consulting agreement dated the date hereof between the Purchaser and
Eugene Goldberg (the "Consulting Agreement Guarantee") and (iii) to
each of Barry Goldberg, Ira Goldberg and James Goldberg a guarantee of
the Purchaser's obligations under their respective employment
agreements dated the date hereof with the Purchaser (collectively, the
"Employment Agreement Guarantees");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Purchaser, the
Seller and the Shareholders hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Acquisition Documents" means this Agreement, the Ancillary
Agreements, and any certificate, Financial Statement, Interim
Financial Statement, report or other document delivered pursuant to
this Agreement or the transactions contemplated hereby.
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control
with, such specified Person.
"Agreement" or "this Agreement" means this Asset Purchase
Agreement, dated as of August 29, 1996, among the Seller, the
Shareholders and the Purchaser (including the Exhibits, the Seller's
and Shareholders' Disclosure Schedule and the Purchaser's Disclosure
Schedule) and all amendments hereto made in accordance with the
provisions of Section 10.09.
"Ancillary Agreements" means the Bill of Sale, the Assumption
Agreement and the Escrow Agreement.
"Asset Purchase Agreement Guarantee" has the meaning specified in
the recitals to this Agreement.
"Assets" has the meaning specified in Section 2.01(a).
"Assumed Liabilities" has the meaning specified in Section
2.02(a).
"Assumption Agreement" means the Assumption Agreement to be
executed by the Purchaser and the Seller on the Closing Date
substantially in the form of Exhibit 1.01(a) hereto.
"Audit" has the meaning specified in Section 7.02(j).
"Berdon" has the meaning specified in Section 2.07(b)(iii).
<PAGE>
"Bill of Sale" means the Bill of Sale and Assignment to be
executed by the Seller on the Closing Date substantially in the form
of Exhibit 1.01(b) hereto.
"Business" has the meaning specified in the recitals to this
Agreement.
"Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by Law to be
closed in the city of New York.
"Closing" has the meaning specified in Section 2.04.
"Closing Balance Sheet" means the audited balance sheet (including
the related notes and schedules thereto) of the Seller, to be prepared
pursuant to Section 2.07(a) and to be dated as of the Closing Date.
"Closing Date" has the meaning specified in Section 2.04.
"Code" means the Internal Revenue Code of 1986, as amended
through the date hereof.
"Confidentiality Agreement" means the letter agreement dated as of
May 8, 1996 between the Seller and the Purchaser.
"Consignment Customer List" has the meaning specified in Section
5.09(a).
"Consulting Agreement Guarantee" has the meaning specified in the
recitals to this Agreement.
"Control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two
or more Persons, means the possession, directly or indirectly or as
trustee, personal representative or executor, of the power to direct
or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee,
personal representative or executor, by contract or otherwise,
including, without limitation, the ownership, directly or indirectly,
of securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such Person.
"Customer List" has the meaning specified in Section 5.09(a).
"Employment Agreement Guarantees" has the meaning specified in the
recitals to this Agreement.
<PAGE>
"Encumbrance" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of
any kind, including, without limitation, any restriction on the use,
voting, transfer, receipt of income or other exercise of any
attributes of ownership.
"Environmental Claim" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations, proceedings,
consent orders or consent agreements relating in any way to any
Environmental Law.
"Environmental Laws" means any Law, and any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the
environment, health, safety or Hazardous Materials, including,
without limitation, Proposition 65.
"ERISA" has the meaning specified in Section 3.23(a).
"Escrow Agent" means The Chase Manhattan Bank, N.A.
"Escrow Agreement" has the meaning specified in Section 2.08.
"Escrow Amount" means $2,000,000.
"Escrow Fund" means the Escrow Amount deposited with the Escrow
Agent, as such sum may be increased or decreased as provided in the
Escrow Agreement.
"Excluded Assets" has the meaning specified in Section 2.01(b).
"Excluded Liabilities" has the meaning specified in Section
2.02(b).
"Excluded 401(k) Assets" has the meaning specified in Section
2.01(a)(xv).
"Exhibits" means the Exhibits attached hereto and forming a part
of this Agreement.
"Financial Statements" has the meaning specified in Section
3.06(a)(i).
"Governmental Authority" means any United States federal, state
or local or any foreign government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal,
or judicial or arbitral body.
<PAGE>
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Hang Cheon" has the meaning specified in Section 5.08(a).
"Hazardous Materials" means (a) petroleum and petroleum products,
radioactive materials, asbestos, transformers or other equipment that
contain polychlorinated biphenyls, and radon gas, (b) any other
chemicals, materials or substances defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "toxic pollutants", "contaminants" or "pollutants", or
words of similar import, under any applicable Environmental Law, and
(c) any other chemical, material or substance exposure to which is
regulated by any Governmental Authority.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Indebtedness" means, with respect to any Person, (a) all
indebtedness of such Person, whether or not contingent, for borrowed
money, (b) all obligations of such Person for the deferred purchase
price of property or services, (c) all obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments,
(d) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by
such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all obligations of such
Person as lessee under leases that have been or should be, in
accordance with U.S. GAAP, recorded as capital leases, (f) all
obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (g) all
obligations of such Person to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of such Person or any
warrants, rights or options to acquire such capital stock, valued, in
the case of redeemable preferred stock, at the greater of its
voluntary or involuntary liquidation preference plus accrued and
unpaid dividends, (h) all Indebtedness of others referred to in
clauses (a) through (f) above guaranteed directly or indirectly in any
manner by such Person, or in effect guaranteed directly or indirectly
by such Person through an agreement (i) to pay or purchase such
Indebtedness or to advance or supply funds for the payment or purchase
of such Indebtedness, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness
or to assure the holder of such Indebtedness against loss, (iii) to
supply funds to or in any other manner invest in the debtor (including
any agreement to pay for property or services irrespective of whether
such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss, and (i) all Indebtedness
referred to in clauses (a) through (f) above secured by (or for which
the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any
<PAGE>
Encumbrance on property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness.
"Indemnifying Party" has the meaning specified in Section
8.02(c).
"Independent Accounting Firm" has the meaning specified in Section
2.07(b)(ii).
"Intellectual Property" means: (i) all domestic and foreign
patents and applications therefor and all reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof;
(ii) all inventions (whether patentable or not), invention
disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (iii) all copyrights,
copyright registrations and applications therefor, and all other
rights corresponding thereto throughout the world; (iv) all industrial
designs and any registrations and applications therefor; (v) all trade
names, corporate names, trade dress, logos, common law trademarks and
service marks, trademark and service mark registrations and
applications therefor; (vi) all proprietary computer software,
including, without limitation, source code, operating systems and
specifications, data, data bases, files, documentation and other
materials related thereto; (vii) all income, royalties, damages and
payments now and hereafter due and/or payable with respect to any of
the foregoing, including, without limitation, damages and payments for
past or future infringements or misappropriations thereof; and (viii)
all rights to sue for past, present and future infringements or
misappropriations of any of the foregoing.
"Interim Financial Statements" has the meaning specified in
Section 3.06(a)(ii).
"Inventories" means all inventory, merchandise, finished goods,
raw materials, packaging, supplies and other personal property
related to the Business, maintained, held or stored by or for the
Seller and any prepaid deposits for any of the same.
"Inventory Valuation Resolution Date" has the meaning pecified in
Section 2.07(b)(iii).
"IRS" means the Internal Revenue Service of the United States.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, requirement or rule of
common law.
<PAGE>
"Leased Real Property" means the real property leased by the
Seller as tenant, together with, to the extent leased by the Seller,
all buildings and other structures, facilities or improvements
currently or hereafter located thereon, all fixtures, systems,
equipment and items of personal property of the Seller attached or
appurtenant thereto, and all easements, licenses, rights and
appurtenances relating to the foregoing.
"Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured
or unmatured or determined or determinable, including, without
limitation, those arising under any Law (including, without
limitation, any Environmental Law), Action or Governmental Order and
those arising under any contract, agreement, arrangement, commitment
or undertaking.
"Licensed Intellectual Property" means all Intellectual
Property licensed or sublicensed by the Seller from a third party.
"Loss" has the meaning specified in Section 8.02(a).
"Material Adverse Effect" means any circumstance, change in, or
effect on, the Business or the Seller that, individually or in the
aggregate with any other circumstances, changes in, or effects on, the
Seller or the Business: (a) is, or could be, materially adverse to the
business, operations, assets or liabilities (including, without
limitation, contingent liabilities), employee relationships, customer
or supplier relationships, results of operations or the condition
(financial or otherwise) of the Business or (b) could materially
adversely affect the ability of the Purchaser to operate or conduct
the Business in the manner in which it is currently operated or
conducted by the Seller.
"Material Contracts" has the meaning specified in Section 3.16(a).
"Net Assets" means the excess of (i) the Assets (excluding the
Excluded Assets) over (ii) the amounts set forth in the line items
identified as "accounts payable", "dividends payable" and "accrued
expenses and other liabilities" on any specified balance sheet of the
Seller, including the Reference Balance Sheet and the Closing Balance
Sheet.
"Oneida" has the meaning specified in the recitals to this
Agreement.
"Owned Intellectual Property" means all Intellectual Property in
and to which the Seller has, or has a right to hold, right, title
and interest.
"Permitted Encumbrances" means such of the following as to which
no enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) liens for taxes, assessments and
governmental charges or levies not yet due
<PAGE>
and payable; (b) Encumbrances imposed by Law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business securing
obligations that (i) are not overdue for a period of more than 30
days and (ii) are not in excess of $10,000 in the case of a single
property or $50,000 in the aggregate at any time; (c) pledges or
deposits to secure obligations under workers' compensation laws or
similar legislation or to secure public or statutory obligations; and
(d) liens on substantially all of the assets of the Seller, including
pledges of Inventories and accounts receivable to secure bank debt
incurred in the ordinary course of the Business consistent with past
practice to finance the purchase of Inventories and to provide
working capital.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity,
as well as any syndicate or group that would be deemed to be a
person under Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended.
"Plans" has the meaning specified in Section 3.23(a).
"Proposition 65" means the Safe Drinking Water and Toxic
Enforcement Act of 1986, California Health and Safety Code 25249.5
et seq., and any regulations promulgated pursuant thereto.
"Purchase Price" has the meaning specified in Section 2.03(a).
"Purchase Price Bank Account" means a bank account in the United
States to be designated by the Seller in a written notice to the
Purchaser at least three Business Days before the Closing.
"Purchaser" has the meaning specified in the preamble to this
Agreement.
"Purchaser Indemnified Party" has the meaning specified in Section
8.02(a).
"Purchaser's Accountants" means Coopers & Lybrand LLP, independent
accountants of the Purchaser.
"Purchaser's Disclosure Schedule" means the Purchaser's Disclosure
Schedule attached hereto, dated as of the date hereof,
and forming a part of this Agreement.
"Purchaser's President and COO" means Peter J. Kallet.
<PAGE>
"Receivables" means any and all accounts receivable, notes and
other amounts receivable from third parties, including, without
limitation, customers and employees, arising from the conduct of the
Business before the Closing, whether or not in the ordinary course,
together with any unpaid financing charges accrued thereon.
"Reference Balance Sheet" means the audited balance sheet
(including the related notes and schedules thereto) of the Seller,
dated as of January 31, 1996, a copy of which is set forth in Section
3.06(a)(i) of the Seller's and Shareholders' Disclosure Schedule.
"Reference Balance Sheet Date" means January 31, 1996.
"Rego Affiliate" has the meaning specified in Section 5.07(b).
"Rego Corp." has the meaning specified in Section 3.30.
"Rego Lease" has the meaning specified in Section 3.30.
"Rego-Unrelated Name" has the meaning specified in Section
5.07(b).
"Regulations" means the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of Treasury
with respect to the Code or other federal tax statutes.
"Restricted Period" has the meaning specified in Section 5.08(a).
"Returns" has the meaning specified in Section 6.02(a).
"S Election" means an election under Section 1362(a) of the Code
(or a comparable election under any successor provision) to be taxed
as an S Corporation for Federal income tax purposes.
"Seller" has the meaning specified in the preamble to this
Agreement.
"Seller Indemnified Party" has the meaning specified in Section
8.03(a).
"Seller's and Shareholders' Disclosure Schedule" means the
Seller's and Shareholders' Disclosure Schedule attached hereto,
dated as of the date hereof, and forming a part of this Agreement.
"Seller's Income Taxes" means any Taxes based on or measured by
net income, in whole or in part, payable by the Seller for any period.
<PAGE>
"Shareholder" and "Shareholders" have the respective meanings
specified in the preamble to this Agreement.
"Supplier List" has the meaning specified in Section 5.09(b).
"Tabletop Products" means chinaware, glassware and metal flat
and hollow tableware.
"Tangible Personal Property" has the meaning specified in Section
3.19(a).
"Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts
imposed with respect thereto) imposed by any government or taxing
authority, including, without limitation, taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment,
social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs' duties,
tariffs, and similar charges.
"Third Party Claims" has the meaning specified in Section
8.02(c).
"U.S. GAAP" means United States generally accepted accounting
principles and practices in effect from time to time applied
consistently throughout the periods involved.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Assets to Be Sold. (a) On the terms and subject to the
conditions of this Agreement, on the Closing Date, the Seller shall
sell, assign, transfer, convey and deliver to the Purchaser or cause
to be sold, assigned, transferred, conveyed and delivered to the
Purchaser, and the Purchaser shall purchase from the Seller, all the
assets, properties, goodwill and business of every kind and
description and wherever located, whether tangible or intangible,
real, personal or mixed, directly or indirectly owned by the Seller
or to which it is directly or indirectly entitled and, in any case,
belonging to or used or intended to be used in the Business, other
than the Excluded Assets (the assets to be purchased by the Purchaser
being referred to as the "Assets"), including, without limitation, the
following:
<PAGE>
(i) the Business as a going concern;
(ii) all rights in respect of the Leased Real
Property
and any leased Tangible Personal Property;
(iii) all Tangible Personal Property used or held
for use by the Seller at the locations at which the Business is
conducted, or otherwise owned or held by the Seller at the Closing
Date for use in the conduct of the Business and not otherwise included
in clause (ii) above;
(iv) all vehicles other than the Seller's 1989
Silver Spur Rolls Royce used by Eugene Goldberg;
(v) all cash, cash equivalents and bank accounts
(other than the Purchase Price Bank Account) owned by the Seller at
the Closing Date;
(vi) all Inventories;
(vii) all Receivables;
(viii) all books of account, general, financial, tax
records (other than tax returns and supporting schedules filed with
respect to the Seller's Income Taxes) and personnel records, invoices,
shipping records, supplier lists, correspondence and other
documents, records and files and any rights thereto owned, associated
with or employed by the Seller or used in, or relating to, the
Business at the Closing Date, other than organizational documents,
minute and stock record books and the corporate seal of the Seller;
provided, however, that the Seller shall be entitled to retain its
general ledger and all of its journals including, without limitation,
its journals for sales, purchases, cash receipts and cash
disbursements, so long as it shall deliver certified copies of all of
the foregoing to the Purchaser at the Closing;
(ix) the goodwill of the Seller relating to the
Business;
(x) all the Seller's right, title and interest
in, to and under the Owned Intellectual Property and the Licensed
Intellectual Property;
(xi) all claims, causes of action, choses in
action, rights of recovery and rights of set-off of any kind
(including rights to insurance proceeds and rights under and pursuant
to all warranties, representations and guarantees made by suppliers
of products, materials or equipment, or components thereof),
pertaining to, arising out of, and enuring to the benefit of the
Seller;
<PAGE>
(xii) all sales and promotional literature, customer
lists and other sales-related materials owned, used, associated with
or employed by the Seller at the Closing Date;
(xiii) all rights of the Seller under all contracts,
licenses, sublicenses, agreements, leases, commitments, and sales
and purchase orders, and under all commitments, bids and offers (to
the extent such offers are transferable);
(xiv) all municipal, state and federal franchises,
permits, licenses, agreements, waivers and authorizations held or used
by the Seller in connection with, or required for, the Business, to
the extent transferable;
(xv) all assets (including, without limitation,
assets held in trust and insurance policies) and rights in respect of
assets used to fund or otherwise relating to any Plans, except assets
relating to the Seller's 401(k) Plan (the "Excluded 401(k) Assets");
(xvi) all progress payments under any customer order
or other agreement which the Purchaser shall have assumed under this
Agreement; and
(xvii) all the Seller's right, title and interest on
the Closing Date in, to and under all other assets, rights and claims
of every kind and nature used or intended to be used in the operation
of, or residing with, the Business.
(b) The Assets shall exclude the following assets owned
by the Seller (the "Excluded Assets"):
(i) the Purchase Price Bank Account;
(ii) the Excluded 401(k) Assets;
(iii) all rights of the Seller under this Agreement,
the Ancillary Agreements and the Guarantee;
(iv) Eugene Goldberg's desk, desk chair, couch,
club chair, wooden cube and painting of a seashell by Fred Werner,
each of which is located in his office in Melville, New York; and
(v) the Seller's 1989 Silver Spur Rolls Royce used by
Eugene Goldberg.
<PAGE>
SECTION 2.02. Assumption and Exclusion of Liabilities. (a) On the
terms and subject to the conditions of this Agreement, the Purchaser
shall, on the Closing Date, assume and shall pay, perform and
discharge when due all Liabilities of the Seller as at the Closing
Date arising out of or relating to the Business, whether accrued or
arising before or after the Closing, except for the Excluded
Liabilities as defined in Section 2.02(b) (the "Assumed
Liabilities").
(b) The Seller shall retain, and shall be responsible
for paying, performing and discharging when due, and the Purchaser
shall not assume or have any responsibility for, all Liabilities of
the Seller as of the Closing Date other than the Assumed
Liabilities (the "Excluded Liabilities"), including, without
limitation:
(i) all Taxes not reflected on the Closing
Balance Sheet now or hereafter owed by the Seller or any Affiliate of
the Seller, or attributable to the Assets or the Business, relating to
any period, or any portion of any period, ending on or prior to the
Closing Date (as provided in Section 6.01) and all of the Seller's
Income Taxes;
(ii) all Liabilities relating to or arising out of
the Excluded Assets;
(iii) all Liabilities relating to or arising out of
the dispute between the Seller and the Hunan Arts & Crafts Import and
Export Corporation;
(iv) all Liabilities of the Seller for warranty
claims, quality-related claims or product liability claims relating to
products shipped prior to the Closing, other than reasonable product
and quality returns and allowances arising in the ordinary course of
the Business;
(v) all Liabilities of the Seller for Indebtedness
to bank lenders;
(vi) all Liabilities of the Seller relating to any
loans payable to any of the Seller's shareholders; and
(vii) all Liabilities of the Seller under any
contracts for professional services entered into by the Seller in
connection with the transactions contemplated by this Agreement,
other than any such Liabilities that are reflected on the Closing
Balance Sheet.
SECTION 2.03. Purchase Price; Allocation of Purchase Price. (a)
Subject to the adjustments set forth in Section 2.07, the purchase
price for the Assets shall be $45,000,000 (the "Purchase Price").
<PAGE>
(b) The sum of the Purchase Price and the Assumed
Liabilities shall be allocated among the Assets as of the Closing Date
in accordance with the Closing Balance Sheet. To the extent that the
sum of the Purchase Price and the Assumed Liabilities exceeds the
book value of the Assets as reflected on the Closing Balance Sheet,
such excess shall be allocated to intangibles. Any subsequent
adjustments to the sum of the Purchase Price and the Assumed
Liabilities shall be reflected in the allocation hereunder in a manner
consistent with Regulation 1.1060-1T(f). Prior to Closing, the
Purchaser, the Seller and the Shareholders shall agree on the contents
of the Form 8594 to be filed by the Purchaser and the Seller in
connection with the transactions contemplated by this Agreement it
being understood that no allocation shall be made in such Form 8594 to
the covenant set forth in Section 5.08. For all Tax purposes, the
Purchaser, the Seller and each of the Shareholders agree to report the
transactions contemplated in this Agreement in a manner consistent
with the terms of this Agreement, including the allocation set forth
in the Closing Balance Sheet, and that none of them will take any
position inconsistent therewith in any Tax return, in any refund
claim, in any litigation, or otherwise.
SECTION 2.04. Closing. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Assets and the assumption of
the Assumed Liabilities contemplated by this Agreement shall take
place at a closing (the "Closing") to be held at the Seller's offices
at 395 North Service Road, Melville, New York at 10:00 A.M. New York
time on the later to occur of (i) October 31, 1996 or (ii) the fifth
Business Day following the later to occur of the (A) expiration or
termination of all applicable waiting periods under the HSR Act and
(B) satisfaction or waiver of all other conditions to the obligations
of the parties set forth in Article VII, or at such other place or
at such other time or on such other date as the Seller, the
Shareholders and the Purchaser may mutually agree upon in writing (the
day on which the Closing takes place being the "Closing Date").
SECTION 2.05. Closing Deliveries by the Seller and the
Shareholders. At the Closing, the Seller and the Shareholders shall
deliver or cause to be delivered to the Purchaser:
(a) the Bill of Sale and such other instruments, in
form and substance reasonably satisfactory to the Purchaser, as may
be requested by the Purchaser to transfer the Assets to the Purchaser
or evidence such transfer on the public records;
(b) an executed counterpart of the Assumption Agreement
and the Escrow Agreement;
(c) a receipt for the Purchase Price less the Escrow
Amount; and
<PAGE>
(d) the opinions, certificates and other documents
required to be delivered pursuant to Section 7.02.
SECTION 2.06. Closing Deliveries by the Purchaser. (a) At the
Closing, the Purchaser shall deliver to the Seller:
(i) the Purchase Price less the Escrow Amount by
wire transfer in immediately available funds to the Purchase Price
Bank Account;
(ii) an executed counterpart of the Assumption
Agreement and the Escrow Agreement; and
(iii) the opinions, certificates and other documents
required to be delivered pursuant to Section 7.01.
(b) At the Closing, the Purchaser shall deliver to the
Escrow Agent, in accordance with the Escrow Agreement, the Escrow
Amount by wire transfer in immediately available funds to the account
designated therefor in the Escrow Agreement.
SECTION 2.07. Adjustment of Purchase Price. The Purchase Price shall
be subject to adjustment after the Closing as specified in this
Section 2.07:
(a) Closing Balance Sheet. As promptly as practicable,
but in any event within sixty calendar days following the Closing
Date, the Purchaser shall deliver to the Seller and the Shareholders
the Closing Balance Sheet, together with the report thereon of the
Purchaser's Accountants, stating that the Closing Balance Sheet fairly
presents the financial position of the Seller at the Closing Date in
conformity with U.S. GAAP applied on a basis consistent with the
preparation of the Reference Balance Sheet and classifying assets and
liabilities in the same manner as on the Reference Balance Sheet. The
Closing Balance Sheet shall not reflect any liability for any unpaid
income taxes, franchise taxes or professional fees or expenses
incurred by the Seller in connection with the transactions
contemplated by this Agreement.
(b) Disputes. (i) Subject to clauses (ii) and (iii)
of this Section 2.07(b), the Closing Balance Sheet delivered by the
Purchaser to the Seller and the Shareholders shall be deemed to be and
shall be final, binding and conclusive on the parties hereto.
(ii) The Shareholders may dispute the amount set forth
on the Closing Balance Sheet in respect of the Inventories if, in
the opinion of the Shareholders, the value of the Inventories is
understated on the Closing Balance Sheet by an amount in
<PAGE>
excess of $100,000; provided, however, that the Shareholders shall
have notified the Purchaser and the Purchaser's Accountants in
writing of their dispute, specifying the amount thereof in dispute and
setting forth, in reasonable detail, the basis for such dispute,
within fifteen Business Days of the Purchaser's delivery of the
Closing Balance Sheet to the Seller and the Shareholders. In the event
of such a dispute, the Shareholders and the Purchaser's President and
COO shall attempt to reconcile their differences, and, in so doing,
will each provide to the other supporting detailed schedules
relating to the value of the Inventories if and to the extent not
previously provided. Any resolution by the Shareholders and the
Purchaser's President and COO as to any disputed amount in respect of
the Inventories shall be final, binding and conclusive on the parties
hereto. If the Shareholders and the Purchaser's President and COO are
unable to reach a resolution within ten Business Days after receipt by
the Purchaser and the Purchaser's Accountants of the Shareholders'
written notice of dispute, the Shareholders and the Purchaser shall
submit the items remaining in dispute for resolution to KPMG Peat
Marwick LLP (or, if such firm shall decline or is unable to act or is
not, at the time of such submission, independent of the Seller, the
Shareholders and the Purchaser, to another independent accounting firm
of international reputation mutually acceptable to the Purchaser and
the Shareholders) (either KPMG Peat Marwick LLP or such other
accounting firm being referred to herein as the "Independent
Accounting Firm"), which shall, within fifteen Business Days after
such submission, determine and report to the Purchaser and the
Shareholders upon such disputed amount, and such report shall be
final, binding and conclusive on the Seller, the Shareholders and the
Purchaser. In making any such determination, the Independent
Accounting Firm shall resolve any such disputed amount in accordance
with U.S. GAAP applied on a basis consistent with the preparation of
the Reference Balance Sheet. The fees and disbursements of the
Independent Accounting Firm shall be shared equally by the Seller and
the Shareholders, on the one hand, and the Purchaser, on the other
hand.
(iii) David Berdon & Co. LLP ("Berdon"), on behalf
of the Seller and the Shareholders, shall be permitted, during the
twenty Business Days following the earlier of (A) the failure of the
Shareholders to notify the Purchaser and the Purchaser's Accountants
of a dispute as to the amount set forth on the Closing Balance Sheet
in respect of the Inventories within fifteen Business Days after the
Purchaser's delivery of the Closing Balance Sheet to the Seller and
the Shareholders, (B) the resolution of all disputes, pursuant to
Section 2.07(b)(ii), by the Shareholders and the Purchaser's President
and COO and (C) the resolution of all disputes, pursuant to Section
2.07(b)(ii), by the Independent Accounting Firm (the earlier of such
dates being the "Inventory Valuation Resolution Date"), to review the
Closing Balance Sheet and such supporting workpapers of the
Purchaser's Accountants and books and records of the Seller relating
to the Closing Balance Sheet as Berdon
<PAGE>
shall reasonably request. The Seller and the Shareholders may dispute
any amounts reflected on the Closing Balance Sheet (other than any
amounts in respect of the Inventories), but only on the basis that the
amounts reflected on the Closing Balance Sheet (other than any amounts
in respect of the Inventories) were not arrived at in accordance with
U.S. GAAP applied on a basis consistent with the preparation of the
Reference Balance Sheet; provided, however, that the Seller and the
Shareholders shall have notified the Purchaser and the Purchaser's
Accountants in writing of each disputed item, specifying the amount
thereof in dispute and setting forth, in reasonable detail, the
basis for such dispute, within thirty Business Days of the Inventory
Valuation Resolution Date. In the event of such a dispute, Berdon
and the Purchaser's Accountants shall attempt to reconcile their
differences, and any resolution by them as to any disputed amounts
shall be final, binding and conclusive on the parties hereto. If
Berdon and the Purchaser's Accountants are unable to reach a
resolution with such effect within twenty Business Days after receipt
by the Purchaser and the Purchaser's Accountants of the Seller's and
the Shareholders' written notice of dispute, Berdon and the
Purchaser's Accountants shall submit the items remaining in dispute
for resolution to the Independent Accounting Firm, which shall, within
thirty Business Days after such submission, determine and report to
the Purchaser, the Seller and the Shareholders upon such remaining
disputed items, and such report shall be final, binding and conclusive
on the Seller, the Shareholders and the Purchaser. The fees and
disbursements of the Independent Accounting Firm shall be shared
equally by the Seller and the Shareholders, on the one hand, and the
Purchaser, on the other hand.
(iv) In acting under this Agreement, the
Purchaser's Accountants, Berdon and the Independent Accounting Firm
shall be entitled to the privileges and immunities of arbitrators.
(c) Purchase Price Adjustment. The Closing Balance
Sheet shall be deemed final for the purposes of this Section 2.07 upon
the earlier of (A) the failure of the Seller and the Shareholders to
notify the Purchaser of a dispute within thirty Business Days after
the Inventory Valuation Resolution Date, (B) the resolution of all
disputes, pursuant to Section 2.07(b)(iii), by the Purchaser's
Accountants and Berdon and (C) the resolution of all disputes,
pursuant to Section 2.07(b)(iii), by the Independent Accounting
Firm. After the Closing Balance Sheet is deemed final, a Purchase
Price adjustment shall be made as follows:
(i) in the event that the Net Assets reflected on
the Reference Balance Sheet exceeds the Net Assets reflected on the
Closing Balance Sheet, the Purchase Price shall be adjusted downward
in an amount equal to such excess, and, within three Business Days
after the Closing Balance Sheet is
<PAGE>
deemed final, the Purchaser shall deliver written notice to the
Escrow Agent, the Seller and the Shareholders specifying the amount
of such downward adjustment of the Purchase Price, and, within three
Business Days of its receipt of such notice and in accordance with the
terms of the Escrow Agreement, the Escrow Agent shall pay such amount
out of the Escrow Fund by wire transfer in immediately available funds
to an account designated by the Purchaser. In the event that the
Escrow Fund is insufficient to cover the amount of such downward
adjustment, the Escrow Agent shall pay the entire Escrow Fund by
wire transfer in immediately available funds to an account
designated by the Purchaser and, on or prior to the date of such
payment, the Seller and the Shareholders shall pay, on a joint and
several basis, by wire transfer in immediately available funds to the
same account, an amount equal to the amount of such deficiency. In
the event that the amount of funds in the Escrow Fund exceeds the
amount of the downward adjustment of the Purchase Price provided for
in the first sentence of this Section 2.07(c)(i), the Escrow Agent
shall, after paying the amount of such excess to an account designated
by the Purchaser as provided in such sentence, pay the remaining
amount of funds in the Escrow Fund by wire transfer in immediately
available funds to an account designated by the Seller;
(ii) in the event that the Net Assets reflected on
the Closing Balance Sheet exceeds the Net Assets reflected on the
Reference Balance Sheet, the Purchase Price shall be adjusted upward
in an amount equal to such excess and, within three Business Days
after the Closing Balance Sheet is deemed final, the Purchaser shall
pay the amount of such excess and the Escrow Agent shall pay the
entire Escrow Fund, in each case by wire transfer in immediately
available funds to an account designated by the Seller; and
(iii) any Purchase Price adjustment made pursuant to
this Section 2.07 shall be paid together with interest thereon from
the Closing Date to and including the date of payment at a rate equal
to the interest rate prevailing on 90 day United States Treasury Bills
as of the Closing Date.
(d) Purchase Price Adjustment Methodology. The
methodology for computing the adjustment, if any, to the Purchase
Price is illustrated in Schedule 2.07(d) hereto.
SECTION 2.08. Escrow. Prior to the Closing, the Seller, the
Shareholders and the Purchaser shall enter into an Escrow Agreement
with the Escrow Agent substantially in the form of Exhibit 2.08
hereto (the "Escrow Agreement"). Pursuant to the terms of the Escrow
Agreement, the Purchaser shall deposit the Escrow Amount in an
account to be
<PAGE>
managed and paid out by the Escrow Agent in accordance with the terms
of the Escrow Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND THE SHAREHOLDERS
As an inducement to the Purchaser to enter into this Agreement,
the Seller and the Shareholders hereby jointly and severally represent
and warrant to the Purchaser as follows:
SECTION 3.01. Organization of the Seller and Authority of the Seller
and the Shareholders. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
New York and has all necessary power and authority to enter into this
Agreement and each Ancillary Agreement, to carry out its obligations
hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The Seller is duly licensed or
qualified to do business and is in good standing in each jurisdiction
in which the properties owned or leased by it or the operation of its
business makes such licensing or qualification necessary, except for
those jurisdictions in which the failure to be so licensed or
qualified would not, singly or in the aggregate, have a Material
Adverse Effect. The execution and delivery of this Agreement and each
Ancillary Agreement by the Seller, the performance by the Seller of
its obligations hereunder and thereunder and the consummation by the
Seller of the transactions contemplated hereby and thereby have been
duly authorized by all requisite action on the part of the Seller
and the Shareholders. Each Shareholder has full right and capacity to
enter into this Agreement and the Escrow Agreement and to carry out
his obligations hereunder and thereunder. This Agreement has been
duly executed and delivered by the Seller and the Shareholders, and
(assuming due authorization, execution and delivery by the
Purchaser) this Agreement constitutes a legal, valid and binding
obligation of the Seller and each Shareholder enforceable against the
Seller and each Shareholder in accordance with its terms. Upon its
execution, the Escrow Agreement will be duly executed and delivered by
the Seller and the Shareholders and (assuming due authorization,
execution Purchaser) will constitute a legal, valid and binding
obligation of the Seller and the Shareholders enforceable against the
Seller and each Shareholder in accordance with its terms. Upon its
execution, each other Ancillary Agreement will be duly executed and
delivered by the Seller and (assuming due authorization, execution and
delivery by the Purchaser) will constitute a legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance
with its terms.
<PAGE>
SECTION 3.02. Shareholders; Subsidiaries. The shares of the
Seller's common stock owned by the Shareholders constitute all the
issued and outstanding capital stock of the Seller and are owned of
record and beneficially solely by the Shareholders free and clear of
all Encumbrances. There are no options, warrants, convertible
securities or other rights, agreements or other understandings
relating to the capital stock of the Seller or obligating the
Seller to issue or sell, or either Shareholder to sell, any shares of
capital stock of the Seller. There are no corporations, partnerships,
joint ventures, associations or other entities in which the Seller
owns, of record or beneficially, any direct or indirect equity or
other interest or any right (contingent or otherwise) to acquire
the same. The Seller is not a member of (nor is any part of the
Business conducted through) any partnership, nor is the Seller a
participant in any joint venture or similar arrangement.
SECTION 3.03. Books and Records. The minute books of the Seller for
the period since June 9, 1992 contain accurate records of all meetings
and accurately reflect all other actions taken by the shareholders,
the Board of Directors and all committees of the Board of Directors
of the Seller during such period. Complete and accurate copies of all
such minute books for such period have been provided by the Seller to
the Purchaser.
SECTION 3.04. No Conflict. Assuming that all consents, approvals,
authorizations and other actions described in Section 3.05 have
been obtained, the execution, delivery and performance of this
Agreement and each Ancillary Agreement by the Seller, and the
execution, delivery and performance of this Agreement and the Escrow
Agreement by each Shareholder, do not and will not (a) violate,
conflict with or result in the breach of any provision of the
Certificate of Incorporation or By-Laws of the Seller, (b) conflict
with or violate (or cause an event which could have a Material
Adverse Effect as a result of) any Law or Governmental Order
applicable to the Seller or any of its assets, properties or
businesses or (c) except as set forth in Section 3.04 of the
Seller's and Shareholders' Disclosure Schedule, conflict with,
result in any breach of, constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any
of the assets or properties of the Seller pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license,
permit, franchise or other instrument or arrangement to which the
Seller or either Shareholder is a party or by which any of such assets
or properties is bound.
SECTION 3.05. Governmental Consents and Approvals. The execution,
delivery and performance of this Agreement and each Ancillary
Agreement by the Seller, and the execution, delivery and performance
of this Agreement and the Escrow Agreement by each Shareholder, do
not and will not require any consent, approval, authorization or other
<PAGE>
order of, action by, filing with or notification to, any Governmental
Authority, except as required by the HSR Act.
SECTION 3.06. Financial Information; Books and Records. (a) True
and complete copies of (i) the audited balance sheet of the Seller for
each of the four fiscal years ended as of January 31, 1993, January
31, 1994, January 31, 1995 and January 31, 1996, and the related
audited statements of income, retained earnings, shareholders' equity
and statements of cash flows of the Seller, together with all related
notes and schedules thereto, accompanied by the reports thereon of
Ernst & Young LLP (collectively referred to herein as the "Financial
Statements") and (ii) the unaudited balance sheet of the Seller as of
May 3, 1996, and the related statements of income, retained earnings,
shareholders' equity and statements of cash flows of the Seller,
together with all related notes and schedules thereto (collectively
referred to herein as the "Interim Financial Statements") have been
delivered by the Seller to the Purchaser. The Reference Balance
Sheet is attached hereto as Section 3.06(a)(i) of the Seller's and
Shareholders' Disclosure Schedule. The Financial Statements
(including the Reference Balance Sheet) and the Interim Financial
Statements were prepared in accordance with the books of account and
other financial records of the Seller. The Financial Statements
(including the Reference Balance Sheet) (x) present fairly the
financial condition and results of operations of the Seller as of the
dates thereof or for the periods covered thereby, (y) have been
prepared in accordance with U.S. GAAP applied on a basis consistent
with the past practices of the Seller and throughout the periods
involved and (z) include all adjustments that are necessary for a fair
presentation of the financial condition of the Seller and the results
of the operations of the Seller as of the dates thereof and for the
periods covered thereby.
(b) The books of account and other financial records of
the Seller (i) are in all material respects complete and correct, and,
subject to normal year-end adjustments, do not contain or reflect any
material inaccuracies or discrepancies and (ii) have been maintained
in accordance with good business and accounting practices.
SECTION 3.07. No Undisclosed Liabilities. There are no
Liabilities of the Seller other than Liabilities (i) reflected or
reserved for on the Reference Balance Sheet or (ii) disclosed in
Section 3.07 of the Seller's and Shareholders' Disclosure Schedule.
The reserves reflected on the Reference Balance Sheet, other than
reserves for Liabilities relating to the Excluded Assets and the
Excluded Liabilities, are in amounts that have been established on a
basis consistent with the past practices of the Seller and in
accordance with U.S. GAAP.
SECTION 3.08. Receivables. Section 3.08 of the Seller's and
Shareholders' Disclosure Schedule is an aged list of the Receivables
as of May 3, 1996 showing separately those Receivables that as of such
date had been outstanding (i) for 45 days or less, (ii) more
<PAGE>
than 60 days, (iii) more than 90 days and (iv) more than 120 days.
Except to the extent, if any, reserved for on the Reference Balance
Sheet, all Receivables reflected on the Reference Balance Sheet arose
from, and the Receivables existing on the Closing Date will have
arisen from, the sale of Inventories to Persons not affiliated with
the Seller and in the ordinary course of the Business consistent
with past practice and, except as reserved for on the Reference
Balance Sheet, to the best knowledge of the Seller and each
Shareholder, constitute or will constitute, as the case may be, only
valid, undisputed claims of the Seller not subject to valid claims of
set-off or other defenses or counterclaims other than normal cash
discounts accrued in the ordinary course of the Business consistent
with past practice. All Receivables reflected on the Reference
Balance Sheet (subject to the reserve for bad debts reflected on the
Reference Balance Sheet) have been collected or, to the best knowledge
of the Seller and each Shareholder, are or will be good and will be
collectible, without resort to litigation or extraordinary
collection activity. To the best knowledge of the Seller and each
Shareholder, all Receivables that have arisen since the Reference
Balance Sheet Date or that will arise prior to the Closing Date will
be good and will be collectible, without resort to litigation or
extraordinary collection activity.
SECTION 3.09. Inventories. (a) Subject to amounts reserved therefor
on the Reference Balance Sheet, the values at which all Inventories
are carried on the Reference Balance Sheet reflect the historical
inventory valuation policy of the Seller of stating such
Inventories at the lower of cost (determined on the first-in, first-
out method) or market value. Except as set forth in Section 3.09 of
the Seller's and Shareholders' Disclosure Schedule, the Seller has
good and marketable title to the Inventories free and clear of all
Encumbrances. Except as set forth in Section 3.09 of the Seller's and
Shareholders' Disclosure Schedule, the Inventories do not consist of,
in any material amount, items that are obsolete, damaged or more than
nineteen months old. The Inventories do not consist of any items
held on consignment to the Seller. The Seller is not under any
obligation or liability with respect to accepting returns of items of
Inventory or merchandise in the possession of its customers other than
in the ordinary course of the Business consistent with past practice.
No clearance or extraordinary sale of the Inventories has been
conducted since the Reference Balance Sheet Date. The Seller has not
acquired or committed to acquire Inventory that is not of a quality
and quantity usable in the ordinary course of the Business within a
reasonable period of time and consistent with past practice nor has
the Seller changed the price of any Inventory except for (i) price
reductions to reflect any reduction in the cost thereof to the Seller,
(ii) reductions and increases responsive to normal competitive
conditions and consistent with the Seller's past sales practices,
(iii) increases to reflect any increase in the cost thereof to the
Seller and (iv) increases and reductions made with the written consent
of the Purchaser. Section 3.09 of the Seller's and Shareholders'
Disclosure Schedule contains a complete list of the addresses of all
warehouses and other facilities in which the Inventories are located.
<PAGE>
(b) The Inventories consist or will consist (if
acquired prior to the Closing) of items of a quality and quantity
usable or salable in the normal course of the Business. The
Inventories reflected on the Reference Balance Sheet were as of the
Reference Balance Sheet Date salable at values not less than the book
value amounts shown on the Reference Balance Sheet. The value of all
items of obsolete materials and of materials of below standard
quality has been written down to realizable market value or has been
adequately reserved for on the Reference Balance Sheet.
SECTION 3.10. Acquired Assets. Since the Reference Balance Sheet Date
all the assets of the Seller (other than the Excluded Assets),
including, without limitation, the benefit of any licenses, leases
or other agreements or arrangements, have been acquired for
consideration not less than the fair market value of such asset at
the date of such acquisition.
SECTION 3.11. Sales and Purchase Order Backlog. (a) As of August
23, 1996, open sales orders accepted by the Seller totalled
$2,350,171. Section 3.11(a) of the Seller's and Shareholders'
Disclosure Schedule lists all sales orders exceeding $30,000 per
order, which have been accepted by the Seller and which were open as
of August 23, 1996.
(b) As of August 23, 1996, open purchase orders issued
by the Seller totalled $5,275,361. Section 3.11(b) of the Seller's
and Shareholders' Disclosure Schedule lists all purchase orders
exceeding $30,000 per order, which have been issued by the Seller and
which were open as of August 23, 1996.
SECTION 3.12. Conduct in the Ordinary Course; Absence of Certain
Changes, Events and Conditions. Since the Reference Balance Sheet
Date, except as disclosed in Section 3.12 of the Seller's and
Shareholders' Disclosure Schedule, the Business has been conducted in
the ordinary course and consistent with past practice. As
amplification and not limitation of the foregoing, except as
disclosed in Section 3.12 of the Seller's and Shareholders' Disclosure
Schedule, since the Reference Balance Sheet Date, the Seller has not:
(i) permitted or allowed any of the assets
or properties (whether tangible or intangible) of the Seller to be
subjected to any Encumbrance, other than Permitted Encumbrances and
Encumbrances that will be released at or prior to the Closing;
(ii) except in the ordinary course of the
Business consistent with past practice, discharged or otherwise
obtained the release of any Encumbrance or paid or otherwise
discharged any Liability, other than liabilities reflected on the
Reference Balance Sheet and liabilities incurred in the ordinary
course of the Business consistent with past practice since the date of
the Reference Balance Sheet;
<PAGE>
(iii) written down or written up the value of any
Inventories or Receivables or revalued any assets of the Seller;
(iv) made any change in any method of accounting
or accounting practice or policy other than such changes required by
U.S. GAAP and disclosed in Section 3.12 of the Seller's and
Shareholders' Disclosure Schedule;
(v) amended, terminated, cancelled or compromised
any material claims of the Seller or waived any other rights of
substantial value to the Seller;
(vi) sold, transferred, leased, subleased, licensed
or otherwise disposed of any properties or assets, real, personal or
mixed (including, without limitation, leasehold interests and
intangible property), other than any sale in the ordinary course of
the Business consistent with past practice;
(vii) issued or sold any capital stock, notes, bonds
or other securities, or any option, warrant or other right to acquire
the same, of the Seller;
(viii) redeemed any of the capital stock or declared,
made or paid any dividends or distributions (whether in cash,
securities or other property) to the holders of capital stock of the
Seller or otherwise, other than payments of monthly dividends in the
aggregate amount of $66,000 and quarterly dividends in amounts
determined by the Shareholders and for the purposes and in amounts
consistent with past practice;
(ix) merged with, entered into a consolidation with
or acquired an interest of 5% or more in any Person or acquired a
substantial portion of the assets or business of any Person or any
division or line of business thereof, or otherwise acquired any
material assets other than in the ordinary course of the Business
consistent with past practice;
(x) made any capital expenditure or commitment for
any capital expenditure in an amount in excess of $20,000 in the
aggregate;
(xi) issued any purchase orders or otherwise agreed
to make any purchases other than in the ordinary course of the
Business consistent with past practice;
(xii) made any material changes in the customary
methods of operations of the Seller, or the Business, including,
without limitation, practices and policies relating to purchasing,
Inventories, marketing, selling and pricing;
<PAGE>
(xiii) incurred any Indebtedness other than loans
under the Seller's existing bank credit facilities for working
capital or the purchase of Inventories in the ordinary course of the
Business consistent with past practice;
(xiv) made any loan to, guaranteed any Indebtedness
of or otherwise incurred any Indebtedness on behalf of any Person
(other than advances of expenses made in the ordinary course of the
Business consistent with past practice in an aggregate amount not in
excess of $20,000);
(xv) failed to pay any creditor any amount owed to
such creditor when due which, when aggregated with all such other
amounts that the Seller has failed to pay, exceed $10,000;
(xvi) (A) granted any increase, or announced any
increase, in the wages, salaries, compensation, bonuses, incentives,
pension or other benefits payable by the Seller to any of its
employees, including, without limitation, any increase or change
pursuant to any Plan, or (B) established or increased or promised to
increase any benefits under any Plan, in either case except as
required by Law and involving ordinary increases consistent with the
past practice of the Seller;
(xvii) entered into any agreement, arrangement or
transaction with any of its directors, officers, employees or
shareholders (or with any relative, beneficiary, spouse or Affiliate
of any such Person);
(xviii) laid off any employees or implemented any
early retirement, separation or program providing early retirement
window benefits within the meaning of Section 1.401(a)-4 of the
Regulations or announced or planned any such action or program for
the future;
(xix) disclosed any secret or confidential
Intellectual Property (except by way of issuance of a patent) or
permitted to lapse or go abandoned any Intellectual Property (or any
registration or grant thereof or any application relating thereto) to
which, or under which, the Seller has any right, title, interest or
license;
(xx) allowed any permit that was issued or relates
to the Seller or otherwise relates to the Business to lapse or
terminate or failed to renew any insurance policy or permit that is
scheduled to terminate or expire within 45 calendar days of the
Closing Date;
<PAGE>
(xxi) suffered any casualty loss or damage with
respect to any of the Assets which in the aggregate have a replacement
cost of more than $50,000, unless such losses or damage shall have
been covered by insurance;
(xxii) amended, modified or consented to the
termination of any Material Contract or the Seller's rights
thereunder;
(xxiii) suffered any Material Adverse Effect; or
(xxiv) agreed, whether in writing or otherwise, to
take any of the actions specified in this Section 3.12 or granted any
options to purchase, rights of first refusal, rights of first offer or
any other similar rights with respect to any of the actions specified
in this Section 3.12, except as expressly contemplated by this
Agreement and the Ancillary Agreements.
SECTION 3.13. Litigation. Except as set forth in Section 3.13 of the
Seller's and Shareholders Disclosure Schedule (which, with respect to
each Action disclosed therein, sets forth the parties, nature of the
proceeding, date and method commenced, amount of damages or other
relief sought and, if applicable, paid or granted), there are no
Actions by or against the Seller or either Shareholder, or affecting
any of the Assets or the Business, pending before any Governmental
Authority (or, to the best knowledge of the Seller and each
Shareholder, threatened to be brought by or before any Governmental
Authority). None of the matters disclosed in Section 3.13 of the
Seller's and Shareholders' Disclosure Schedule has had or would have a
Material Adverse Effect or could affect the legality, validity or
enforceability of this Agreement, any Ancillary Agreement or the
consummation of the transactions contemplated hereby or thereby.
Neither the Seller nor any of its assets or properties, including,
without limitation, the Assets, nor either Shareholder, is subject to
any Governmental Order (or, to the best knowledge of the Seller and
each Shareholder, are there any such Governmental Orders threatened to
be imposed by any Governmental Authority) which has had or would have
a Material Adverse Effect.
SECTION 3.14. Compliance with Laws; Permits. (a) The Seller has
conducted and continues to conduct the Business in all material
respects in compliance with (i) all Governmental Orders applicable to
the Seller or any of its properties or assets, including, without
limitation, the Assets, or the Business, and (ii) except as set forth
in Section 3.23(c) of the Seller's and Shareholders' Disclosure
Schedule or where the failure to comply with such Laws would not have
a Material Adverse Effect or materially adversely affect the ability
of the Seller to conduct the Business as currently conducted, all Laws
applicable to the Seller or any of its properties or assets,
including, without limitation, the Assets, or the Business.
<PAGE>
(b) As of the Closing Date, the Seller has all permits
and licenses which are necessary to operate the Business as currently
conducted, and is in all material respects in compliance with their
terms and conditions, and (ii) all applications for renewal have been
timely filed.
SECTION 3.15. Environmental Matters. The Seller is in material
compliance with Proposition 65. Except as would not have a
Material Adverse Effect or would not materially adversely affect the
ability of the Seller to conduct the Business as it is currently
being conducted, (a) the Seller is in compliance with all other
applicable Environmental Laws and the requirements of all
environmental permits, (b) Hazardous Materials have not been
generated, used, treated, handled or stored on, transported to or
from, or released on any Leased Real Property or, to the best
knowledge of the Seller and each Shareholder, any property adjoining
any Leased Real Property, by the Seller or, to the best knowledge of
the Seller and each Shareholder, any other Person, and (c) there are
no circumstances with respect to any Leased Real Property or any Asset
or the operation of the Business that could reasonably be anticipated
(i) to form the basis of an Environmental Claim against the Seller,
any Asset or any Leased Real Property or (ii) to cause such Leased
Real Property or Asset to be subject to any restrictions on ownership,
occupancy, use or transferability under any applicable Environmental
Law.
SECTION 3.16. Material Contracts. (a) Section 3.16(a) of the
Seller's and Shareholders' Disclosure Schedule lists each of the
following contracts and agreements (including, without limitation,
oral and informal arrangements) of the Seller (such contracts and
agreements, together with all contracts, agreements, leases and
subleases for any Real Property (including, without limitation,
brokerage contracts) listed or otherwise disclosed in Section 3.18(b)
of the Seller's and Shareholders' Disclosure Schedule to which the
Seller is a party, all agreements relating to Intellectual Property
listed or otherwise disclosed on Section 3.17(a) of the Seller's
and Shareholders' Disclosure Schedule and all agreements relating to
Tangible Personal Property listed or otherwise disclosed in Section
3.19 of the Seller's and Shareholders' Disclosure Schedule,
being "Material Contracts"):
(i) each contract, agreement, invoice, purchase
order and other arrangement, for the purchase of Inventories, other
materials or personal property with any supplier or for the
furnishing of services to the Seller (other than professional
services in connection with the transactions contemplated by this
Agreement) or otherwise related to the Business (other than any
such contract, agreement, invoice, purchase order or other
arrangement for the purchase of Inventories in the ordinary course
of the Business consistent with past practice), under the terms of
which the Seller: (A) is likely to pay or otherwise give
consideration of more than $75,000 in the aggregate during the
fiscal year ending January 31, 1997 or
<PAGE>
(B) is likely to pay or otherwise give consideration of more than
$75,000 in the aggregate over the remaining term of such contract;
(ii) each contract, agreement, invoice, sales order and
other arrangement, for the sale of Inventories (other than any
such contract, agreement, invoice, sales order or other
arrangement for the sale of Inventories in the ordinary course of
the Business consistent with past practice) or other personal
property or for the furnishing of services by the Seller which:
(A) is likely to involve consideration of more than $75,000 in the
aggregate during the fiscal year ending January 31, 1997 or (B) is
likely to involve consideration of more than $75,000 in the
aggregate over the remaining term of the contract;
(iii) all contracts and agreements that limit the
ability of the Seller to compete in any line of business or with
any Person or in any geographic area or during any period of time;
(iv) all other contracts and agreements that are likely
to involve consideration of more than $75,000; and
(v) all other contracts and agreements, whether or not
made in the ordinary course of the Business, that are material to
the Seller or the conduct of the Business, or the absence of which
would have a Material Adverse Effect.
For purposes of this Section 3.16 and Sections 3.18, 3.19 and
3.20, the term "lease" shall include any and all leases,
subleases, sale/leaseback agreements or similar arrangements.
(b) Each Material Contract (i) is valid and binding on the
respective parties thereto and is in full force and effect,
(ii) is freely and fully assignable to the Purchaser without
penalty or other adverse consequences and (iii) upon consummation
of the transactions contemplated by this Agreement and the
Ancillary Agreements, except to the extent that any consents set
forth in Section 3.04 of the Seller's and Shareholders' Disclosure
Schedule are not obtained, shall continue in full force and effect
without penalty or other adverse consequence. The Seller is not
in breach of, or default under, any Material Contract.
(c) No other party to any Material Contract is in breach
thereof or default thereunder.
(d) There is no contract, agreement or other arrangement
granting any Person any preferential right to purchase, other than
in the ordinary course of the Business
<PAGE>
consistent with past practice, any of the properties or assets of
the Seller, including, without limitation, the Assets.
SECTION 3.17. Intellectual Property. (a) The Seller owns all
the Intellectual Property necessary for the conduct of the
Business as it is currently conducted. Section 3.17(a)(i) of the
Seller's and Shareholders' Disclosure Schedule sets forth a true
and complete list and a brief description, including a complete
identification of each patent and patent application and each
trademark registration or application for registration thereof and
each registered copyright, of all Owned Intellectual Property that
has been registered or as to which an application for registration
is pending. Except as set forth in Section 3.17(a)(ii) of the
Seller's and Shareholders' Disclosure Schedule, the Seller is not
the licensee of any Licensed Intellectual Property other than
Intellectual Property licensed to it in connection with custom
orders placed by customers of the Seller from time to time in the
ordinary course of the Business. The Seller is the owner of each
item of Intellectual Property described in Section 3.17(a)(i) of
the Seller's and Shareholders' Disclosure Schedule. Except as
disclosed in Section 3.17(a)(iii) of the Seller's and
Shareholders' Disclosure Schedule, the rights of the Seller in or
to such Owned Intellectual Property do not, to the best knowledge
of the Seller and each Shareholder, conflict with or infringe on
the rights of any other Person and neither the Seller nor either
Shareholder has received any claim or written notice from any
Person to such effect.
(b) Except as disclosed in Section 3.17(a)(iii) of the
Seller's and Shareholders' Disclosure Schedule all the Owned
Intellectual Property is owned by the Seller, free and clear of
any Encumbrance other than Permitted Encumbrances. No Actions
have been asserted or are pending (or, to the best knowledge of
the Seller and each Shareholder, has any such Action been
threatened) against the Seller either (i) based upon or
challenging or seeking to deny or restrict the use by the Seller
of any of the Owned Intellectual Property or (ii) alleging that
any services provided, or products manufactured or sold by the
Seller are being provided, manufactured or sold in violation of
any patents or trademarks, or any other rights of any Person.
Except as set forth in Section 3.17(b) of the Seller's and
Shareholders' Disclosure Schedule, to the best knowledge of the
Seller and each Shareholder, no Person is using any patents,
copyrights, trademarks, service marks, trade names, trade secrets
or similar property that are confusingly similar to the Owned
Intellectual Property or that infringe upon the Owned Intellectual
Property or upon the rights of the Seller therein. The Seller has
not granted any license or other right to any other Person with
respect to the Owned Intellectual Property other than to
manufacturers of Inventories in the ordinary course of the
Business to the extent necessary to permit the incorporation of
certain Owned Intellectual Property in such Inventories and the
sale by such manufacturers of damaged Inventories and seconds in
China and other countries in Asia other than Japan. The
consummation of the transactions contemplated by this Agreement
will not result in the termination or impairment of any of the
Owned Intellectual Property.
<PAGE>
(c) All rights of the Seller in each item of Owned
Intellectual Property are transferable to the Purchaser as herein
contemplated. As a result of the transactions contemplated
hereby, upon the Closing, the Purchaser shall own or possess,
without payment of any fee, all the Owned Intellectual Property.
SECTION 3.18. Real Property. (a) The Seller does not own any
real property.
(b) Section 3.18(b) of the Seller's and Shareholders'
Disclosure Schedule lists: (i) the street address of each parcel
of Leased Real Property, (ii) the identity of the lessor, lessee
and current occupant (if different from lessee) of each such
parcel of Leased Real Property, (iii) the term and final rental
payment terms of the leases pertaining to each such parcel of
Leased Real Property and (iv) the current use of each such parcel
of Leased Real Property.
(c) The Seller has not subleased any parcel or any portion
of any parcel of Leased Real Property to any other Person, nor has
the Seller assigned its interest under any lease or sublease
listed in Section 3.18(b) of the Seller's and Shareholders'
Disclosure Schedule to any third party.
(d) The Seller is in peaceful and undisturbed possession of
each parcel of Leased Real Property. The Seller has, or has
caused to be, delivered to the Purchaser correct and complete
copies of all leases and subleases listed in Section 3.18(b) of
the Seller's and Shareholders' Disclosure Schedule and any and all
ancillary documents pertaining thereto (including, but not limited
to, all amendments, consents for alterations and documents
recording variations and evidence of commencement dates and
expiration dates). With respect to each of such leases and
subleases:
(i) such lease or sublease represents the entire
agreement between the respective landlord and tenant with respect
to such property and, to the best knowledge of the Seller and each
Shareholder, such lease or sublease, together with all ancillary
documents delivered pursuant to the second sentence of this
Section 3.18(d), is legal, valid, binding, enforceable and in full
force and effect; and
(ii) the consummation of the transactions contemplated
by this Agreement will not constitute a breach or default under
such lease or sublease or otherwise give the landlord a right to
terminate such lease or sublease; neither the Seller nor either
Shareholder has received any notice of a breach or default under
such lease or sublease, which breach or default has not been
cured; and neither the Seller, nor (to the best knowledge of the
Seller and each Shareholder) any other party to such lease or
sublease, is in breach or default in any material respect, and, to
the best knowledge
<PAGE>
of the Seller and each Shareholder, no event has occurred that, with
notice or lapse of time would constitute such a breach or default or
permit termination, modification or acceleration under such lease or
sublease.
SECTION 3.19. Tangible Personal Property. (a) Section 3.19 of
the Seller's and Shareholders' Disclosure Schedule lists each
distinct group of furniture, fixtures, personalty, vehicles and
other tangible personal property (the "Tangible Personal
Property") used in the Business or owned or leased by the Seller.
(b) The Seller has the full right to exercise any renewal
options contained in the leases and subleases pertaining to the
Tangible Personal Property on the terms and conditions therein and
upon due exercise would be entitled to enjoy the use of each item
of leased Tangible Personal Property for the full term of such
renewal options.
SECTION 3.20. Assets. (a) The Seller owns, leases or has the
legal right to use all the properties and assets, including,
without limitation, the Owned Intellectual Property, the Licensed
Intellectual Property, the Leased Real Property and the Tangible
Personal Property, used or intended to be used in the conduct of
the Business or otherwise owned, leased or used by the Seller and,
with respect to contract rights, is a party to and enjoys the
right to the benefits of all contracts, agreements and other
arrangements used or intended to be used by the Seller in or
relating to the conduct of the Business, all of which properties,
assets and rights constitute Assets except for the Excluded
Assets. The Seller has good and marketable title to, or, in the
case of leased or subleased Assets, valid and subsisting leasehold
interests in, all the Assets, free and clear of all Encumbrances,
except (i) as disclosed in Section 3.17(a)(iii) of the Seller's
and Shareholders' Disclosure Schedule; and (ii) Permitted
Encumbrances.
(b) The Assets and the Excluded Assets constitute all the
properties, assets and rights forming a part of, used, held or
intended to be used in, and all such properties, assets and rights
as are necessary in the conduct of, the Business. At all times
since the Reference Balance Sheet Date, the Seller has caused the
Assets to be maintained in accordance with good business practice,
and all the Assets are in good operating condition and repair and
are suitable for the purposes for which they are used and
intended.
(c) The Seller has the complete and unrestricted power and
unqualified right to sell, assign, transfer, convey and deliver
the Assets to the Purchaser without penalty or other adverse
consequences. Following the consummation of the transactions
contemplated by this Agreement and the execution of the
instruments of transfer contemplated by this Agreement, the
Purchaser will own, with good, valid and marketable title, or
lease, under valid and subsisting leases, or otherwise acquire the
interests of the Seller in the Assets, free and clear of any
Encumbrances, other than Permitted
<PAGE>
Encumbrances, and without incurring any penalty or other adverse
consequence, including, without limitation, any increase in rentals,
royalties, or license or other fees imposed as a result of, or arising
from, the consummation of the transactions contemplated by this
Agreement.
SECTION 3.21. Customers. (a) Except as disclosed in Section
3.21(a) of the Seller's and Shareholders' Disclosure Schedule,
neither the Seller nor either Shareholder has received any notice
or has any reason to believe that any significant customer of the
Seller has ceased, or will cease, to use the products of the
Seller or has substantially reduced, or will substantially reduce,
the use of such products at any time.
(b) Each customer included on the Consignment Customer List
has entered into a consignment agreement with the Seller on
customary terms that (i) is valid and binding on the respective
parties thereto and is in full force and effect, (ii) is freely
and fully assignable to the Purchaser without penalty or other
adverse consequences and (iii) upon consummation of the
transactions contemplated by this Agreement and the Ancillary
Agreements shall continue in full force and effect without penalty
or other adverse consequence. The Seller (i) has a first
priority, perfected security interest in all such merchandise held
on consignment and (ii) has full access to, and the right to
inspect, such merchandise during normal business hours.
SECTION 3.22. Suppliers. Neither the Seller nor either
Shareholder has received any notice or has any reason to believe
that any supplier included on the Supplier List will not sell
merchandise or provide services to the Business at any time after
the Closing Date in the same volume and on terms and conditions
similar to those imposed on current sales to the Business, subject
to general and customary price increases.
SECTION 3.23. Employee Benefit Matters. (a) Plans and Material
Documents. Section 3.23(a) of the Seller's and Shareholders'
Disclosure Schedule lists (i) all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental
retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other
contracts or agreements, whether legally enforceable or not, to
which the Seller is a party, with respect to which the Seller has
any obligation or which are maintained, contributed to or
sponsored by the Seller for the benefit of any current or former
employee, officer or director of the Seller (other than the
Seller's 401(k) Plan), (ii) each employee benefit plan for which
the Seller could incur liability under Section 4069 of ERISA in
the event such plan has been or were to be terminated, (iii) any
plan in respect of which the Seller could incur liability under
Section 4212(c) of ERISA and (iv) any contracts, arrangements or
understandings between the Seller or any of its Affiliates
<PAGE>
and any employee of the Seller including, without limitation, any
contracts, arrangements or understandings relating to a sale of
the Seller (collectively, the "Plans"). Section 3.23(a) of the
Seller's and Shareholders' Disclosure Schedule specifies those
Plans that are in writing and the Seller has furnished the
Purchaser with a complete and accurate copy of each written Plan,
a description of each unwritten Plan, and a complete and accurate
copy of each material document prepared in connection with each
such Plan including, without limitation, (i) a copy of each trust
or other funding arrangement, (ii) the most recent summary plan
description and summary of material modifications, (iii) the most
recently filed IRS Form 5500, (iv) the most recently received IRS
determination letter for each such Plan, and (v) the most recently
prepared actuarial report and financial statement in connection
with each such Plan. Except as disclosed on Section 3.23(a) of
the Seller's and Shareholders' Disclosure Schedule, there are no
other employee benefit plans, programs, arrangements or
agreements, whether formal or informal, whether in writing or not,
to which the Seller is a party, with respect to which the Seller
has any obligation or which are maintained, contributed to or
sponsored by the Seller for the benefit of any current or former
employee, officer or director of the Seller. The Seller has no
express or, to the best knowledge of the Seller and each
Shareholder, implied commitment, whether legally enforceable or
not, (i) to create, incur liability with respect to or cause to
exist any other employee benefit plan, program or arrangement,
(ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify,
change or terminate any Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.
(b) Absence of Certain Types of Plans. None of the Plans is
subject to Title IV of ERISA, and the Seller has never maintained,
sponsored or contributed to any employee pension benefit plan
subject to Title IV of ERISA.
(c) Compliance with Applicable Law. Except as disclosed in
Section 3.23(c) of the Seller's and Shareholders' Disclosure
Schedule, each Plan is now and always has been operated in all
material respects in accordance with the requirements of all
applicable Law, including, without limitation, ERISA and the Code,
and all persons who participate in the operation of such Plans and
all Plan "fiduciaries" (within the meaning of Section 3(21) of
ERISA) have acted in all material respects in accordance with the
provisions of all applicable Law, including, without limitation,
ERISA and the Code. The Seller has performed all material
obligations required to be performed by it under, is not in any
respect in material default under or in material violation of, and
to the best knowledge of the Seller and each Shareholder, there
has been no material default or material violation by any party
to, any Plan. No legal action, suit or claim is pending or
threatened with respect to any Plan (other than claims for
benefits in the ordinary course) and no fact or event exists that
could reasonably be expected to give rise to any such action, suit
or claim.
<PAGE>
(d) Qualification of Certain Plans. Each Plan which is
intended to be qualified under Section 401(a) of the Code or
Section 401(k) of the Code has received a favorable determination
letter from the IRS after 1985 that it is so qualified and each
trust established in connection with any Plan which is intended to
be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS after 1985
that it is so exempt and, to the best knowledge of the Seller and
each Shareholder, no fact or event has occurred since the date of
such determination letter from the IRS to adversely affect the
qualified status of any such Plan or the exempt status of any such
trust.
(e) Absence of Certain Liabilities and Events. There has
been no prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) with respect to any Plan
that has resulted or could reasonably be expected to result in a
material liability. The Seller has not incurred any liability for
any excise tax arising under Section 4971, 4972, 4980 or 4980B of
the Code and, to the best knowledge of the Seller and each
Shareholder, no fact or event exists which could give rise to any
such liability.
(f) Plan Contributions and Funding. All contributions,
premiums or payments required to be made with respect to any Plan
have been made on or before their due dates. All such
contributions have been fully deducted for income tax purposes and
no such deduction has been challenged or disallowed by any
government entity and, to the best knowledge of the Seller and
each Shareholder, no fact or event exists which could give rise to
any such challenge or disallowance.
SECTION 3.24. Labor Matters. (a) The Seller is not a party to
any collective bargaining agreement or other labor union contract
applicable to persons employed by the Seller or in the Business
and, to the best knowledge of the Seller and each Shareholder,
currently there are no material workplace disputes or
organizational campaigns, petitions or other unionization
activities seeking recognition of a collective bargaining unit
which could affect the Seller; (b) there are no unfair labor
practice complaints pending against the Seller before the National
Labor Relations Board or any other Governmental Authority or any
current union representation questions involving employees of the
Seller that would have a Material Adverse Effect; (c) the Seller
is currently substantially in compliance with all applicable Laws
relating to the employment of labor, including those related to
wages, hours, collective bargaining and the payment and
withholding of taxes and other sums as required by the appropriate
Governmental Authority and has withheld and paid to the
appropriate Governmental Authority or is holding for payment not
yet due to such Governmental Authority all amounts required to be
withheld from employees of the Seller and is not liable for any
arrears of wages, taxes, penalties or other sums for failure to
comply with any of the foregoing; (d) the Seller has paid in full
to all its employees or adequately accrued for in accordance with
U.S. GAAP consistently applied all wages, salaries, commissions,
bonuses, benefits and other compensation due to or on behalf of
such
<PAGE>
employees; (e) there is no claim with respect to payment of wages,
salary or overtime pay that has been asserted or is now pending
or, to the best knowledge of the Seller and each Shareholder,
threatened before any Governmental Authority with respect to any
Persons currently or formerly employed by the Seller; (f) the
Seller is not is a party to, or otherwise bound by, any consent
decree with, or citation by, any Governmental Authority relating to
employees or employment practices; (g) there is no charge or
proceeding with respect to a violation of any occupational safety or
health standards that has been asserted or is now pending or, to the
best knowledge of the Seller and each Shareholder, threatened with
respect to the Seller; and (h) there is no charge of discrimination
in employment or employment practices, for any reason, including,
without limitation, age, gender, race, religion or other legally
protected category, which has been asserted or is now pending or, to
the best knowledge of the Seller and each Shareholder, threatened
before the United States Equal Employment Opportunity Commission,
or any other Governmental Authority in any jurisdiction in which the
Seller has employed or currently employs any Person.
SECTION 3.25. Key Employees. Section 3.25 of the Seller's and
Shareholders' Disclosure Schedule lists the name, place of
employment, the current annual salary rates, bonuses, deferred or
contingent compensation, pension, "golden parachute" and other
like benefits paid or payable (in cash or otherwise) in 1993,
1994, 1995 and 1996, the date of employment and a description of
position and job function of each current salaried employee,
officer, director, consultant or agent of the Seller whose annual
compensation exceeded (or, in 1996, is expected to exceed)
$50,000.
SECTION 3.26. Certain Interests. (a) Except as disclosed in
Section 3.26(a) of the Seller's and Shareholders' Disclosure
Schedule, no shareholder, officer or director of the Seller and no
relative or spouse (or relative of such spouse) who resides with,
or is a dependent of, any such shareholder, officer or director:
(i) has any direct or indirect financial interest in
any competitor, supplier or customer of the Seller; provided,
however, that the ownership of securities representing no more
than one percent of the outstanding voting power of any
competitor, supplier or customer, and which are also listed on any
national securities exchange or traded actively in the national
over-the-counter market, shall not be deemed to be a "financial
interest" so long as the Person owning such securities has no
other connection or relationship with such competitor, supplier or
customer;
(ii) owns, directly or indirectly, in whole or in part,
or has any other interest in any tangible or intangible property
which the Seller uses or has used in the conduct of the Business
or otherwise; or
<PAGE>
(iii) has outstanding any Indebtedness to the Seller
(other than advances of expenses made in the ordinary course of
the Business consistent with past practice in an aggregate amount
not in excess of $20,000).
(b) Except as disclosed in Section 3.26(b) of the Seller's
and Shareholders' Disclosure Schedule, the Seller has no Liability
or any other obligation of any nature whatsoever to, any officer,
director or shareholder of the Seller or to any relative or spouse
(or relative of such spouse) who resides with, or is a dependent
of, any such officer, director or shareholder.
SECTION 3.27. Taxes. (a) (i) All returns and reports in respect
of Taxes required to be filed with respect to the Seller or the
Business have been timely filed; (ii) all Taxes required to be
shown on such returns and reports or otherwise due have been
timely paid; (iii) all such returns and reports are true, correct
and complete in all material respects; (iv) no adjustment relating
to such returns has been proposed formally or informally by any
Tax authority and, to the best knowledge of the Seller and each
Shareholder, no basis exists for any such adjustment; (v) there
are no pending or, to the best knowledge of the Seller and each
Shareholder, threatened actions or proceedings for the assessment
or collection of Taxes against the Seller or (insofar as either
relates to the activities or income of the Seller or the Business
or could result in liability of the Seller on the basis of joint
and/or several liability) any corporation that was includible in
the filing of a return with the Seller on a consolidated or
combined basis; (vi) no consent under Section 341(f) of the Code
has been filed with respect to the Seller; (vii) there are no Tax
liens on any assets of the Seller or of the Business; and (viii)
since the Reference Balance Sheet Date, neither the Seller nor
either Shareholder has made any express or deemed election or
settled or compromised any liability with respect to Taxes of the
Seller or that arise as a result of the flow through of items of
income or loss from the Seller due to the Seller's S Election (or
comparable election under state or local law). At all times since
February 1, 1987, the Seller has had in effect (i) an S Election,
(ii) a comparable state law election in each state in which it
conducts business and (iii) a comparable local law election in
each locality in which it both conducts business and is subject to
a local income tax. The Seller has not received a Revenue Agent
Report or other comparable document of the Internal Revenue
Service including, without limitation, a 30-day letter or a notice
of deficiency or comparable notification from a state or local tax
authority proposing to disallow such S Election (or comparable
state or local law election) for any taxable year.
(b) There are no outstanding waivers or agreements extending
the statute of limitations for any period with respect to any Tax
to which the Seller or the Business may be subject; there are no
requests for information currently outstanding that could affect
the Taxes of the Seller or the Business; and to the best knowledge
of the Seller and each Shareholder, there are no proposed
reassessments of any property owned by the Seller or
<PAGE>
other proposals that could increase the amount of any Tax to which
the Seller or the Business would be subject.
(c) For purposes of determining whether the conditions to
Closing have been satisfied (but not for purposes of the Seller's
and the Shareholders' indemnification of the Purchaser pursuant to
Section 6.01(a)), the representations in this Section 3.27 shall
apply only with respect to items that would have a Material
Adverse Effect on the Purchaser or the Business. For purposes of
the Seller's and the Shareholders' indemnification of the
Purchaser pursuant to Section 6.01(a), the representations in
Section 3.27 shall be deemed to have been made with no exception.
(d) On the Reference Balance Sheet, reserves and allowances
have been provided, and on the Closing Balance Sheet reserves and
allowances will be provided, in each case adequate to satisfy all
Liabilities for Taxes relating to the Business for periods through
the Reference Balance Sheet Date and the Closing Date,
respectively (without regard to the materiality thereof).
SECTION 3.28. Insurance. (a) Section 3.28(a) of the Seller's
and Shareholders' Disclosure Schedule sets forth the following
information with respect to each insurance policy (including
policies providing property, casualty, liability, workers'
compensation, and bond and surety arrangements) under which the
Seller has been an insured, a named insured or otherwise the
principal beneficiary of coverage at any time within the past
three years:
(i) the name, address and telephone number of the agent
or broker;
(ii) the name of the insurer and the names of the
principal insured and each named insured;
(iii) the policy number and the period of coverage;
(iv) the type, scope (including an indication of whether
the coverage was on a claims made, occurrence or other basis) and
amount (including a description of how deductibles, retentions and
aggregates are calculated and operate) of coverage; and
(v) the premium charged for the policy, including,
without limitation, a description of any retroactive premium
adjustments or other loss-sharing arrangements.
<PAGE>
(b) With respect to each such insurance policy: (i) except
for policies that have expired under their terms in the ordinary
course, is in full force and effect; (ii) the Seller is not in
breach or default (including any breach or default with respect to
the payment of premiums or the giving of notice), and no event has
occurred which, with notice or the lapse of time, would constitute
such a breach or default or permit termination or modification,
under the policy; (iii) no party to the policy has repudiated, or
given notice of an intent to repudiate, any provision thereof and
(iv) to the best knowledge of the Seller and each Shareholder, no
insurer on the policy has been declared insolvent or placed into
receivership, conservatorship or liquidation.
(c) All material assets, properties and risks of the
Business and the Seller are, and for the past five years have
been, covered by valid and, except for policies that have expired
under their terms in the ordinary course, currently effective
insurance policies or binders of insurance (including, without
limitation, general liability insurance, property insurance and
workers' compensation insurance) issued in favor of the Seller, in
each case with responsible insurance companies, in such types and
amounts and covering such risks as are consistent with customary
practices and standards of companies engaged in businesses and
operations similar to those of the Seller.
(d) At no time subsequent to January 31, 1996 has the Seller
(i) been denied any insurance or indemnity bond coverage which it
has requested, (ii) made any material reduction in the scope or
amount of its insurance coverage, or received notice from any of
its insurance carriers that any insurance premiums will be subject
to increase in an amount materially disproportionate to the amount
of the increases with respect thereto (or with respect to similar
insurance) in prior years or that any insurance coverage listed in
Section 3.28(a) of the Seller's and Shareholders' Disclosure
Schedule will not be available in the future substantially on the
same terms as are now in effect or (iii) suffered any
extraordinary increase in premium for renewed coverage. Since
January 31, 1996 no insurance carrier has cancelled, failed to
renew or materially reduced any insurance coverage for the Seller
or given any notice or other indication of its intention to
cancel, not renew or reduce any such coverage.
(e) At the time of the Closing, all insurance policies
currently in effect will be outstanding and duly in force.
(f) All of the Assets are insurable on customary terms at
commercially reasonable rates and no Asset will cease to be
insurable on terms substantially similar to those in effect as of
the date hereof as a result of the consummation of the
transactions contemplated by this Agreement.
<PAGE>
SECTION 3.29. Accounts; Lockboxes; Safe Deposit Boxes; Powers of
Attorney. Section 3.29 of the Seller's and Shareholders'
Disclosure Schedule is a true and complete list of (i) the names
of each bank, savings and loan association, securities or
commodities broker or other financial institution in which the
Seller has an account, including cash contribution accounts, and
the names of all persons authorized to draw thereon or have access
thereto, (ii) the location of all lockboxes and safe deposit boxes
of the Seller and the names of all Persons authorized to draw
thereon or have access thereto and (iii) the names of all Persons,
if any, holding powers of attorney from the Seller relating to the
Business or the Seller. At the time of the Closing, the Seller
shall not have any such account, lockbox or safe deposit box other
than those listed in Section 3.29 of the Seller's and
Shareholders' Disclosure Schedule, nor shall any additional Person
have been authorized, from the date of this Agreement, to draw
thereon or have access thereto or to hold any such power of
attorney, without the prior written consent of the Purchaser.
Except as disclosed in Section 3.29 of the Seller's and
Shareholders' Disclosure Schedule, the Seller has not commingled
monies or accounts of the Seller with other monies or accounts of
the Shareholders or any Affiliates of the Seller. At the time of
the Closing, all monies and accounts of the Seller shall be held
by, and be accessible only to, the Seller.
SECTION 3.30. Affiliated Parties. (a) Rego Corporation, a New
York corporation ("Rego Corp."), does not own any asset that
constitutes any portion of the Assets or the Business other than
its rights as tenant under the Agreement of Lease, dated as of May
16, 1989 (the "Rego Lease"), between Rego Corp. and 495 Corporate
Center Associates, a New York limited partnership. None of the
other Persons listed on Section 3.30 of the Seller's and
Shareholders' Disclosure Schedule or any other Person owns any
asset that constitutes any portion of the Assets or the Business.
SECTION 3.31. Full Disclosure. (a) Neither the Seller nor
either Shareholder is aware of any facts pertaining to the Seller
or the Business which materially and adversely affect the Seller
or the Business or which are likely in the future to materially
and adversely affect the Seller or the Business and which have not
been disclosed in this Agreement, the Seller's and Shareholders'
Disclosure Schedule or the Financial Statements or otherwise
disclosed to the Purchaser by the Seller in writing.
(b) No representation or warranty of the Seller or either
Shareholder in this Agreement, or in any statement or certificate
furnished or to be furnished to the Purchaser pursuant to this
Agreement, or in connection with the transactions contemplated by
this Agreement, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not
misleading.
<PAGE>
SECTION 3.32. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement or
the Ancillary Agreements based upon arrangements made by or on
behalf of the Seller or either Shareholder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Seller and the Shareholders to enter
into this Agreement, the Purchaser hereby represents and warrants
to the Seller and the Shareholders as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York and has all
necessary corporate power and authority to enter into this
Agreement, the Assumption Agreement and the Escrow Agreement, to
carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement, the Assumption Agreement
and the Escrow Agreement by the Purchaser, the performance by the
Purchaser of its obligations hereunder and thereunder and the
consummation by the Purchaser of the transactions contemplated
hereby and thereby have been duly authorized by all requisite
action on the part of the Purchaser. This Agreement has been, and
upon its execution each of the Assumption Agreement and the Escrow
Agreement will be, duly executed and delivered by the Purchaser,
and (assuming due authorization, execution and delivery of each of
this Agreement and the Escrow Agreement by the Seller and the
Shareholders and due authorization, execution and delivery of the
Assumption Agreement by the Seller) this Agreement constitutes,
and upon its execution each of the Assumption Agreement and the
Escrow Agreement will constitute, legal, valid and binding
obligations of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms.
SECTION 4.02. No Conflict. Assuming compliance with the
requirements of the HSR Act and the making and obtaining of all
filings, notifications, consents, approvals, authorizations and
other actions referred to in Section 4.03, except as may result
from any facts or circumstances relating solely to the Seller or
either Shareholder, the execution, delivery and performance of
this Agreement, the Assumption Agreement and the Escrow Agreement
by the Purchaser, do not and will not (a) violate, conflict with
or result in the breach of any provision of the Certificate of
Incorporation or By-Laws of the Purchaser, (b) conflict with or
violate any Law or Governmental Order applicable to the Purchaser
or
<PAGE>
(c) except as set forth in Section 4.02(c) of the Purchaser's
Disclosure Schedule, conflict with, or result in any breach of,
constitute a default (or event which with the giving of notice or
lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation
of, or result in the creation of any Encumbrance on any of the
assets or properties of the Purchaser pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument or arrangement to
which the Purchaser is a party or by which any of such assets or
properties is bound, which would have a material adverse effect on
the ability of the Purchaser to consummate the transactions
contemplated by this Agreement, the Assumption Agreement or the
Escrow Agreement.
SECTION 4.03. Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement, the
Assumption Agreement and the Escrow Agreement by the Purchaser do
not and will not require any consent, approval, authorization or
other order of, action by, filing with, or notification to, any
Governmental Authority, except as required by the HSR Act.
SECTION 4.04. Brokers. Except for Morgan Stanley & Co.
Incorporated, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Purchaser.
The Purchaser is solely responsible for payment of the fees and
expenses of Morgan Stanley & Co. Incorporated.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing. (a) The
Seller and each Shareholder covenant and agree that, between the
date hereof and the Closing, the Seller shall not conduct the
Business other than in the ordinary course and consistent with the
Seller's prior practice. Without limiting the generality of the
foregoing, the Seller shall (i) continue its advertising and
promotional activities, and pricing and purchasing policies, in
accordance with past practice; (ii) not shorten or lengthen the
customary payment cycles for any of its payables or receivables;
(iii) use its reasonable best efforts to (A) preserve intact its
business organization and the business organization of the
Business, (B) keep available to the Purchaser the services of the
employees of the Seller, (C) continue in full force and effect
without material modification all existing policies or binders of
insurance currently maintained in respect of the Seller and the
Business and (D) preserve its current relationships with its
customers, suppliers and other persons with which it has
significant business
<PAGE>
relationships; (iv) exercise, but only after notice to the
Purchaser and receipt of the Purchaser's prior written approval,
any rights of renewal pursuant to the terms of any of the leases or
subleases set forth in Section 3.18(b) of the Seller's and
Shareholders' Disclosure Schedule which by their terms would
otherwise expire; and (v) not engage in any practice, take any
action, fail to take any action or enter into any transaction
which could cause any representation or warranty of the Seller or
either Shareholder to be untrue or result in a breach of any
covenant made by the Seller or either Shareholder in this Agreement.
(b) Between the date hereof and the Closing, the Seller
shall promptly deliver to the Purchaser copies of (i) each
purchase order issued by the Seller and (ii) each sales order (A)
received from one of the Seller's thirty most significant
customers (determined by reference to the Customer List) or (B)
requiring payment to the Seller of more than $40,000.
(c) The Seller and each Shareholder covenant and agree that,
prior to the Closing, without the prior written consent of the
Purchaser, the Seller will not do any of the things enumerated in
the second sentence of Section 3.12 (including, without
limitation, clauses (i) through (xxiv) thereof).
SECTION 5.02. Access to Information. (a) From the date hereof
until the Closing, including, without limitation, in connection
with the Audit, upon reasonable notice, the Seller and each
Shareholder shall and shall cause each of the Seller's' officers,
directors, employees, agents, accountants and counsel to:
(i) afford the officers, employees and authorized agents,
accountants, counsel, financing sources and representatives of the
Purchaser reasonable access, and in a manner that will not
interfere unreasonably with the Seller's operations, to the
offices, properties, plants, other facilities, books and records
of the Seller (including, without limitation, any merchandise held
by customers of the Seller on consignment and any records relating
thereto) and to those officers, directors, employees, agents,
accountants and counsel of the Seller who have any knowledge
relating to the Seller or the Business, and (ii) furnish to the
officers, employees and authorized agents, accountants, counsel,
financing sources and representatives of the Purchaser such
additional financial and operating data and other information
regarding the Business and the assets, properties and goodwill of
the Seller as the Purchaser may from time to time reasonably
request.
(b) In order to facilitate the resolution of any claims made
against or incurred by the Seller prior to the Closing, for a
period of seven years after the Closing, the Purchaser shall
(i) retain the books and records of the Seller which are
transferred to the Purchaser pursuant to this Agreement relating
to periods prior to the Closing in a manner reasonably consistent
with the prior practices of the Seller and (ii) upon reasonable
notice, afford the officers and employees of the Seller and the
authorized agents and representatives
<PAGE>
of the Seller and each Shareholder, reasonable access (including
the right to make, at the Seller's or such Shareholder's expense,
photocopies), during normal business hours, to such books and
records.
(c) In order to facilitate the resolution of any claims made
by or against or incurred by the Purchaser after the Closing or
for any other reasonable purpose, for a period of seven years
following the Closing, the Seller or the Shareholders shall (i)
retain all books and records of the Seller which are not
transferred to the Purchaser pursuant to this Agreement and which
relate to the Seller, its operations or the Business for periods
prior to the Closing and which shall not otherwise have been
delivered to the Purchaser and (ii) upon reasonable notice, afford
the officers, employees and authorized agents and representatives
of the Purchaser, reasonable access (including the right to make
photocopies at the expense of the Purchaser), during normal
business hours, to such books and records.
SECTION 5.03. Confidentiality. The Seller and each Shareholder
agree to, and will cause their respective agents, representatives
and Affiliates, and, in the case of the Seller, the Seller's
employees, officers and directors, to: (i) treat and hold as
confidential (and not disclose or provide access to any Person to)
all information relating to trade secrets, processes, patent or
trademark applications, product development, price, customer and
supplier lists, pricing and marketing plans, policies and
strategies, operations methods, product development techniques,
business acquisition plans, new personnel acquisition plans and
any other confidential information with respect to the Business or
the Seller, (ii) in the event that the Seller, either Shareholder
or any such agent, representative, Affiliate, employee, officer or
director becomes legally compelled to disclose any such
information, provide the Purchaser with prompt written notice of
such requirement so that the Purchaser may seek a protective order
or other remedy or waive compliance with this Section 5.03,
(iii) in the event that such protective order or other remedy is
not obtained, or the Purchaser waives compliance with this Section
5.03, furnish only that portion of such confidential information
which is legally required to be provided and exercise its best
efforts to obtain assurances that confidential treatment will be
accorded such information, and (iv) promptly furnish (prior to,
at, or as soon as practicable following, the Closing) to the
Purchaser any and all copies (in whatever form or medium) of all
such confidential information then in the possession of the
Seller, either Shareholder or any of their agents, representatives
or Affiliates, and, in the case of the Seller, the Seller's
employees, officers and directors, and destroy any and all
additional copies then in the possession of the Seller, either
Shareholder or any of their agents, representatives or Affiliates,
and, in the case of the Seller, the Seller's employees, officers
and directors, of such information and of any analyses,
compilations, studies or other documents prepared, in whole or in
part, on the basis thereof; provided, however, that this sentence
shall not apply to any information that, at the time of
disclosure, is available publicly and was not disclosed in breach
of this Agreement by the Seller, either Shareholder, their agents,
representatives or Affiliates, or, in the case of the Seller, the
<PAGE>
Seller's employees, officers or directors; provided further that
specific information shall not be deemed to be within the
foregoing exception merely because it is embraced in general
disclosures in the public domain.
SECTION 5.04. Regulatory and Other Authorizations; Notices and
Consents. (a) The Seller and each Shareholder shall use their
reasonable best efforts to obtain all authorizations, consents,
orders and approvals of all Governmental Authorities and officials
that may be or become necessary for their execution and delivery
of, and the performance of their obligations pursuant to, this
Agreement and the Escrow Agreement and, in the case of the Seller,
the Bill of Sale and the Assumption Agreement, and will cooperate
fully with the Purchaser in promptly seeking to obtain all such
authorizations, consents, orders and approvals. Each party hereto
agrees to make an appropriate filing, if necessary, pursuant to
the HSR Act with respect to the transactions contemplated by this
Agreement as promptly as practicable after the date hereof and to
supply as promptly as practicable to the appropriate Governmental
Authorities any additional information and documentary material
that may be requested pursuant to the HSR Act.
(b) The Seller shall promptly give notices to the third
parties identified in Section 3.04 of the Seller's and
Shareholders' Disclosure Schedule, and the Seller and each
Shareholder shall use reasonable best efforts to obtain third
party consents or estoppel certificates, as the case may be, from
each of such parties.
(c) The Purchaser shall cooperate and use all reasonable
efforts to assist the Seller and the Shareholders in giving such
notices and obtaining such consents and estoppel certificates;
provided, however, that the Purchaser shall have no obligation to
give any guarantee or other consideration of any nature in
connection with any such notice, consent or estoppel certificate
or to consent to any change in the terms of any Material Contract
which the Purchaser in its sole and absolute discretion may deem
adverse to the interests of the Purchaser or the Business.
(d) To the best knowledge of the Seller and each
Shareholder, there is no reason why all the consents, approvals
and authorizations listed in Section 3.04 of the Seller's and
Shareholders' Disclosure Schedule will not be received.
(e) The Seller, each Shareholder and the Purchaser agree
that, in the event any consent, approval or authorization listed
in Section 3.04 of the Seller's and Shareholders' Disclosure
Schedule or otherwise necessary or desirable to preserve for the
Business or the Purchaser any right or benefit under any lease,
license, contract, commitment or other agreement or arrangement to
which the Seller is a party is not obtained prior to the Closing,
the Seller and each Shareholder will, subsequent to the Closing,
cooperate with the Purchaser in attempting to obtain such consent,
approval or authorization as promptly thereafter as
<PAGE>
practicable. If such consent, approval or authorization cannot be
obtained, the Seller and each Shareholder will use their reasonable
best efforts to provide the Purchaser with the rights and benefits of
the affected lease, license, contract, commitment or other agreement
or arrangement for the term of such lease, license, contract or
other agreement or arrangement, and, if the Seller or either
Shareholder provides such rights and benefits, the Purchaser shall
assume the obligations and burdens thereunder.
SECTION 5.05. Notice of Developments. Prior to the Closing, the
Seller and each Shareholder shall promptly notify the Purchaser in
writing of (a) all events, circumstances, facts and occurrences
arising subsequent to the date of this Agreement which could
result in any breach of a representation or warranty or covenant
of the Seller or either Shareholder in this Agreement or which
could have the effect of making any representation or warranty of
the Seller or either Shareholder in this Agreement untrue or
incorrect in any respect and (b) all other material developments
adversely affecting the assets, Liabilities, business, financial
condition, operations, results of operations, customer or supplier
relations, employee relations, projections or prospects of the
Seller or the Business.
SECTION 5.06. No Solicitation or Negotiation. The Seller and
each Shareholder agree that between the date of this Agreement and
the earlier of (i) the Closing and (ii) the termination of this
Agreement, neither the Seller nor either Shareholder nor any of
their respective agents, representatives and Affiliates, nor any
employees, officers or directors of the Seller, will (a) solicit,
initiate, consider, encourage or accept any other proposals or
offers from any Person (i) relating to any acquisition or purchase
of all or any portion of the capital stock of the Seller or assets
of the Seller (other than Inventories or other assets to be sold
in the ordinary course of the Business consistent with past
practice), (ii) to enter into any business combination with the
Seller or (iii) to enter into any other extraordinary business
transaction involving or otherwise relating to the Seller, or (b)
participate in any discussions, conversations, negotiations or
other communications regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate in any way,
assist or participate in, facilitate or encourage any effort or
attempt by any other Person to seek to do any of the foregoing.
The Seller and each Shareholder immediately shall cease and cause
to be terminated all existing discussions, conversations,
negotiations and other communications with any Persons conducted
heretofore with respect to any of the foregoing. The Seller and
each Shareholder shall notify the Purchaser promptly if any such
proposal or offer, or any inquiry or other contact with any Person
with respect thereto, is made and shall provide such information
regarding such proposal, offer, inquiry or contact as the
Purchaser may reasonably request. The Seller and each Shareholder
agrees not to, without the prior written consent of the Purchaser,
release any Person from, or waive any provision of, any
confidentiality or standstill agreement to which the Seller or
either Shareholder is a party.
<PAGE>
SECTION 5.07. Use of Intellectual Property. (a) From and after
the Closing, neither the Seller nor either Shareholder shall use
any of the Owned Intellectual Property or the Licensed
Intellectual Property.
(b) On the Closing Date the Seller shall, and the
Shareholders shall cause Rego Corp. and any other Affiliate of
either Shareholder that uses the word "THC" or "Rego" as part of
its corporate name (Rego Corp. or any such Affiliate being
referred to herein as a "Rego Affiliate") to, change its corporate
name, and amend its Certificate of Incorporation (or equivalent
organizational documents) accordingly, to one not using any
trademark, service mark, trade dress, logo, trade name or
corporate name contained in the Owned Intellectual Property or the
Licensed Intellectual Property or any trademark, service mark,
trade dress, logo, trade name or corporate name similar or related
thereto (a "Rego-Unrelated Name"). As promptly as practicable
following the Closing, the Seller and each Shareholder shall, and
the Shareholders shall cause each Rego Affiliate to, remove or
obliterate any Owned Intellectual Property or Licensed
Intellectual Property from letterheads and other materials
remaining in its or their possession or under its or their
control, and the Seller and each Shareholder shall not, and the
Shareholders shall cause each Rego Affiliate not to, use or put
into use after the Closing any materials that bear any trademark,
service mark, trade dress, logo, trade name or corporate name
contained in the Owned Intellectual Property or the Licensed
Intellectual Property or any trademark, service mark, trade dress,
logo, trade name or corporate name similar or related thereto.
SECTION 5.08. Non-Competition. (a) In partial consideration of
the payment of the Purchase Price, as set forth in Section 2.03,
the Seller and each Shareholder agree that, for a period of three
years after the Closing (the "Restricted Period"), neither the
Seller nor either Shareholder shall engage, directly or
indirectly, in any business anywhere in the world that
manufactures, produces or supplies Tabletop Products or related
services to customers in the foodservice or consumer products
industry or, without the prior written consent of the Purchaser,
directly or indirectly, own an interest in, manage, operate, join,
control, lend money or render financial or other assistance to or
participate in or be connected with, as a partner, stockholder,
consultant or otherwise, any Person that competes with the
Purchaser or the Business in manufacturing, producing or supplying
Tabletop Products or related services to customers in the
foodservice or consumer products industry; provided, however,
that, for the purposes of this Section 5.08, (i) ownership of
securities having no more than one percent of the outstanding
voting power of any competitor which are listed on any national
securities exchange or traded actively in the national
over-the-counter market shall not be deemed to be in violation of
this Section 5.08 so long as the Person owning such securities has
no other connection or relationship with such competitor, and (ii)
ownership by either Shareholder of securities of Hang Cheon, a
company organized under the laws of Korea ("Hang Cheon"), shall
not be deemed to be in violation of
<PAGE>
this Section 5.08 so long as Hang Cheon continues to conduct its
business as it is currently conducted and does not sell any products
in North America.
(b) As a separate and independent covenant, the Seller and
each Shareholder agree with the Purchaser that, for a period of
five years following the Closing, neither the Seller nor either
Shareholder will, in any way, directly or indirectly, (i) except
if acting on behalf of the Purchaser, call upon, solicit, advise
or otherwise do, or attempt to do, business with any customers of
the Business or the Seller with whom the Business or the Seller
had any dealings prior to the Closing Date, or take away or
interfere or attempt to interfere with any custom, trade, business
or patronage of the Purchaser or the Business, for the purpose of
conducting or engaging in any business that manufactures, produces
or supplies Tabletop Products or related services to customers in
the foodservice or consumer products industry, or (ii) interfere
with or attempt to interfere with any officers, employees,
representatives or agents of the Purchaser or the Business, or
induce or attempt to induce any of them to leave the employ of the
Purchaser or violate the terms of their contracts, or any
employment arrangements, with the Purchaser.
(c) The Restricted Period shall be extended by the length of
any period during which the Seller or either Shareholder is in
breach of the terms of this Section 5.08.
(d) The Seller and each Shareholder acknowledge that the
covenants of the Seller and each Shareholder set forth in this
Section 5.08 are an essential element of this Agreement and that,
but for the agreement of the Seller and each Shareholder to comply
with these covenants, the Purchaser would not have entered into
this Agreement. The Seller and each Shareholder acknowledge that
this Section 5.08 constitutes an independent covenant and, if the
Closing occurs, that it shall not be affected by performance or
nonperformance of any other provision of this Agreement, either
before or after the Closing, by the Purchaser. The Seller and
each Shareholder have independently consulted with their
respective counsel and after such consultation agree that the
covenants set forth in this Section 5.08 are reasonable and
proper.
(e) It is the intent and understanding of each party hereto
that if in any action before any Governmental Authority legally
empowered to enforce the terms and covenants contained in this
Section 5.08 any term, restriction, covenant or promise contained
herein is found to be unreasonable and accordingly unenforceable,
then such term, restriction, covenant or promise shall be deemed
modified to the extent necessary to make it enforceable by such
Governmental Authority.
SECTION 5.09. Customer and Supplier Lists. (a) No later than
September 23, 1996, the Seller shall deliver to the Purchaser, to
the attention of the Purchaser's President and COO, written lists
setting forth (i) the names and addresses of the thirty most
<PAGE>
significant customers (by revenue) of the Business for the period
beginning on February 1, 1996 and ended on the date hereof and for
each of the four fiscal years ended as of January 31, 1993,
January 31, 1994, January 31, 1995 and January 31, 1996, and the
amount for which each such customer was invoiced during each such
period (the "Customer List"), and (ii) the names and addresses of
all customers, if any, of the Business that hold merchandise
provided by the Seller on consignment (the "Consignment Customer
List"); provided, however, that if the Purchaser's President and
COO does not return to the United States on or prior to September
23, 1996, the Seller shall deliver the Customer List and the
Consignment Customer List to the Purchaser's President and COO no
later than one Business Day after his return to the United States.
(b) No later than September 23, 1996, the Seller shall
deliver to the Purchaser's President and COO written lists setting
forth (i) the names and addresses of each of the Seller's
suppliers of products for resale for the period beginning on
February 1, 1996 and ended on the date hereof and for each of the
four fiscal years ended as of January 31, 1993, January 31, 1994,
January 31, 1995 and January 31, 1996, and the amount for which
each such supplier invoiced the Seller during each such period,
and (ii) the names and addresses of the ten most significant
suppliers of other goods and services for the Business for the
period beginning on February 1, 1996, and ended on the date hereof
and for each of the four fiscal years ended as of January 31,
1993, January 31, 1994, January 31, 1995 and January 31, 1996, and
the amounts for which each such supplier invoiced the Seller
during each such period (collectively, the "Supplier List");
provided, however, that if the Purchaser's President and COO does
not return to the United States on or prior to September 23, 1996,
the Seller shall deliver the Supplier List to him no later than
one Business Day after his return to the United States.
SECTION 5.10. Further Action. Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all
appropriate action, do or cause to be done all things necessary,
proper or advisable under applicable Laws, and execute and deliver
such documents and other papers, as may be required to carry out
the provisions of this Agreement and consummate and make effective
the transactions contemplated by this Agreement.
SECTION 5.11. Bulk Transfer Laws. Except as otherwise provided
in Section 6.08, the Purchaser and each Shareholder hereby waive
compliance by the Seller with any applicable bulk sale or bulk
transfer laws of any jurisdiction in connection with the sale of
the Assets to the Purchaser (other than any obligations with
respect to the application of the proceeds herefrom).
SECTION 5.12. Filing of Form 5500s. Prior to the Closing Date,
the Seller shall (i) file all Form 5500s with respect to the Plans
that are required to be filed prior to the
<PAGE>
Closing Date, and (ii) pay all penalties and interest due with respect
to any failure or delay in filing such Form 5500s.
SECTION 5.13. Assignment of Rego Lease. Prior to the Closing
Date, the Shareholders shall cause Rego Corp. to assign all of its
rights under the Rego Lease to the Seller.
ARTICLE VI
TAX MATTERS
SECTION 6.01. Indemnity. (a) The Seller and each Shareholder
jointly and severally agree to indemnify and hold harmless the
Purchaser against the following Taxes (except to the extent Taxes
on the Closing Balance Sheet have been specifically reserved for
such Taxes) and, except as otherwise provided in Section 6.04,
against any loss, damage, liability or expense, including
reasonable fees for attorneys and other outside consultants,
incurred in contesting or otherwise in connection with any such
Taxes: (i) the Seller's Income Taxes; (ii) Taxes (other than the
Seller's Income Taxes) imposed on the Seller or the Business with
respect to taxable periods of such Person ending on or before the
Closing Date; (iii) with respect to taxable periods beginning
before the Closing Date and ending after the Closing Date, Taxes
(other than the Seller's Income Taxes) imposed on the Seller or
the Business which are allocable, pursuant to Section 6.01(b), to
the portion of such period ending on the Closing Date; (iv) Taxes
(other than the Seller's Income Taxes) imposed on any member of
any affiliated group with which the Seller files, have filed or
should have filed a Tax return on a consolidated or combined basis
for a taxable period ending on or before the Closing Date; and
(v) Taxes imposed on the Purchaser as a result of any breach of
warranty or misrepresentation under Section 3.27 of this
Agreement. The Purchaser shall be responsible for Taxes and
associated expenses not allocated to the Seller and the
Shareholders pursuant to the first sentence hereof.
(b) In the case of Taxes (other than the Seller's Income
Taxes) that are payable with respect to a taxable period that
begins before the Closing Date and ends after the Closing Date,
the portion of any such Tax that is allocable to the portion of
the period ending on the Closing Date shall be:
(i) in the case of Taxes that are either (x) based upon
or related to income or receipts, or (y) imposed in connection
with any sale or other transfer or assignment of property (real or
personal, tangible or intangible) (other than conveyances pursuant
to this Agreement, as provided under Section 6.07), deemed equal
to the amount which would be payable if the taxable year ended
with the Closing Date; and
<PAGE>
(ii) in the case of Taxes imposed on a periodic basis
with respect to the assets of the Seller, any Assets or otherwise
measured by the level of any item, deemed to be the amount of such
Taxes for the entire period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the
immediately preceding period) multiplied by a fraction the
numerator of which is the number of calendar days in the period
ending on the Closing Date and the denominator of which is the
number of calendar days in the entire period.
(c) The Purchaser agrees to indemnify and hold harmless the
Seller for any Taxes that are imposed upon or that relate to the
Assets or the Business (i) that are allocable to any taxable
period commencing after the Closing Date or, in the case of a
taxable period that begins before the Closing Date and ends after
the Closing Date, that are allocable pursuant to Section 6.01(b)
to the portion of such period commencing after the Closing Date,
and (ii) that are not Taxes for which the Seller has an obligation
to indemnify the Purchaser pursuant to the provisions of Section
6.01(a) and (b).
SECTION 6.02. Returns and Payments. (a) From the date of this
Agreement through and after the Closing Date, the Seller shall
prepare and file or otherwise furnish in proper form to the
appropriate Governmental Authority (or cause to be prepared and
filed or so furnished) in a timely manner all Tax returns, reports
and forms ("Returns") relating to the Seller and the Business that
are due on or before or relate to any taxable period ending on or
before the Closing Date (and the Purchaser shall do the same for
Returns relating to the Business as conducted by the Purchaser
with respect to any taxable period ending after the Closing Date).
Returns of the Business other than for the Seller's Income Taxes
not yet filed for any taxable period that begins before the
Closing Date shall be prepared in a manner consistent with past
practices employed with respect to such corporations (except to
the extent counsel for the Seller renders a legal opinion that
there is no reasonable basis in Law therefor or that a Return
cannot be so prepared and filed without being subject to
penalties). With respect to any Return required to be filed by
the Purchaser or the Seller with respect to the Business and as to
which an amount of Tax is allocable to the other party under
Section 6.01(b), the filing party shall provide the other party
and its authorized representatives with a copy of such completed
Return and a statement certifying the amount of Tax shown on such
Return that is allocable to such other party pursuant to Section
6.01(b), together with appropriate supporting information and
schedules at least 20 Business Days prior to the due date
(including any extension thereof) for the filing of such Return,
and such other party and its authorized representatives shall have
the right to review and comment on such Return and statement prior
to the filing of such Return.
(b) The Seller shall pay or cause to be paid when due and
payable all Taxes with respect to the Seller and the Business for
any taxable period ending on or before the Closing Date to the
extent such Taxes exceed the amount, if any, specifically accrued
for
<PAGE>
such Taxes on the Closing Balance Sheet, and the Purchaser shall so
pay or cause to be paid Taxes for the Business for any taxable period
after the Closing Date (subject to its right of indemnification from
the Seller and the Shareholders by the date set forth in Section 6.05
for Taxes attributable to the portion of any Tax period that includes
the Closing Date pursuant to Sections 6.01(a) and 6.01(b)).
SECTION 6.03. Refunds. Any Tax refund (including any interest
with respect thereto) relating to the Seller or the Business for
any taxable period prior to the Closing Date or attributable to
the portion of any tax period that includes the Closing Date
pursuant to Section 6.01(b) (except for any refund included on the
Reference Balance Sheet, which shall be the property of the
Purchaser, and if paid to the Seller or either Shareholder, shall
be paid over promptly to the Purchaser) shall be the property of
the Seller, and if received by the Purchaser shall be payable
promptly to the Seller. Notwithstanding the foregoing sentence:
any Tax refund (or equivalent benefit to the Seller through a
reduction in Tax liability) for a period or portion thereof before
the Closing Date arising out of the carryback or utilization of a
loss, deduction or credit (including utilization of any loss,
deduction or credit attributable to the portion of any period
after the Closing Date for any taxable year that includes the
Closing Date) incurred by the Business in a taxable year beginning
after the Closing Date (including, however, the portion beginning
after the Closing Date for any taxable period that includes the
Closing Date) shall be the property of the Purchaser and, if
received by the Seller or either Shareholder, shall be payable
promptly to the Purchaser.
SECTION 6.04. Contests. (a) After the Closing, the Purchaser
shall promptly notify the Seller in writing of any written notice
of a proposed assessment or claim in an audit or administrative or
judicial proceeding of the Purchaser which, if determined
adversely to the taxpayer, would be grounds for indemnification
under this Article VI; provided, however, that a failure to give
such notice will not affect the Purchaser's right to
indemnification under this Agreement except to the extent, if any,
that, but for such failure, the Seller could have avoided all or a
portion of the Tax liability in question.
(b) In the case of an audit or administrative or judicial
proceeding that relates to periods ending on or before the Closing
Date, provided that the Seller or either Shareholder acknowledge
in writing their liability under this Agreement to hold the
Purchaser harmless against the full amount of any adjustment which
may be made as a result of such audit or proceeding that relates
to periods ending on or before the Closing Date (or, in the case
of any taxable year that includes the Closing Date, against an
adjustment allocable under Section 6.01(b) to the portion of such
year ending on or before the Closing Date), the Seller and either
Shareholder shall have the right at their expense to participate
in and control the conduct of such audit or proceeding but only to
the extent that such audit or proceeding relates solely to a
potential adjustment for which the Seller or either Shareholder
have
<PAGE>
acknowledged their liability; the Purchaser also may participate
in any such audit or proceeding and, if the Seller or either
Shareholder do not assume the defense of any such audit or proceeding,
the Purchaser may defend the same in such manner as it may deem
appropriate, including, but not limited to, settling such audit or
proceeding after giving five days' prior written notice to the Seller
setting forth the terms and conditions of settlement. In the
event that issues relating to a potential adjustment for which the
Seller or either Shareholder have acknowledged their liability are
required to be dealt with in the same proceeding as separate issues
relating to a potential adjustment for which the Purchaser would be
liable, the Purchaser shall have the right, at its expense, to
control the audit or proceeding with respect to the latter issues.
(c) With respect to issues relating to a potential
adjustment for which both the Seller or either Shareholder (as
evidenced by their acknowledgment under this Section 6.04), and
the Purchaser, could be liable, (i) each party may participate in
the audit or proceeding, and (ii) the audit or proceeding shall be
controlled by that party which would bear the burden of the
greater portion of the sum of the adjustment and any corresponding
adjustments that may reasonably be anticipated for future Tax
periods. The principle set forth in the preceding sentence shall
govern also for purposes of deciding any issue that must be
decided jointly (in particular, choice of judicial forum) in
situations in which separate issues are otherwise controlled under
this Article VI by the Purchaser or the Seller or either
Shareholder.
(d) Neither the Purchaser, on the one hand, nor the Seller
nor any Shareholder, on the other hand, shall enter into any
compromise or agree to settle any claim pursuant to any Tax audit
or proceeding which would adversely affect the other party for
such year or a subsequent year without the written consent of the
other party, which consent may not be unreasonably withheld. The
Purchaser, the Seller and each Shareholder agree to cooperate in
the defense against or compromise of any claim in any audit or
proceeding.
(e) It is understood that the provisions of paragraphs (b)
and (c) of this Section 6.04 shall not apply to any audit,
proceeding or potential adjustment that relates to the Seller's
Income Taxes, which audit, proceeding or potential adjustment
shall be controlled solely by the Seller.
(f) In the case of an indemnity pursuant to Section 6.01(c)
of this Agreement, similar principles to those set forth under
Section 6.04(a) through 6.04(d) shall apply. Such principles
shall not apply in the case of a proceeding related to the
Seller's Income Taxes.
SECTION 6.05. Time of Payment. (a) Payment by the Seller or
either Shareholder of any amounts due to the Purchaser under this
Article VI in respect of Taxes
<PAGE>
shall be made (i) at least three Business Days before the due date
of the applicable estimated or final Return required to be filed by
the Purchaser on which is required to be reported income for a
period ending after the Closing Date for which the Seller or
either Shareholder are responsible under Sections 6.01(a) and
6.01(b) without regard to whether the Return shows overall net
income or loss for such period, and (ii) within three Business
Days following an agreement between the Seller and either Shareholder,
on the one hand, and the Purchaser, on the other hand, that an
indemnity amount is payable, an assessment of a Tax by a taxing
authority, or a determination" as defined in Section 1313(a) of the
Code. If liability under this Article VI is in respect of costs or
expenses other than Taxes, payment by the Seller or either
Shareholder of any amounts due under this Article VI shall be made
within five Business Days after the date when the Seller has been
notified by the Purchaser that the Seller and the Shareholders have a
liability for a determinable amount under this Article VI and are
provided with calculations or other materials supporting such
liability.
(b) In the case of an indemnity pursuant to Section 6.01(c)
of this Agreement, similar principles to those set forth under
Section 6.05(a) shall apply.
SECTION 6.06. Cooperation and Exchange of Information. Upon the
terms set forth in Section 5.02, the Seller, each Shareholder and
the Purchaser will provide each other with such cooperation and
information as either of them reasonably may request of the other
in filing any Return, amended Return or claim for refund,
determining a liability for Taxes or a right to a refund of Taxes,
or conducting any audit or other proceeding in respect of Taxes.
Such cooperation and information shall include providing copies of
relevant Returns or portions thereof, together with accompanying
schedules, related work papers and documents relating to rulings
or other determinations by Tax authorities. The Seller and the
Purchaser each shall make its employees available to the other on
a basis mutually convenient to both parties to provide
explanations of any documents or information provided hereunder.
Each of the Seller, each Shareholder and the Purchaser shall
retain all Returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of the Seller
and the Business for each taxable period first ending after the
Closing Date and for all prior taxable periods until the later of
(i) the expiration of the statute of limitations of the taxable
periods to which such Returns and other documents relate, without
regard to extensions except to the extent notified by the other
party in writing of such extensions for the respective Tax
periods, or (ii) six years following the due date (without
extension) for such Returns. Any information obtained under this
Section 6.06 shall be kept confidential in accordance with Section
5.02 except as may be otherwise necessary in connection with the
filing of Returns or claims for refund or in conducting an audit
or other proceeding.
SECTION 6.07. Conveyance Taxes. The Purchaser shall be liable
for and shall hold the Seller and the Shareholders harmless
against any real property transfer or gains, sales, use, transfer,
value added, stock transfer, and stamp taxes, any transfer,
<PAGE>
recording, registration, and other fees, and any similar Taxes
which become payable in connection with the transactions
contemplated by this Agreement. The Seller, after the review and
consent by the Purchaser, shall file such applications and
documents as shall permit any such Tax to be assessed and paid on
or prior to the Closing Date in accordance with any available
pre-sale filing procedure. The Purchaser shall execute and
deliver all instruments and certificates necessary to enable the
Seller to comply with the foregoing. The Purchaser shall complete
and execute a resale or other exemption certificate with respect
to the inventory items sold hereunder, and shall provide the
Seller with an executed copy thereof.
SECTION 6.08. Bulk Transfers. The Seller and the Purchaser agree
to comply timely with the provisions of Section 1141(c) of the
New York Tax Law and the regulations issued thereunder, including,
but not limited to, the provisions relating to notification of the
New York State Tax Commission prior to a bulk sale of business
assets.
SECTION 6.09. Miscellaneous. (a) The Seller, each Shareholder
and the Purchaser agree to treat all payments made by either to or
for the benefit of the other under this Article VI, under other
indemnity provisions of this Agreement and for any
misrepresentations or breach of warranties or covenants as
adjustments to the Purchase Price for Tax purposes and that such
treatment shall govern for purposes hereof except to the extent
that the laws of a particular jurisdiction provide otherwise, in
which case such payments shall be made in an amount sufficient to
indemnify the relevant party on an after-Tax basis.
(b) Notwithstanding any provision in this Agreement to the
contrary, the obligations of any party hereto to indemnify and
hold harmless any other party hereto pursuant to this Article VI,
and the representations and warranties contained in Section 3.27,
shall terminate at the close of business on the 120th day
following the expiration of the applicable statute of limitations
with respect to the Tax liabilities in question (giving effect to
any waiver, mitigation or extension thereof).
(c) From and after the date of this Agreement, the Seller
shall not, without the prior written consent of the Purchaser
(which may not unreasonably be withheld) make, or cause or permit
to be made, any Tax election that would affect the Business.
(d) From and after the date of this Agreement, neither
Shareholder shall, without prior written consent of the Purchaser
(which may not unreasonably be withheld), make, or cause or permit
to be made, any Tax election that would affect the Business.
<PAGE>
(e) For purposes of this Article VI, "the Purchaser" and
"the Seller", respectively, shall include each member of the
affiliated group of corporations of which it is or becomes a
member.
(f) The Purchaser, on the one hand, or the Seller and the
Shareholders, on the other hand, as the case may be, shall be
entitled to recover from the other professional fees and related
costs that it may reasonably incur to enforce the provisions of
this Article VI.
(g) To the extent the Seller does not perform any of its
obligations under this Article VI, each Shareholder shall have a
joint and several obligation to perform such obligation on the
Seller's behalf.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01. Conditions to Obligations of the Seller and the
Shareholders. The obligations of the Seller and the Shareholders
to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment, at or prior to the Closing,
of each of the following conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Purchaser contained in this
Agreement shall have been true and correct when made and shall be
true and correct in all material respects as of the Closing, with
the same force and effect as if made as of the Closing Date, other
than such representations and warranties as are made as of another
date, the covenants and agreements contained in this Agreement to
be complied with by the Purchaser on or before the Closing shall
have been complied with in all material respects, and the Seller
and the Shareholders shall have received a certificate from the
Purchaser to such effect signed by a duly authorized officer
thereof;
(b) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the purchase of the Assets
contemplated hereby shall have expired or shall have been
terminated;
(c) No Proceeding or Litigation. No Action shall have been
commenced by or before any Governmental Authority against the
Seller, either Shareholder or the Purchaser, seeking to restrain
or materially and adversely alter the transactions contemplated by
this Agreement which, in the reasonable, good faith determination
of
<PAGE
the Seller and the Shareholders, is likely to render it
impossible or unlawful to consummate such transactions; provided,
however, that the provisions of this Section 7.01(c) shall not
apply if the Seller or either Shareholder has directly or
indirectly solicited or encouraged any such Action;
(d) Resolutions of the Purchaser. The Seller shall have
received a true and complete copy, certified by the Secretary or
an Assistant Secretary of the Purchaser, of the resolutions duly
and validly adopted by the Board of Directors of the Purchaser
evidencing its authorization of the execution and delivery of this
Agreement, the Assumption Agreement and the Escrow Agreement and
the consummation of the transactions contemplated hereby and
thereby;
(e) Incumbency Certificate. The Seller shall have received
a certificate of the Secretary or an Assistant Secretary of the
Purchaser certifying the names and signatures of the officers of
the Purchaser authorized to sign this Agreement, the Assumption
Agreement and the Escrow Agreement and the other documents to be
delivered hereunder and thereunder;
(f) Legal Opinion. The Seller shall have received such
legal opinion, if any, addressed to the Seller and dated the
Closing Date, as the parties may mutually agree on, provided that
the failure of the parties to agree on any such opinion shall not
constitute a failure of the condition set forth in this Section
7.01(f); and
(g) Assumption Agreement and Escrow Agreement. The
Purchaser shall have executed and delivered to the Seller the
Assumption Agreement and the Escrow Agreement.
SECTION 7.02. Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the
fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Seller and each Shareholder
contained in this Agreement, subject to Section 3.27(c), shall
have been true and correct when made and shall be true and correct
in all material respects as of the Closing with the same force and
effect as if made as of the Closing, other than such
representations and warranties as are made as of another date, the
covenants and agreements contained in this Agreement to be
complied with by the Seller and each Shareholder on or before the
Closing shall have been complied with in all material respects,
and the Purchaser shall have received a certificate of the Seller
to such effect signed by the President thereof and certificates of
each Shareholder to such effect signed by the respective
Shareholders;
<PAGE>
(b) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the purchase of the Assets
contemplated hereby shall have expired or shall have been
terminated;
(c) No Proceeding or Litigation. No Action shall have been
commenced or threatened by or before any Governmental Authority
against the Seller, either Shareholder or the Purchaser seeking to
restrain or materially and adversely alter the transactions
contemplated hereby which the Purchaser believes, in its sole and
absolute discretion, is likely to render it impossible or unlawful
to consummate the transactions contemplated by this Agreement or
which would have a Material Adverse Effect; provided, however,
that the provisions of this Section 7.02(c) shall not apply if the
Purchaser has solicited or encouraged any such Action;
(d) Resolutions of the Seller. The Purchaser shall have
received a true and complete copy, certified by the Secretary or
an Assistant Secretary of the Seller, of the resolutions duly and
validly adopted by the Board of Directors of the Seller evidencing
its authorization of the execution and delivery of this Agreement
and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby, and of the
resolutions duly and validly adopted by the Shareholders
evidencing their authorization of the consummation of the
transactions contemplated hereby and thereby;
(e) Incumbency Certificate of the Seller. The Purchaser
shall have received a certificate of the Secretary or an Assistant
Secretary of the Seller certifying the names and signatures of the
officers of the Seller authorized to sign this Agreement and the
Ancillary Agreements and the other documents to be delivered
hereunder and thereunder;
(f) Legal Opinion. The Purchaser shall have received such
legal opinion, if any, addressed to the Purchaser and dated the
Closing Date, as the parties may mutually agree on, provided that
the failure of the parties to agree on any such opinion shall not
constitute a failure of the condition set forth in this Section
7.02(f);
(g) Consents and Approvals. The Seller and the Shareholders
shall have received, each in form and substance satisfactory to
the Purchaser, all third party consents and estoppel certificates
listed in Section 3.04 of the Seller's and Shareholders'
Disclosure Schedule;
(h) Ancillary Agreements. The Seller shall have executed
and delivered to the Purchaser each Ancillary Agreement and the
Shareholders shall have executed and delivered to the Purchaser
the Escrow Agreement;
<PAGE>
(i) No Material Adverse Effect. No circumstance, change in,
or effect on the Business shall have occurred which has a Material
Adverse Effect;
(j) Due Diligence. The Purchaser shall have completed all
of its business, financial, legal, accounting and environmental
due diligence with respect to the Business, including, without
limitation, (i) a full and complete balance sheet audit of the
Business (the "Audit"), (ii) one or more meetings with such of the
Seller's suppliers as the Purchaser desires to meet, provided that
Eugene Goldberg shall be given the opportunity to accompany the
Purchaser's President and COO (or such other representative of the
Purchaser as is reasonably acceptable to Eugene Goldberg) at any
such meeting on the Purchaser's schedule and at the Purchaser's
expense, and (iii) one or more meetings with each of Sysco Corp.,
Edward Don and Company and Marriott Corporation (and any of their
respective Affiliates) and any other of the Seller's ten most
significant customers (determined by reference to the Customer
List), provided that Allan Conseur shall be given the opportunity
to accompany, or to select another employee of the Seller to
accompany, the Purchaser's representative at any such meeting on
the Purchaser's schedule and at the Purchaser's expense, and with
regard to all of the foregoing, the Purchaser shall, in its sole
and absolute judgment, be satisfied with the results thereof;
(k) Bank Release of Liens. All Encumbrances on or against
any of the Assets created pursuant to the Seller's credit
agreements or facilities with banks shall have been released, and
the Purchaser shall have received a certificate of the Seller to
such effect, signed by the President thereof, and a certificate or
certificates of such banks to such effect signed, in each case, by
a duly authorized representative thereof;
(l) Certificate of Non-Foreign Status. The Purchaser shall
have received a certificate from the Seller (which complies with
Section 1445 of the Code) of non-foreign status executed in
accordance with the provisions of the Foreign Investment in Real
Property Tax Act;
(m) Books and Records. The Purchaser shall have received
copies of the Seller's general ledger and all of its journals
including, without limitation, its journals for sales, purchases,
cash receipts and cash disbursements, together with a certificate
of the Seller's President to the effect that such copies are
complete and correct in all respects;
(n) Form 5500s. The Purchaser shall have received evidence
reasonably acceptable to it that the Seller has (i) filed all Form
5500s with respect to the Plans that were required to be filed
prior to the Closing Date and (ii) paid all penalties and interest
due with respect to any failure or delay in filing such Form
5500s;
<PAGE>
(o) Name Changes. The Seller shall have changed, and the
Shareholders shall have caused each Rego Affiliate to change, its
corporate name, and the Seller shall have amended, and the
Shareholders shall have caused each Rego Affiliate to amend, its
Certificate of Incorporation (or equivalent organizational
documents) accordingly, to one using a Rego-Unrelated Name;
(p) Assignment of Rego Lease. The Purchaser shall have
received evidence reasonably acceptable to it that Rego Corp. has
assigned all of its rights under the Rego Lease to the Seller; and
(q) Customer List and Supplier List. The Purchaser shall
have received the Customer List, the Consignment Customer List
and the Supplier List.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Survival of Representations and Warranties. The
representations and warranties of the Purchaser, the Seller and
each Shareholder contained in this Agreement and the Ancillary
Agreements, and all statements contained in the Acquisition
Documents, shall survive the Closing until May 31, 1998; provided,
however, that (a) the representations and warranties dealing with
Tax matters shall survive as provided in Section 6.09(b) and
(b) insofar as any claim is made by the Purchaser for the breach
of any representation or warranty of the Seller or either
Shareholder contained herein, which claim arises out of
allegations of personal injury or property damage suffered by any
third party on or prior to the Closing Date or attributable to
products or Inventory sold or shipped, or activities or omissions
that occur, on or prior to the Closing Date, such representations
and warranties shall, for purposes of such claim by the Purchaser,
survive until thirty calendar days after the expiration of the
applicable statute of limitations governing such claims, and
(c) insofar as any claim is made by the Purchaser for the breach
of any representation or warranty of the Seller contained herein
relating to environmental matters, such representations and
warranties shall, for purposes of such claims by the Purchaser,
survive the Closing until the third anniversary of the Closing.
Neither the period of survival nor the liability of the Purchaser,
on the one hand, and the Seller and the Shareholders, on the other
hand, with respect to their respective representations and
warranties shall be reduced by any investigation made at any time
by or on behalf of the Purchaser, on the one hand, or the Seller
or either Shareholder, on the other hand. If written notice of a
claim has been given prior to the expiration of the applicable
representations and warranties by the Purchaser to the Seller and
the Shareholders, or by the Seller or either Shareholder to the
Purchaser, as
<PAGE>
the case may be, then the relevant representations and warranties
shall survive as to such claim until the claim has been finally
resolved.
SECTION 8.02. Indemnification by the Seller and the Shareholders.
(a) The Purchaser and its Affiliates, officers, directors,
employees, agents, successors and assigns (each a "Purchaser
Indemnified Party") shall be indemnified and held harmless by the
Seller and the Shareholders, jointly but not severally (provided
that neither Shareholder shall be liable to the Purchaser for an
amount in excess of $17,000,000 under this Section 8.02), for any
and all Liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without
limitation, attorneys' and consultants' fees and expenses)
actually suffered or incurred by them (including, without
limitation, any Action brought or otherwise initiated by any of
them) (hereinafter a "Loss"), arising out of or resulting from:
(i) the breach of any representation or warranty made
by the Seller or either Shareholder contained in the Acquisition
Documents; or
(ii) the breach of any covenant or agreement by the
Seller or either Shareholder contained in the Acquisition
Documents; or
(iii) Liabilities of the Seller as of January 31,
1996 that are not reflected on the Reference Balance Sheet arising
from or relating to the ownership or actions or inactions of the
Seller or either Shareholder or the conduct of the Business on or
before January 31, 1996; or
(iv) any and all Losses suffered or incurred by the
Purchaser by reason of or in connection with any claim or cause of
action of any third party to the extent arising out of any action,
inaction, event, condition, liability or obligation of the Seller
occurring or existing prior to the Closing, other than the Assumed
Liabilities; or
(v) the Excluded Liabilities.
To the extent that the Seller's and the Shareholders' undertakings
set forth in this Section 8.02 may be unenforceable, the Seller
and each Shareholder shall contribute the maximum amount that they
are permitted to contribute under applicable Law to the payment
and satisfaction of all Losses incurred by the Purchaser.
(b) No claim may be made against the Seller or either
Shareholder for indemnification pursuant to Section 8.02(a)(i)
with respect to any individual item of liability or damage unless
the aggregate of all such liabilities and damages of the Purchaser
<PAGE>
Indemnified Parties with respect to Section 8.02(a)(i) shall
exceed $100,000, and neither the Seller nor either Shareholder
shall be required to pay or be liable for the first $100,000 in
aggregate amount of any such liabilities and damages.
(c) A Purchaser Indemnified Party shall give the Seller and
each Shareholder notice of any matter which a Purchaser
Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement, within 60 days of
such determination, stating the amount of the Loss, if known, and
method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of
indemnification is claimed or arises. The obligations and
Liabilities of the Seller and each Shareholder under this Article
VIII with respect to Losses arising from claims of any third party
which are subject to the indemnification provided for in this
Article VIII ("Third Party Claims") shall be governed by and
contingent upon the following additional terms and conditions: if
a Purchaser Indemnified Party shall receive notice of any Third
Party Claim, the Purchaser Indemnified Party shall give the Seller
and each Shareholder notice of such Third Party Claim within 30
days of the receipt by the Purchaser Indemnified Party of such
notice; provided, however, that the failure to provide such notice
shall not release the Seller or either Shareholder from any of
their obligations under this Article VIII except to the extent the
Seller or either Shareholder is materially prejudiced by such
failure and shall not relieve the Seller or either Shareholder
from any other obligation or liability that they may have to any
Indemnified Party otherwise than under this Article VIII. If the
Seller or either Shareholder (for purposes of this Section
8.02(c), the "Indemnifying Party") acknowledges in writing its
obligation to indemnify the Purchaser Indemnified Party hereunder
against any Losses that may result from such Third Party Claim,
then the Indemnifying Party shall be entitled to assume and
control the defense of such Third Party Claim at its expense and
through counsel of its choice if the Indemnifying Party gives
notice of its intention to do so to the Purchaser Indemnified
Party within five days of the receipt of such notice from the
Purchaser Indemnified Party; provided, however, that if there
exists or is reasonably likely to exist a conflict of interest
that would make it inappropriate in the judgment of the Purchaser
Indemnified Party for the same counsel to represent the Purchaser
Indemnified Party and the Indemnifying Party, then the Purchaser
Indemnified Party shall be entitled to retain its own counsel, in
each jurisdiction for which the Purchaser Indemnified Party
determines counsel is required, at the expense of the Indemnifying
Party. In the event the Seller or either Shareholder exercises
the right to undertake any such defense against any such Third
Party Claim as provided above, the Purchaser Indemnified Party
shall cooperate with such Indemnifying Party in such defense and
make available to the Indemnifying Party, at the Indemnifying
Party's expense, all witnesses, pertinent records, materials and
information in the Purchaser Indemnified Party's possession or
under the Purchaser Indemnified Party's control relating thereto
as is reasonably required by the Indemnifying Party. Similarly,
in the event the Purchaser Indemnified Party is, directly or
indirectly, conducting the defense against any such Third
<PAGE>
Party Claim, the Seller and each Shareholder shall cooperate with
the Purchaser Indemnified Party in such defense and make available to
the Purchaser Indemnified Party, at the Seller's and each
Shareholder's expense, all such witnesses, records, materials and
information in the Seller's or either Shareholder's possession or
under the Seller's or either Shareholder's control relating
thereto as is reasonably required by the Purchaser Indemnified
Party. No such Third Party Claim may be settled by the Seller or
either Shareholder without the written consent of the Purchaser
Indemnified Party.
SECTION 8.03. Indemnification by the Purchaser. (a) The Seller
and its Affiliates, officers, directors, employees, agents,
successors and assigns (each a "Seller Indemnified Party") shall
be indemnified and held harmless by the Purchaser (provided that
the Purchaser shall not be liable for an amount in excess of
$34,000,000 under this Section 8.03) for any and all Loss arising
out of or resulting from:
(i) the breach of any representation or warranty made
by the Purchaser contained in the Acquisition Documents; or
(ii) the breach of any covenant or agreement by the
Purchaser contained in the Acquisition Documents; or
(iii) the failure of the Purchaser to pay when due
any Assumed Liability.
To the extent that the Purchaser's undertakings set forth in this
Section 8.03 may be unenforceable, the Purchaser shall contribute
the maximum amount that it is permitted to contribute under
applicable Law to the payment and satisfaction of all Losses
incurred by the Seller or the Shareholders.
(b) No claim may be made against the Purchaser for
indemnification pursuant to Section 8.03(a)(i) with respect to any
individual item of liability or damage unless the aggregate of all
such liabilities and damages of the Seller Indemnified Parties
with respect to Section 8.03(a)(i) shall exceed $100,000, and the
Purchaser shall not be required to pay or be liable for the first
$100,000 in aggregate amount of any such liabilities and damages.
(c) A Seller Indemnified Party shall give the Purchaser
notice of any matter which a Seller Indemnified Party has
determined has given or could give rise to a right of
indemnification under this Agreement, within 60 days of such
determination, stating the amount of the Loss, if known, and
method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of
indemnification is claimed or arises. The obligations and
Liabilities of the Purchaser under this Article VIII with respect
to Losses arising from Third Party Claims shall be governed by
<PAGE>
and contingent upon the following additional terms and conditions: if
a Seller Indemnified Party shall receive notice of any Third Party
Claim, the Seller Indemnified Party shall give the Purchaser
notice of such Third Party Claim within 30 days of the receipt by
the Seller Indemnified Party of such notice; provided, however,
that the failure to provide such notice shall not release the
Purchaser from any of its obligations under this Article VIII
except to the extent the Purchaser is materially prejudiced by
such failure and shall not relieve the Purchaser from any other
obligation or liability that it may have to any Indemnified Party
otherwise than under this Article VIII. If the Purchaser
acknowledges in writing its obligation to indemnify the Seller
Indemnified Party hereunder against any Losses that may result
from such Third Party Claim, then the Purchaser shall be entitled
to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if the Purchaser gives
notice of its intention to do so to the Seller Indemnified Party
within five days of the receipt of such notice from the Seller
Indemnified Party; provided, however, that if there exists or is
reasonably likely to exist a conflict of interest that would make
it inappropriate in the judgment of the Seller Indemnified Party
for the same counsel to represent the Seller Indemnified Party and
the Purchaser, then the Seller Indemnified Party shall be entitled
to retain its own counsel, in each jurisdiction for which the
Seller Indemnified Party determines counsel is required, at the
expense of the Purchaser. In the event the Purchaser exercises
the right to undertake any such defense against any such Third
Party Claim as provided above, the Seller Indemnified Party shall
cooperate with the Purchaser in such defense and make available to
the Purchaser, at the Purchaser's expense, all witnesses,
pertinent records, materials and information in the Seller
Indemnified Party's possession or under the Seller Indemnified
Party's control relating thereto as is reasonably required by the
Purchaser. Similarly, in the event the Seller Indemnified Party
is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Purchaser shall cooperate with the
Seller Indemnified Party in such defense and make available to the
Seller Indemnified Party, at the Purchaser's expense, all such
witnesses, records, materials and information in the Purchaser's
possession or under the Purchaser's control relating thereto as is
reasonably required by the Seller Indemnified Party. No such
Third Party Claim may be settled by the Purchaser without the
written consent of the Seller Indemnified Party.
SECTION 8.04. Tax Matters. Anything in this Article VIII (except
for the specific reference to Tax matters in Section 8.01) to the
contrary notwithstanding, the rights and obligations of the
parties with respect to indemnification for any and all Tax
matters shall be governed by Article VI.
<PAGE>
ARTICLE IX
TERMINATION AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by the Purchaser if, between the date hereof and the
time scheduled for the Closing: (i) an event or condition occurs
that has resulted in or that may be expected to result in a
Material Adverse Effect; or (ii) the Seller makes a general
assignment for the benefit of creditors, or any proceeding shall
be instituted by or against the Seller seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up or
reorganization, arrangement, adjustment, protection, relief or
composition of its debts under any Law relating to bankruptcy,
insolvency or reorganization; or
(b) by the Seller, either Shareholder or the Purchaser if
the Closing shall not have occurred by January 1, 1997; provided,
however, that the right to terminate this Agreement under this
Section 9.01(b) shall not be available to the Seller or either
Shareholder, on the one hand, or the Purchaser, on the other hand,
if such party's failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in,
the failure of the Closing to occur on or prior to such date; or
(c) by the Seller, either Shareholder or the Purchaser in
the event that any Governmental Authority shall have issued an
order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such order, decree, ruling or other action
shall have become final and nonappealable; or
(d) by the mutual written consent of the Seller, each
Shareholder and the Purchaser.
SECTION 9.02. Effect of Termination. In the event of termination
of this Agreement as provided in Section 9.01, this Agreement
shall forthwith become void and there shall be no liability on the
part of either party hereto except (a) as set forth in Section
10.01 and (b) that nothing herein shall relieve any party from
liability for any breach of this Agreement.
SECTION 9.03. Waiver. The Purchaser, on the one hand, and the
Seller and the Shareholders, on the other hand, may (a) extend the
time for the performance of any of such other party or parties'
obligations or other acts, (b) waive any inaccuracies in the
<PAGE>
representations and warranties of such other party or parties
contained herein or in any document delivered by such other party
or parties pursuant hereto or (c) waive compliance with any of the
agreements or conditions of such other party or parties contained
herein. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party or parties
to be bound thereby. Any waiver of any term or condition shall
not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of
any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not
constitute a waiver of any of such rights.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation,
fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing
shall have occurred.
SECTION 10.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall
be given or made (and shall be deemed to have been duly given or
made upon receipt) by delivery in person, by courier service, by
cable, by telecopy, by telegram, by telex or by registered or
certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other
address for a party as shall be specified in a notice given in
accordance with this Section 10.02):
(a) if to the Seller:
THC Systems, Inc.
c/o Mr. Eugene Goldberg
11796 Maidstone Drive
West Palm Beach, FL 33414
Telecopy: (561) 790-4406
with a copy to:
<PAGE>
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019
Telecopy: (212) 554-7700
Attention: Solomon P. Friedman, Esq.
(b) if to the Shareholders, to:
Mr. Eugene Goldberg
11796 Maidstone Drive
West Palm Beach, FL 33414
Telecopy: (561) 790-4406
and to:
Mr. Robert Goldberg
16712 Sweet Bay Drive
Delray Beach, FL 33445
Telecopy: (407) 498-9518
with a copy to:
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019
Telecopy: (212) 554-7700
Attention: Solomon P. Friedman, Esq.
(c) if to the Purchaser:
Oneida Ltd.
Oneida, NY 13421
Telecopy: (315) 363-3700
Attention: Catherine H. Suttmeier, Esq.
with a copy to:
<PAGE>
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: (212) 848-7179
Attention: Bonnie Greaves, Esq.
SECTION 10.03. Public Announcements. The parties hereto agree
that they will issue a press release announcing the execution of
this Agreement promptly following such execution in substantially
the form of Exhibit 10.03 hereto. Thereafter, neither the Seller
or either Shareholder, on the one hand, nor the Purchaser, on the
other hand, shall make, or cause to be made, any press release or
public announcement in respect of this Agreement or the
transactions contemplated hereby or otherwise communicate with any
news media without prior consultation with the other party or
parties, and the parties shall cooperate as to the contents of any
such press release or public announcement.
SECTION 10.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 10.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced
by any Law or public policy, all other terms and provisions of
this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
SECTION 10.06. Entire Agreement. This Agreement, together with
the Confidentiality Agreement, constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and
oral, between the Seller, the Shareholders and the Purchaser with
respect to the subject matter hereof.
SECTION 10.07. Assignment. This Agreement may not be assigned by
operation of Law or otherwise without the express written consent
of the Seller, each Shareholder and the Purchaser (which consent
may be granted or withheld in the sole discretion of the Seller,
each Shareholder and the Purchaser); provided, however, that the
Purchaser may assign this Agreement to an Affiliate of the
Purchaser without the consent of
<PAGE>
the Seller or either Shareholder as long as, following any such
assignment, the Asset Purchase Agreement Guarantee remains in full
force and effect.
SECTION 10.08. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the
parties hereto and their permitted assigns and nothing herein,
express or implied, is intended to or shall confer upon any other
Person, including, without limitation, any union or any employee
or former employee of the Seller, any legal or equitable right,
benefit or remedy of any nature whatsoever, including, without
limitation, any rights of employment for any specified period,
under or by reason of this Agreement.
SECTION 10.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on
behalf of, the Seller, each Shareholder and the Purchaser or
(b) by a waiver in accordance with Section 9.03.
SECTION 10.10. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of
New York, applicable to contracts executed in and to be performed
entirely within that state. All actions and proceedings arising
out of or relating to this Agreement shall be heard and determined
in any New York state or federal court sitting in the State of
New York.
SECTION 10.11. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed
to be an original but all of which taken together shall constitute
one and the same agreement.
SECTION 10.12. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of
this Agreement was not performed in accordance with the terms
hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy
at Law or equity, without the necessity of demonstrating the
inadequacy of money damages.
<PAGE>
IN WITNESS WHEREOF, the Seller, each Shareholder and the
Purchaser have caused this Agreement to be executed as of the date
first written above, in the case of the Seller and the Purchaser,
by their respective officers thereunto duly authorized.
THC SYSTEMS, INC.
By: /s/ Eugene Goldberg
Name:
Title:
/s/ Eugene Goldberg
Name: Eugene Goldberg
/s/ Robert Goldberg
Name: Robert Goldberg
ONEIDA COMMUNITY CHINA, INC.
By: /s/ Peter J. Kallet
Name:
Title: President
<PAGE>
EXHIBIT A
PERSONS ENTERING INTO EMPLOYMENT OR CONSULTING
AGREEMENTS WITH THE PURCHASER
Consulting Agreements
Eugene Goldberg
Employment Agreements
Allan Conseur
Ira Goldberg
Barry Goldberg
James Goldberg
<PAGE>
EXHIBIT 1.01(a)
FORM OF ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT, dated as of __________________ ____,
1996 (this "Agreement"), between ONEIDA COMMUNITY CHINA, INC., a
New York corporation (the "Purchaser"), and THC SYSTEMS, INC., a
New York corporation (the "Seller"). All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto
in the Asset Purchase Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Seller, Eugene Goldberg, Robert Goldberg and the
Purchaser have entered into an Asset Purchase Agreement, dated as
of August 29, 1996 (the "Asset Purchase Agreement"), providing for
the sale to the Purchaser of the Business and the Assets, and the
assumption by the Purchaser of the Assumed Liabilities; and
WHEREAS, the execution and delivery of this Agreement by the
Purchaser is a condition to the obligations of the Seller and the
Shareholders to consummate the transactions contemplated by the
Asset Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements and covenants hereinafter set forth, the
Purchaser and the Seller hereby agree as follows:
1. The Purchaser hereby assumes and agrees to pay, perform and
discharge when due all Liabilities of the Seller as at the Closing
Date arising out of or relating to the Business, whether accrued
or arising before or after the Closing, except for the Excluded
Liabilities.
2. Any notice, request or other document to be given hereunder
to either party hereto shall be given in accordance with Section
10.02 of the Asset Purchase Agreement.
3. This Agreement shall not be assigned by operation of Law or
otherwise without the express written consent of the Seller and
the Purchaser (which consent may be granted or withheld in the
sole discretion of the Seller and the Purchaser); provided,
however, that the Purchaser may assign this Agreement to an
Affiliate of the Purchaser without the consent of the Seller as
long as, following any such assignment, the Asset Purchase
Agreement Guarantee remains in full force and effect.
<PAGE>
4. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to
contracts executed in and to be performed in that State.
5. This Agreement may not be amended, waived or otherwise
modified except by a written instrument signed by the Seller and
the Purchaser.
6. This Agreement may be executed in one or more counterparts,
and by the different parties hereto in separate counterparts, each
of which shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
ONEIDA COMMUNITY CHINA, INC.
By:
Name:
Title:
THC SYSTEMS, INC.
By:
Name:
Title:
<PAGE>
EXHIBIT 1.01(b)
FORM OF BILL OF SALE AND ASSIGNMENT
BILL OF SALE AND ASSIGNMENT, dated as of ____________ ___,
1996, from THC SYSTEMS, INC., a New York corporation (the
"Seller"), to ONEIDA COMMUNITY CHINA, INC. , a New York
corporation (the "Purchaser"). All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto
in the Asset Purchase Agreement (as defined below).
WHEREAS, the Seller, Eugene Goldberg, Robert Goldberg and the
Purchaser have entered into an Asset Purchase Agreement, dated as
of August 29, 1996 (the "Asset Purchase Agreement"), providing for
the sale to the Purchaser of the Business and the Assets, and the
assumption by the Purchaser of the Assumed Liabilities; and
WHEREAS, the execution and delivery of this Bill of Sale and
Assignment by the Seller is a condition to the obligations of the
Purchaser to consummate the transactions contemplated by the Asset
Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged, and pursuant to the Asset
Purchase Agreement, the Seller by these presents hereby agrees as
follows:
1. Sale and Assignment of Assets and Properties. The Seller
does hereby sell, assign, transfer, convey and deliver to the
Purchaser, its successors and assigns, forever, the entire right,
title and interest of the Seller in and to all the assets,
properties, goodwill and business of every kind and description
and wherever located, whether tangible or intangible, real,
personal or mixed, directly or indirectly owned by the Seller or
to which it is directly or indirectly entitled and, in any case,
belonging to or used or intended to be used in the Business, other
than the Excluded Assets (the assets to be purchased by the
Purchaser being referred to as the "Assets"), including, without
limitation, the following:
(i) the Business as a going concern;
(ii) all rights in respect of the Leased Real Property and
any leased Tangible Personal Property;
(iii) all Tangible Personal Property used or held for use
by the Seller at the locations at which the Business is conducted,
or otherwise owned or held by the Seller at the Closing Date for
use in the conduct of the Business and not otherwise included in
clause (ii) above;
<PAGE>
(iv) all vehicles other than the Seller's 1989 Silver Spur
Rolls Royce used by Eugene Goldberg;
(v) all cash, cash equivalents and bank accounts (other than
the Purchase Price Bank Account) owned by the Seller at the
Closing Date;
(vi) all Inventories;
(vii) all Receivables;
(viii) all books of account, general, financial, tax
records (other than tax returns and supporting schedules filed
with respect to the Seller's Income Taxes) and personnel records,
invoices, shipping records, supplier lists, correspondence and
other documents, records and files and any rights thereto owned,
associated with or employed by the Seller or used in, or relating
to, the Business at the Closing Date, other than organizational
documents, minute and stock record books and the corporate seal of
the Seller; provided, however, that the Seller shall be entitled
to retain its general ledger and all of its journals including,
without limitation, its journals for sales, purchases, cash
receipts and cash disbursements, so long as it shall deliver
certified copies of all of the foregoing to the Purchaser at the
Closing;
(ix) the goodwill of the Seller relating to the Business;
(x) all the Seller's right, title and interest in, to and
under the Owned Intellectual Property and the Licensed
Intellectual Property;
(xi) all claims, causes of action, choses in action, rights
of recovery and rights of set-off of any kind (including rights to
insurance proceeds and rights under and pursuant to all
warranties, representations and guarantees made by suppliers of
products, materials or equipment, or components thereof),
pertaining to, arising out of, and enuring to the benefit of the
Seller;
(xii) all sales and promotional literature, customer
lists and other sales-related materials owned, used, associated
with or employed by the Seller at the Closing Date;
(xiii) all rights of the Seller under all contracts,
licenses, sublicenses, agreements, leases, commitments, and sales
and purchase orders, and under all commitments, bids and offers
(to the extent such offers are transferable);
<PAGE>
(xiv) all municipal, state and federal franchises,
permits, licenses, agreements, waivers and authorizations held or
used by the Seller in connection with, or required for, the
Business, to the extent transferable;
(xv) all assets (including, without limitation, assets held
in trust and insurance policies) and rights in respect of assets
used to fund or otherwise relating to any Plans, except the
Excluded 401(k) Assets;
(xvi) all progress payments under any customer order or
other agreement which the Purchaser shall have assumed under this
Agreement; and
(xvii) all the Seller's right, title and interest on the
Closing Date in, to and under all other assets, rights and claims
of every kind and nature used or intended to be used in the
operation of, or residing with, the Business.
2. Assets and Properties Not Sold or Assigned. The following
are specifically excepted from the Assets to be transferred to the
Purchaser pursuant to Section 1 of this Bill of Sale and
Assignment (the "Excluded Assets"):
(i) the Purchase Price Bank Account;
(ii) the Excluded 401(k) Assets;
(iii) all rights of the Seller under this Agreement, the
Ancillary Agreements and the Guaranty;
(iv) Eugene Goldberg's desk, desk chair, couch, club chair,
wooden cube and painting of a seashell by Fred Werner, each of
which is located in his office in Melville, New York; and
(v) the Seller's 1989 Silver Spur Rolls Royce used by Eugene
Goldberg.
3. Power of Attorney. The Seller hereby constitutes and
appoints the Purchaser, its successors and assigns, the true and
lawful attorney of the Seller, with full power of substitution, in
the name of the Purchaser or in the name of the Seller, but for
the benefit and at the expense of the Purchaser:
(a) to collect, demand and receive any and all assets and
properties hereby sold and assigned to the Purchaser or intended
so to be;
<PAGE>
(b) to institute and prosecute any and all actions, suits or
proceedings which the Purchaser may deem proper in order to
collect, assert or enforce any claim, right or title of any kind
in or to the assets and properties hereby sold and assigned to the
Purchaser or intended so to be, to defend or compromise any and
all actions, suits or proceedings in respect of any of such assets
and properties, and to do all such acts and things in relation
thereto as the Purchaser shall deem advisable;
(c) to take any and all reasonable action designed to
provide for the Purchaser the benefits under all contracts and
leases, including enforcement at the cost and for the account of
the Purchaser of any and all rights against the other party
thereto arising out of the breach or cancellation thereof by such
other party or otherwise; and
(d) to take any and all other reasonable action designed to
vest more fully in the Purchaser the assets and properties hereby
sold and assigned to the Purchaser or intended so to be and in
order to provide for the Purchaser the benefit, use, enjoyment and
possession of such assets and properties.
The Seller acknowledges that the foregoing powers are coupled with
an interest and shall be irrevocable by it or upon its subsequent
dissolution or in any manner or for any reason. The Purchaser
shall be entitled to retain for its own account any amounts
collected pursuant to the foregoing powers, including any amounts
payable as interest with respect thereto. The Seller shall from
time to time pay to the Purchaser, when received, any amounts
which shall be received directly or indirectly by the Seller
(including amounts received as interest) in respect of any assets
or properties sold, assigned or transferred to the Purchaser
pursuant hereto.
4. No Rights in Third Parties. Nothing expressed or implied in
this Bill of Sale and Assignment is intended to confer upon any
person, other than the Purchaser and the Seller and their
respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Bill of Sale
and Assignment.
5. Successors and Assigns. This Bill of Sale and Assignment
shall bind and inure to the benefit of the Seller and the
Purchaser and their respective successors and permitted assigns.
6. Governing Law. This Bill of Sale and Assignment shall be
governed by, and construed in accordance with, the laws of the
State of New York.
<PAGE>
IN WITNESS WHEREOF, the Seller has caused this Bill of Sale
and Assignment to be duly executed and its corporate seal to be
affixed hereto as of the day and year first above written.
THC SYSTEMS, INC.
By:
Name:
Title:
[Corporate Seal]
Attest:
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On the ____th day of _________, 1996, before me personally
came , to me known, who, being by me
duly sworn, did depose and day that he is of THC
SYSTEMS, INC., a New York corporation and the corporation
described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation, and that
he signed his name thereto by like authority.
[Notarial Seal] Notary Public
<PAGE>
EXHIBIT 2.07(d)
METHODOLOGY FOR COMPUTING PURCHASE PRICE ADJUSTMENT
REFERENCE BALANCE SHEET (1/31/96)
ASSETS ASSETS
TOTAL PURCHASED EXCLUDED
ASSETS
Current Assets
Cash
Accounts receivable, net
of allowance for doubtful
accounts of $250,000
in 1996
Inventories
Prepaid expenses and other
current assets
Total current assets
Property and equipment, net
Federal tax deposit
Deferred financing costs, net
of accumulated amortization
of $57,514 in 1996
Total Assets
LIABILITIES LIABILITIES
TOTAL ASSUMED EXCLUDED
LIABILITIES
Current liabilities:
Current portion of long-
term debt
Notes and acceptances
payable
Accounts payable
Dividends payable
Accrued expenses and
other liabilities
Total current liabilities
Long-term debt, less current
portion
Loans payable to shareholders
Total Liabilities
NET ASSETS = ASSETS PURCHASED - LIABILITIES ASSUMED =
<PAGE>
CLOSING BALANCE SHEET
ASSETS ASSETS
TOTAL PURCHASED EXCLUDED
ASSETS
Current Assets
Cash
Accounts receivable, net of
allowance for doubtful
accounts
Inventories
Prepaid expenses and
other current assets
Total current assets
Property and equipment, net
Federal tax deposit
Deferred financing costs,
net of accumulated
amortization
Total Assets
LIABILITIES LIABILITIES
TOTAL ASSUMED EXCLUDED
LIABILITIES
Current liabilities:
Current portion of
long-term debt
Notes and acceptances
payable
Accounts payable
Dividends payable
Accrued expenses and
other liabilities
Total current liabilities
Long-term debt, less
current portion
Loans payable to
shareholders
Total Liabilities
NET ASSETS = ASSETS PURCHASED - LIABILITIES ASSUMED =
<PAGE>
EXHIBIT 2.08
FORM OF ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of ___________ ____, 1996 (this
"Agreement"), among THC SYSTEMS, INC., a New York corporation (the
"Seller"), EUGENE GOLDBERG and ROBERT GOLDBERG (collectively, the
"Shareholders"), and ONEIDA COMMUNITY CHINA, INC., a New York
corporation (the "Purchaser"), and THE CHASE MANHATTAN BANK, N.A.,
a Delaware corporation (the "Escrow Agent"). All capitalized
terms not otherwise defined herein shall have the meanings
ascribed thereto in the Asset Purchase Agreement (as defined
below).
W I T N E S S E T H:
WHEREAS, the Seller, the Shareholders and the Purchaser have
entered into an Asset Purchase Agreement, dated as of August 29,
1996 (the "Asset Purchase Agreement"), pursuant to which the
Purchaser has agreed to purchase from the Seller, and the Seller
has agreed to sell to the Purchaser, the Business and the Assets,
and the Purchaser has agreed to assume the Assumed Liabilities;
WHEREAS, it is contemplated under the Asset Purchase
Agreement that the Purchaser will deposit or cause to be deposited
into escrow the sum of $2,000,000 in cash at the Closing (the
"Escrow Amount") to be held and disbursed by the Escrow Agent in
accordance with Section 4 of this Agreement;
WHEREAS, a copy of the Asset Purchase Agreement has been
delivered to the Escrow Agent, and the Escrow Agent is willing to
act as the Escrow Agent hereunder;
WHEREAS, the parties hereto agree that the Escrow Agent is
not a party to the Asset Purchase Agreement and has no rights or
obligations thereunder, and that the duties and obligations of the
Escrow Agent shall be determined solely by this Agreement; and
WHEREAS, the Escrow Agent will hold the Escrow Amount in
Account No. _______________ at ___________, ____________ (the
"Escrow Account");
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein and in the Asset Purchase
Agreement, and intending to be legally bound hereby, the parties
hereby agree as follows:
1. Appointment and Agreement of Escrow Agent. The Purchaser,
the Seller and the Shareholders hereby appoint the Escrow Agent to
serve as, and the Escrow Agent hereby agrees to act as, escrow
agent upon the terms and conditions of this Agreement.
<PAGE>
2. Establishment of the Escrow Fund. (a) Pursuant to Section
2.06(b) of the Asset Purchase Agreement, the Purchaser shall
deliver to the Escrow Agent on the date hereof the Escrow Amount.
The Escrow Agent shall hold the Escrow Amount and all interest and
other amounts earned thereon (the "Escrow Fund") in escrow
pursuant to this Agreement in the Escrow Account.
(b) The Purchaser, the Seller and the Shareholders
confirm to the Escrow Agent and to each other that the Escrow Fund
is free and clear of all Encumbrances except as may be created by
this Agreement and the Asset Purchase Agreement.
3. Purpose of the Escrow Fund. The Escrow Amount will be
deposited with the Escrow Agent and will be held by the Escrow
Agent to secure the obligations of the Seller and each of the
Shareholders contained in Section 2.07 of the Asset Purchase
Agreement.
4. Payments from the Escrow Fund. (a) If, at any time, the
Purchaser shall deliver to the Escrow Agent a written notice (a
"Purchaser's Certificate"), which Purchaser's Certificate shall:
(i) state that the Purchase Price is required to
be adjusted downward pursuant to the terms of Section 2.07(c)(i)
of the Asset Purchase Agreement; and
(ii) state the aggregate amount of such downward
adjustment in the Purchase Price (the "Adjustment Amount");
within three Business Days of its receipt of the Purchaser's
Certificate, the Escrow Agent shall pay to the Purchaser, by wire
transfer in immediately available funds to an account designated
by the Purchaser, out of the Escrow Account an amount in cash
equal to the Adjustment Amount, together with interest thereon
from the Closing Date to and including the date of payment by the
Escrow Agent to the Purchaser at a rate equal to the interest rate
prevailing on 90-day United States Treasury Bills as of the
Closing Date (the "Interest Amount"). In the event that the
Escrow Fund is insufficient to cover the aggregate of the
Adjustment Amount and the Interest Amount, the Escrow Agent shall
pay the entire Escrow Fund by wire transfer in immediately
available funds to an account designated by the Purchaser. In the
event that the Escrow Fund exceeds the aggregate of the Adjustment
Amount and the Interest Amount, the Escrow Agent shall, after
paying the Adjustment Amount and the Interest Amount to an account
designated by the Purchaser, pay the remaining Escrow Fund by wire
transfer in immediately available funds to an account designated
by the Seller, plus any interest earned on such amount from the
Closing Date to the date of payment, such interest to be
transferred to the Seller upon receipt by the Escrow Agent of such
interest.
<PAGE>
(f) Upon the termination of this Agreement in accordance
with Section 10(c), the Escrow Agent shall promptly liquidate all
investments of the Escrow Fund and transfer to the Seller, by wire
transfer in immediately available funds, the amount in cash then
remaining in the Escrow Fund, plus any interest earned on such
amount from the Closing Date to the date of payment (such interest
to be transferred to the Seller upon receipt by the Escrow Agent
of such interest).
5. Liquidation of the Escrow Fund. Whenever the Escrow
Agent shall be required to make payment from the Escrow Fund, the
Escrow Agent shall pay such amounts by liquidating the investments
of the Escrow Fund to the extent necessary to pay such amounts in
full and in cash. Subject to the provisions of Section 9(g) of
this Agreement, the Escrow Agent shall not be liable for any
losses incurred in any such liquidation.
6. Maintenance of the Escrow Fund; Termination of the Escrow
Fund. The Escrow Agent shall continue to maintain the Escrow Fund
until the termination of this Agreement.
7. Investment of Escrow Fund. The Escrow Agent shall invest and
reinvest moneys on deposit in the Escrow Fund, unless joint
written notice to the contrary is received from the Seller and the
Purchaser, in any combination of the following: (a) readily
marketable direct obligations of the Government of the United
States or any agency or instrumentality thereof or readily
marketable obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (b)
insured certificates of deposit, of or time deposits with, any
commercial bank that is a member of the Federal Reserve System and
which issues (or the parent of which issues) commercial paper
rated as described in clause (c), is organized under the laws of
the United States or any State thereof and has combined capital
and surplus of at least $1 billion or (c) commercial paper in an
aggregate amount of no more than $1,000,000 per issuer outstanding
at any time, issued by any corporation organized under the laws of
any State of the United States, rated at least "Prime-1" (or the
then equivalent grade) by Moody's Investors Services, Inc. or "A-
1" (or the then equivalent grade) by Standard & Poors, Inc.
8. Assignment of Rights to the Escrow Fund; Assignment of
Obligations; Successors. This Agreement may not be assigned by
operation of Law or otherwise without the express written consent
of the Seller, each Shareholder and the Purchaser (which consent
may be granted or withheld in the sole discretion of the Seller,
each Shareholder and the Purchaser); provided, however, that the
Purchaser may assign this Agreement to an Affiliate of the
Purchaser without the consent of the Seller or either Shareholder
as long as, following any such assignment, the Asset Purchase
Agreement Guarantee remains in full force and effect.
<PAGE>
9. Escrow Agent. (a) Except as expressly contemplated by this
Agreement or by joint written instructions from the Purchaser, the
Seller and the Shareholders, the Escrow Agent shall not sell,
transfer or otherwise dispose of in any manner all or any portion
of the Escrow Fund, except pursuant to an order of a court of
competent jurisdiction.
(b) The duties and obligations of the Escrow Agent
shall be determined solely by this Agreement, and the Escrow Agent
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement.
(c) In the performance of its duties hereunder, the
Escrow Agent shall be entitled to rely upon any document,
instrument or signature believed by it in good faith to be genuine
and signed by any party hereto or an authorized officer or agent
thereof, and shall not be required to investigate the truth or
accuracy of any statement contained in any such document or
instrument. The Escrow Agent may assume that any Person
purporting to give any notice in accordance with the provisions of
this Agreement has been duly authorized to do so.
(d) The Escrow Agent shall not be liable for any error
of judgment, or any action taken, suffered or omitted to be taken,
hereunder except in the case of its gross negligence, bad faith or
willful misconduct. The Escrow Agent may consult with counsel of
its own choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in
good faith and in accordance with the opinion of such counsel.
(e) The Escrow Agent shall have no duty as to the
collection or protection of the Escrow Fund or income thereon, nor
as to the preservation of any rights pertaining thereto, beyond
the safe custody of any such funds actually in its possession.
(f) As compensation for its services to be rendered
under this Agreement, for each year or any portion thereof, the
Escrow Agent shall receive a fee in the amount specified in
Schedule A to this Agreement and shall be reimbursed upon request
for all expenses, disbursements and advances, including reasonable
fees of outside counsel, if any,
incurred or made by it in connection with the preparation of this
Agreement and the carrying out of its duties under this Agreement.
All such fees and expenses shall be shared equally by the Seller
and the Shareholders, on the one hand, and the Purchaser, on the
other.
(g) The Purchaser, the Seller and the Shareholders
jointly but not severally agree to reimburse and indemnify the
Escrow Agent for, and hold it harmless against, any loss,
liability or expense, including, without limitation, reasonable
attorneys' fees, incurred without gross negligence, bad faith or
willful misconduct on the part of the Escrow Agent
<PAGE>
arising out of, or in connection with the acceptance of, or the
performance of, its duties and obligations under this Agreement. The
Purchaser, on the one hand, and the Seller and the Shareholders, on
the other, shall share equally the costs of any such loss, liability
or expense suffered by the Escrow Agent. The aggregate liability of
the Purchaser, on the one hand, and the Seller and the Shareholders,
on the other, shall in no event exceed 50% of any such loss, liability
or expense suffered by the Escrow Agent. The terms of this paragraph
(g) shall survive the termination of this Agreement.
(h) The Escrow Agent may at any time resign by giving
twenty Business Days' prior written notice of resignation to the
Seller, the Shareholders and the Purchaser. The Seller and the
Shareholders and the Purchaser may at any time jointly remove the
Escrow Agent by giving ten Business Days' written notice signed by
each of them to the Escrow Agent. If the Escrow Agent shall
resign or be removed, a successor Escrow Agent, which shall be a
bank or trust company having its principal executive offices in
____________, _________, and assets in excess of $10,000,000,000,
and which shall be reasonably acceptable to the Seller and the
Shareholders, shall be appointed by the Purchaser by written
instrument executed by the Seller, the Shareholders and the
Purchaser and delivered to the Escrow Agent and to such successor
Escrow Agent and, thereupon, the resignation or removal of the
predecessor Escrow Agent shall become effective and such successor
Escrow Agent, without any further act, deed or conveyance, shall
become vested with all right, title and interest to all cash and
property held hereunder of such predecessor Escrow Agent, and such
predecessor Escrow Agent shall, on the written request of the
Seller, the Shareholders, the Purchaser or the successor Escrow
Agent, execute and deliver to such successor Escrow Agent all the
right, title and interest hereunder in and to the Escrow Fund of
such predecessor Escrow Agent and all other rights hereunder of
such predecessor Escrow Agent. If no successor Escrow Agent shall
have been appointed within twenty Business Days of a notice of
resignation by the Escrow Agent, the Escrow Agent's sole
responsibility shall thereafter be to hold the Escrow Fund until
the earlier of its receipt of designation of a successor Escrow
Agent, a joint written instruction by the Seller, the Shareholders
and the Purchaser and termination of this Agreement in accordance
with its terms. Additionally, if no successor Escrow Agent shall
have been appointed within twenty business days of a notice of
resignation by the Escrow Agent, the Escrow Agent shall have the
right to institute a bill of interpleader in any court of
competent jurisdiction to determine the rights of the parties.
10. Termination. This Escrow Agreement shall terminate on
the earlier of: (a) the date on which there are no funds
remaining in the Escrow Fund, (b) two Business Days following the date
on which an Adjustment Amount described in a Purchaser's Certificate
delivered to the Escrow Agent shall have been paid to an account
designated by the Purchaser and the remaining Escrow Fund, if any,
shall have been paid to an account designated by the Seller, in each
case in accordance with Section 4 of this Agreement, and (c) two
Business Days after the Purchaser and the Seller shall have delivered
to the Escrow Agent
<PAGE>
a certificate stating that the Purchase Price is not required to be
adjusted downward pursuant to the terms of Section 2.07(c)(i) of
the Asset Purchase Agreement.
11. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be
given or made (and shall be deemed to have been duly given or made
upon receipt) by delivery in person, by courier service, by cable,
by telecopy, by telegram, by telex or by registered or certified
mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with
this Section 11):
(a) if to the Seller:
THC Systems, Inc.
c/o Mr. Eugene Goldberg
11796 Maidstone Drive
West Palm Beach, FL 33414
Telecopy: (561) 790-4406
with a copy to:
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019
Telecopy: (212) 554-7700
Attention: Solomon P. Friedman, Esq.
(b) if to the Shareholders, to:
Mr. Eugene Goldberg
11796 Maidstone Drive
West Palm Beach, FL 33414
Telecopy: (561) 790-4406
and to:
Mr. Robert Goldberg
16712 Sweet Bay Drive
Delray Beach, FL 33445
Telecopy: (407) 498-9518
<PAGE>
with a copy to:
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019
Telecopy: (212) 554-7700
Attention: Solomon P. Friedman, Esq.
(c) if to the Purchaser:
Oneida Ltd.
Oneida, NY 13421
Telecopy: (315) 363-3700
Attention: Catherine H. Suttmeier, Esq.
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: (212) 848-7179
Attention: Bonnie Greaves, Esq.
(d) if to the Escrow Agent, to:
The Chase Manhattan Bank N.A.
___________________________
___________________________
Telecopy: __________________
Attention: __________________
12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York
applicable to contracts executed and to be performed entirely
within that State.
13. Amendments. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on
behalf of, the Seller, the Shareholders, the Purchaser and the
Escrow Agent or (b) by a waiver in accordance with Section 14 of
this Agreement.
<PAGE>
14. Waiver. Any party hereto may (i) extend the time for
the performance of any obligation or other act of any other party
hereto or (ii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party
or parties to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent
breach or a subsequent waiver of the same term or condition, or a
waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
15. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by
any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic and legal substance of
the transactions contemplated by this Agreement is not affected in
any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement be
consummated as originally contemplated to the fullest extent
possible.
16. Entire Agreement. This Agreement and the Asset Purchase
Agreement constitute the entire agreement of the parties hereto
with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral, among the
Seller, the Shareholders, the Purchaser and the Escrow Agent with
respect to the subject matter hereof.
17. No Third Party Beneficiaries. This Agreement is for the
sole benefit of the parties hereto and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer
upon any other person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
18. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall
not affect in any way the meaning or interpretation of this
Agreement.
19. Counterparts. This Agreement may be executed in one or
more counterparts, and by different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original but all of which when taken together shall constitute one
and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above, in
the case of the Seller, the Purchaser and the Escrow Agent, by
their respective officers thereunto duly authorized.
THC SYSTEMS, INC.
By:
Name:
Title:
By:
Name: Eugene Goldberg
By:
Name: Robert Goldberg
ONEIDA COMMUNITY CHINA, INC.
By:
Name:
Title:
THE CHASE MANHATTAN BANK, N.A.
By:
Name:
Title:
<PAGE>
SCHEDULE A
[Escrow Agent Fees]
<PAGE>
EXHIBIT 10.03
FORM OF PRESS RELEASE
For Immediate Release: Contact: David A. Gymburch (315) 361-3271
August 29, 1996 Corporate Public Relations
http://www.oneida.com
ONEIDA LTD. TO ACQUIRE REGO CHINA FOR FOODSERVICE BUSINESS
Oneida, N.Y. - Oneida Ltd. (NYSE/OCQ) announced today it has
signed an agreement to purchase substantially all the assets and
assume certain liabilities of THC Systems, Inc., which operates as
Rego China, for approximately $45 million in cash. The
transaction is expected to be completed by the end of the year,
said Oneida Chairman and Chief Executive Officer William D.
Matthews.
THC, based in Melville, N.Y., is a leading importer and marketer
of commercial vitreous china and porcelain for the foodservice
industry in the United States. THC Chairman and Chief Executive
Officer Eugene Goldberg and Co-Chairman Robert Goldberg said the
company's customers include some of the nation's largest
foodservice distributors, restaurant chains and hotel chains.
Oneida will continue Rego China's present lines of business
through a separate subsidiary.
Mr. Matthews said the acquisition is an ideal complement to the
various china products marketed by the Oneida Foodservice
Division, including dinnerware manufactured by Oneida's Buffalo
China subsidiary. Rego, which has been in business for over 70
years, markets dinnerware for all segments of the foodservice
industry.
"Having Rego join us is a natural extension of Oneida's commitment
to the foodservice business," Mr. Matthews commented. "This truly
rounds out the selection of foodservice china we can offer, giving
us a great array of products. We anticipate many benefits from
the synergism of two widely recognized companies with
complementary product lines."
Oneida, incorporated in 1880, is the world's largest manufacturer
of stainless steel and silverplated flatware for both the consumer
and foodservice industries. Oneida also markets a variety of
serveware for those two industries.
<PAGE>
EXHIBIT 2.2
AMENDMENT TO ASSET PURCHASE AGREEMENT
AMENDMENT TO ASSET PURCHASE AGREEMENT, dated as of November
4, 1996 (this "Amendment"), among THC SYSTEMS, INC., a New York
corporation (the "Seller"), EUGENE GOLDBERG and ROBERT GOLDBERG
(each a "Shareholder" and, collectively, the "Shareholders"), and
ONEIDA COMMUNITY CHINA, INC., a New York corporation (the
"Purchaser"). All capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Asset Purchase
Agreement (as defined below).
WITNESSETH:
WHEREAS, the Seller, the Shareholders and the Purchaser have
entered into an Asset Purchase Agreement, dated as of August 29,
1996 (the "Asset Purchase Agreement"), pursuant to which the
Purchaser has agreed to purchase from the Seller, and the Seller
has agreed to sell to the Purchaser, the Business and the Assets,
and the Purchaser has agreed to assume the Assumed Liabilities;
and
WHEREAS, the Seller, the Shareholders and the Purchaser
desire to amend the Asset Purchase Agreement in certain respects;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Seller,
the Shareholders and the Purchaser hereby agree as follows:
SECTION 1. Definition of Excluded Assets. Section 2.01(b) of the
Asset Purchase Agreement is amended and restated in its entirety
as follows:
"(b) The Assets shall exclude the following assets owned by
the Seller (the "Excluded Assets"):
(i) the Purchase Price Bank Account;
(ii) the Excluded 401(k) Assets;
(iii) all rights of the Seller under this Agreement,
the Ancillary Agreements and the Guarantee;
<PAGE>
(iv) Eugene Goldberg's desk, desk chair, couch, club
chair, wooden cube and painting of a seashell by Fred Werner, each
of which is located in his office in Melville, New York;
(v) the Seller's 1989 Silver Spur Rolls Royce used by
Eugene Goldberg;
(vi) the Federal tax deposit that the Seller is required
to maintain with the IRS pursuant to Section 7519 of the Code as a
result of the fact that the Seller's taxable year ends on January
31, rather than December 31, of each year; and
(vii) all rights and causes of action against Allan
H. Conseur or Morton Cohen that the Seller may have pursuant to
any counterclaims in connection with any Actions brought by Allan
H. Conseur or Morton Cohen against the Seller, and all amounts
recovered or recoverable by the Seller from Allan H. Conseur or
Morton Cohen pursuant to any such counterclaims (or any settlement
thereof)."
SECTION 2. Assumption and Exclusion of Liabilities. Section 2.02
of the Asset Purchase Agreement is amended and restated in its
entirety as follows:
"SECTION 2.02. Assumption and Exclusion of Liabilities.
(a) On the terms and subject to the conditions of this Agreement,
the Purchaser shall, on the Closing Date, assume and shall pay,
perform and discharge when due all Liabilities of the Seller as at
the Closing Date arising out of or relating to the Business,
whether accrued or arising before or after the Closing, except for
the Excluded Liabilities as defined in Section 2.02(b) (the
"Assumed Liabilities").
(b) The Seller shall retain, and shall be responsible for
paying, performing and discharging when due, and the Purchaser
shall not assume or have any responsibility for, all Liabilities
of the Seller as of the Closing Date other than the Assumed
Liabilities (the "Excluded Liabilities"), including, without
limitation:
(i) subject to clause (ix) of this Section 2.02(b), all
Taxes not reflected on the Closing Balance Sheet now or hereafter
owed by the Seller or any Affiliate of the Seller, or attributable
to the Assets or the Business, relating to any period, or any
portion of any period, ending on or prior to the Closing Date (as
provided in Section 6.01) and all of the Seller's Income Taxes;
(ii) all Liabilities relating to or arising out of the
Excluded Assets;
(iii) all Liabilities relating to or arising out of
the dispute between the Seller and the Hunan Arts & Crafts Import
and Export Corporation;
<PAGE>
(iv) all Liabilities of the Seller for warranty claims,
quality-related claims or product liability claims relating to
products shipped prior to the Closing, other than reasonable
product and quality returns and allowances arising in the ordinary
course of the Business;
(v) all Liabilities of the Seller for Indebtedness to
bank lenders;
(vi) all Liabilities of the Seller relating to any loans
payable to any of the Seller's shareholders;
(vii) all Liabilities of the Seller under any
contracts for professional services entered into by the Seller in
connection with the transactions contemplated by this Agreement,
other than any such Liabilities that are reflected on the Closing
Balance Sheet;
(viii) all Liabilities relating to or arising out of
United States Customs duties or penalties relating to amounts
reflected in import documents as (A) interest payments and loading
(or stuffing) charges paid to the Guoguang factory in the People's
Republic of China for Inventories imported into the United States
from such factory by the Seller prior to the Closing Date or (B)
fees or other payments made to buying agents acting on behalf of
the Seller with respect to Inventories imported from Japan or
Korea into the United States by the Seller prior to the Closing
Date;
(ix) Liabilities in an aggregate amount not to exceed
$100,000 relating to or arising out of the customs classification
with regard to mugs imported into the United States by the Seller
prior to the Closing Date;
(x) all Liabilities relating to or arising out of any
Action brought by Allan H. Conseur or Morton Cohen against the
Seller or either Shareholder; and
(xi) all Liabilities relating to any penalties or
interest due with respect to any failure or delay by the Seller in
filing Form 5500s with respect to the Plans prior to the Closing
Date."
SECTION 3. Purchase Price. Section 2.03(a) of the Asset Purchase
Agreement is amended and restated in its entirety as follows:
"SECTION 2.03. Purchase Price; Allocation of Purchase
Price. (a) Subject to the adjustments set forth in Section 2.07,
the purchase price for the Assets shall be $44,618,316 (the
"Purchase Price")."
<PAGE>
SECTION 4. Effect on Asset Purchase Agreement. Except as
specifically amended hereby, all terms, provisions and conditions
of the Asset Purchase Agreement shall remain in full force and
effect, and such terms, provisions and conditions shall govern
this Amendment.
<PAGE>
IN WITNESS WHEREOF, the Seller, each Shareholder and the
Purchaser have caused this Amendment to be executed as of the date
first written above, in the case of the Seller and the Purchaser,
by their respective officers thereunto duly authorized.
THC SYSTEMS, INC.
By: /s/ Eugene Goldberg
Name:
Title:
/s/ Eugene Goldberg
Name: Eugene Goldberg
/s/ Robert Goldberg
Name: Robert Goldberg
ONEIDA COMMUNITY CHINA, INC.
By: /s/ Peter J. Kallet
Name:
Title:
<PAGE>
EXHIBIT 2.3
GUARANTEE
This GUARANTEE is dated as of August 29, 1996 and is delivered by
ONEIDA LTD., a New York corporation (the "Guarantor"), in connection
with the execution and delivery of the Asset Purchase Agreement,
dated as of August 29, 1996 (the "Asset Purchase Agreement"), among
THC SYSTEMS, INC., a New York corporation (the "Seller"), EUGENE
GOLDBERG and ROBERT GOLDBERG (together, the "Shareholders"), and
ONEIDA COMMUNITY CHINA, INC., a New York corporation and a direct
wholly owned subsidiary of the Guarantor (the "Purchaser"). All
capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Asset Purchase Agreement.
The Guarantor hereby guarantees to the Seller and the Shareholders
that all obligations of the Purchaser under the Asset Purchase
Agreement, the proposed Assumption Agreement between the Purchaser and
the Seller (the "Assumption Agreement") and the proposed Escrow
Agreement among the Seller, the Shareholders and the Purchaser (the
"Escrow Agreement" and, together with the Asset Purchase Agreement
and the Assumption Agreement, the "Transaction Agreements"), among the
Seller, the Shareholders and the Purchaser, forms of which are
attached to the Asset Purchase Agreement as Exhibits 1.01(a) and 2.08,
respectively, and which are to be executed and delivered at the
Closing, shall be promptly performed and complied with in accordance
with their respective terms. Upon the failure by the Purchaser to
fulfill any of its obligations under any of the Transaction Agreements
in accordance with the terms thereof, the Guarantor shall forthwith
assume and fulfill such obligations. The obligations of the
Guarantor hereunder with regard to any Transaction Agreement: (a)
shall continue as long as the Purchaser's obligations under any such
Transaction Agreement remain in effect; (b) shall not be extinguished
as a result of any change in the existence, structure or ownership of
the Purchaser; (c) shall continue to be effective or be reinstated, as
the case may be, if, at any time, any of the Purchaser's payments
under any such Transaction Agreement must be restored or returned by
the Seller or either of the Shareholders to the Purchaser or its
successors or to a custodian, receiver or a trustee in bankruptcy as a
result of any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Purchaser or its assets; and (d) shall not be
extinguished by an assignment by the Purchaser of any such Transaction
Agreement to an Affiliate of the Purchaser.
The provisions of this Guarantee shall be binding upon and redound
to the benefit of the Guarantor, the Seller and the Shareholders and
their respective successors and assigns; provided, however, that the
Guarantor may not assign, delegate or otherwise transfer any of its
rights or obligations under this Guarantee without the consent of the
Seller and the Shareholders. This Guarantee is for the sole benefit
of the Seller and the Shareholders and, except as otherwise
contemplated herein, nothing herein expressed or implied shall give or
be
<PAGE>
construed to give any Person, other than the Seller and the
Shareholders, any legal or equitable rights hereunder.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be executed and delivered by its officer hereunto duly authorized
as of the date first above written.
ONEIDA LTD.
By: /s/ Peter J. Kallet
Name:
Title: President
<PAGE>
EXHIBIT 2.4
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of August 29, 1996, between
ONEIDA COMMUNITY CHINA, INC., a New York corporation (the "Company"),
a subsidiary of ONEIDA LTD., a New York corporation ("Oneida") and
EUGENE GOLDBERG, an individual located at 11796 Maidstone Drive, West
Palm Beach, Florida 33414 ("Mr. Goldberg").
WHEREAS, the Company has entered into an Asset Purchase Agreement,
dated as of August 29, 1996 (the "Asset Purchase Agreement"), with THC
Systems, Inc. (the "Seller"), and Mr. Goldberg and Robert Goldberg
(collectively, the "Shareholders");
WHEREAS, the Seller is engaged in the business of importing
and distributing chinaware, flatware, hollowware and related products
to a diversified base of customers, including hotels,
restaurants, distributors, airlines and institutions (the "Business");
WHEREAS, the Shareholders own all of the issued and outstanding
shares of common stock, no par value, of the Seller;
WHEREAS, subject to the terms and conditions contained in the
Asset Purchase Agreement, the Company will buy and the Seller and
the Shareholders will sell the Business;
WHEREAS, Mr. Goldberg has been employed by the Seller and wishes
to terminate such employment; and
WHEREAS, the Company desires to retain Mr. Goldberg to render non-
exclusive consulting and advisory services to the Company, and Mr.
Goldberg is willing to make himself available to provide such
services, all on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter contained, the parties hereto
agree as follows:
1. Consulting Period. The period during which Mr. Goldberg shall be
engaged as a consultant by the Company (the "Consulting Period") shall
commence as of the closing of the acquisition of the Business pursuant
to the Asset Purchase Agreement (the "Commencement Date"), and shall
continue until the third anniversary of the Commencement Date. The
Company and Mr. Goldberg agree that they will enter into good faith
negotiations to extend the Consulting Period at least three (3) months
prior to the third anniversary of the Commencement Date, with such
negotiations being completed at least thirty (30) days prior to the
commencement of any such extended period. Section 4 shall survive any
termination of this Agreement and shall remain in full force and
effect.
<PAGE>
2. Consulting and Advisory Services. (a) Mr. Goldberg's services
hereunder during the Consulting Period shall consist of making himself
available (whether or not the Company chooses to use Mr. Goldberg's
services) to visit the former suppliers of the Seller in order to
enable the Company to maintain relationships therewith and to assist
the Company in subletting its office space in Melville, New York and
to perform such other general consulting and advisory services as the
Company may request from time to time; provided, however, that Mr.
Goldberg shall not be required to (i) travel to the Far East more than
once during each year of the Term, or (ii) to provide services
hereunder on more than fifteen (15) additional days each year during
the Term. The schedule for the performance of the services hereunder
shall be as reasonably requested by Oneida, taking into account Mr.
Goldberg's other obligations.
(b) Mr. Goldberg shall perform the consulting and advisory
services required pursuant to this Agreement in accordance with the
requests and direction of Mr. Peter J. Kallet, the President and Chief
Operating Officer of Oneida, and in the performance of such services
shall use his best efforts, judgment and energy to advance the
business and interests of the Company. Mr. Goldberg agrees to make
himself available for, and faithfully to devote his best efforts to,
the consulting and advisory services to be provided by him
hereunder in accordance with such requests and direction.
(c) In connection with the performance of his consulting and
advisory services hereunder, Mr. Goldberg must travel during the
Consulting Period as reasonably requested by the Company, including,
without limitation, traveling to the Far East once each year. The
Company shall provide Mr. Goldberg with first-class airfare and
accommodations comparable to the accommodations that were provided
heretofore by the Seller for himself and his spouse during such trips
to the Far East.
(d) The Company and Mr. Goldberg agree that Mr. Goldberg
shall not be an employee of the Company or any of its affiliates,
subsidiaries, joint venture partners, shareholders or parents
(such affiliates, subsidiaries, joint venture partners, shareholders
and parents being collectively referred to herein as the "Affiliates")
or any non-affiliated company or business for which Mr. Goldberg has
been asked by the Company to render any consulting or advisory
services hereunder during the Consulting Period but shall act in the
capacity of an independent contractor. Consequently, Mr. Goldberg
shall not be entitled to participate in any employee benefit plans,
programs or arrangements of the Company or any such Affiliates,
companies or businesses. Mr. Goldberg shall act solely in an advisory
capacity and in consequence shall not in any way hold himself out as
an officer, employee or director of the Company or any of its
Affiliates or any such company or business and, unless otherwise
instructed or authorized in writing, shall not have any authority to
act for the Company or any of its Affiliates or to give instructions
or orders on behalf of, or to make any decisions or commitments for or
on behalf of, the Company of any of its Affiliates.
<PAGE>
(e) Recognizing the customs in the Far East and for the
purpose of enabling Mr. Goldberg to function effectively as a
consultant, the Company will provide him with business cards
indicating that he is the Director Emeritus of the Company.
3. Compensation. (a) As compensation for the obligations to
be performed by Mr. Goldberg hereunder, the Company shall pay Mr.
Goldberg an annual fee (the "Consulting Fee") of one hundred
thousand dollars ($100,000.00), payable in ratable monthly
installments on the last day of each month; provided that Mr.
Goldberg shall otherwise be in compliance with the material terms
and conditions set forth in this Agreement at the time each monthly
payment is made. Mr. Goldberg hereby expressly agrees that to the
extent that any taxes arise or result from compensation payable to
him under this Agreement (other than taxes on the Company's net
income), Mr. Goldberg shall be solely responsible for the payment
thereof.
(b) The Company agrees to reimburse Mr. Goldberg for all
reasonable out-of-pocket expenses incurred by Mr. Goldberg in the
performance of his obligations under this Agreement for which
documentation reasonably satisfactory to the Company is provided,
which expenses shall be reimbursed to him in accordance with the
procedures of Oneida that are applicable to key executives of Oneida
and its subsidiaries at the time that such expenses are incurred, it
being understood that the cost of airfare, accommodations and expenses
incurred by Mr. Goldberg for himself and his spouse on any single trip
taken pursuant to paragraph (c) of Section 2 hereof shall not exceed
$45,000.
(c) Notwithstanding any other provision herein to the
contrary, if Mr. Goldberg dies prior to the expiration of the
Consulting Period, the Company shall be under no obligation to make
any additional payments to the Mr. Goldberg's estate after his death
except for any compensation accrued and reimbursement of expenses
incurred prior to his death but not yet paid. The Company shall also
continue to provide any benefits to Mr. Goldberg's survivors as
required by law.
4. Confidential Treatment. Mr. Goldberg understands and
acknowledges that, in the course of his engagement as a consultant,
he will have access to and will learn confidential information and
trade secrets concerning the operations of the Company and its
Affiliates. Accordingly, Mr. Goldberg agrees that he shall not
knowingly disclose or reveal to any unauthorized person, during or
after the Consulting Period, any confidential information relating to
the Company or any of its Affiliates or any other company or business
with respect to which Mr. Goldberg may be requested to render services
hereunder. Mr. Goldberg confirms that such information is the
exclusive property of the Company or such other Affiliates, companies
or businesses, as the case may be, and Mr. Goldberg agrees to hold as
the property of the Company, or such Affiliates, companies or
businesses, as the case may be, all memoranda, books, papers, letters
and other data, and all copies thereof or therefrom, whether made by
Mr. Goldberg or otherwise coming into Mr. Goldberg's possession, and,
on termination of Mr. Goldberg's engagement, or on demand of the
Company at any time, to deliver the same to the Company. Mr.
Goldberg acknowledges and
<PAGE>
agrees that damages for breach of the covenant in this Section 4 will
be difficult to determine and will not afford a full and adequate
remedy, and therefore agrees that the Company, in addition to seeking
actual damages, may seek specific enforcement of the covenant in any
court of competent jurisdiction, including, without limitation, by the
issuance of a temporary or permanent injunction, without the
necessity of a bond.
5. Source of Payments. All payments provided under this Agreement
shall be paid in cash from the general funds of the Company, and no
special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Mr. Goldberg shall
have no right, title or interest whatever in or to any investments
which the Company may make to aid the Company in meeting its
obligations hereunder. Nothing contained in this Agreement, and no
action taken pursuant to its provisions, shall create or be construed
to create a trust of any kind, or a fiduciary relationship, between
the Company and Mr. Goldberg or any other person. To the extent that
any person acquires a right to receive payments from the Company
hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
6. Nonassignability; Binding Agreement. (a) Neither this Agreement
nor any right (other than the right to receive payments), duty,
obligation or interest hereunder shall be assignable or delegable by
Mr. Goldberg or his legal representatives; provided, however, that
nothing in this subsection (a) shall preclude Mr. Goldberg from
designating a beneficiary to receive any benefit payable hereunder
upon his death or the legal representatives of Mr. Goldberg's estate
from assigning any rights hereunder to the person or persons entitled
thereto.
(b) This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto, any successors to or permitted assigns
of the parties hereto and the legal representatives of Mr. Goldberg's
estate.
7. Notices. Any notice hereunder by either party to the other shall
be given in writing by personal delivery, telex, telecopy or certified
mail, return receipt requested, to the applicable address set forth
below:
To the Company: Oneida Community China, Inc.
c/o Oneida Ltd.
Oneida, New York 13421
Attention: Catherine H. Suttmeier, Esq.
With a Copy to: Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: John J. Cannon, III, Esq.
<PAGE>
To Mr. Goldberg: Mr. Eugene Goldberg
11796 Maidstone Drive
West Palm Beach, Fl. 33414
With a Copy to: Moses & Singer, LLP
1301 Avenue of the Americas
New York, New York 10019
Attention: Solomon P. Friedman, Esq.
(or such other address as may from time to time be designated by
notice by any party hereto for such purpose). Notice shall be deemed
given, if by personal delivery, on the date of such delivery or, if by
telecopy, on the business day following receipt of answer back or
telecopy confirmation or, if by certified mail, on the date shown on
the applicable return receipt.
8. New York Law. This Agreement is to be governed by and
interpreted in accordance with the laws of the State of New York,
without giving effect to the choice-of-law provisions thereof. If,
under such law, any portion of this Agreement is at any time deemed to
be in conflict with any applicable statute, rule, regulation or
ordinance, such portion shall be deemed to be modified or altered to
conform thereto or, if that is not possible, to be omitted from this
Agreement, and the invalidity of any such portion shall not affect the
force, effect and validity of the remaining portion hereof.
9. Entire Agreement; Amendment. This Agreement sets forth the entire
understanding of the Company and Mr. Goldberg with respect
to the subject matter hereof and cannot be amended or modified except
by a writing signed by both parties. No waiver of any term or
provision of this Agreement shall be effective unless in a writing
executed by the party charged therewith.
10. Counterparts. This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and
the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, effective as of the day and year first set forth above.
ONEIDA COMMUNITY CHINA, INC.
By: /s/ Peter J. Kallet
Title: President
/s/ Eugene Goldberg
Eugene Goldberg
<PAGE>
EXHIBIT 99.1
For Immediate Release: Contact: David A. Gymburch (315) 361-3271
November 4, 1996 Corporate Public Relations
http://www.prnewswire.com
(Co. News section)
ONEIDA LTD. COMPLETES ACQUISITION OF REGO CHINA
Oneida, N.Y. - Oneida Ltd.(NYSE/OCQ) today announced it has
completed the purchase of substantially all the assets of THC Systems,
Inc., which operates as Rego China. The transaction, for approximately
$45 million in cash, also involves Oneida assuming certain THC
liabilities including accounts payable and related business expenses,
said Oneida Chairman and Chief Executive Officer William D. Matthews.
Oneida on August 29 announced an agreement to acquire THC, which is
based in Melville, N.Y., and is a leading importer and marketer of
commercial vitreous china and porcelain for the foodservice industry.
THC Chairman and Chief Executive Officer Eugene Goldberg and
Co-Chairman Robert Goldberg said the company's customers include some
of the nation's largest foodservice distributors, restaurant chains
and hotel chains. Oneida will continue Rego China's present lines of
business through a separate subsidiary.
"Rego's current customer accounts and chains of supply will be
maintained without any interruption, "Mr. Matthews commented. "We
expect a smooth transition as Rego products become part of our Oneida
Foodservice Division. Rego is a perfect complement to the various
china products we already market. It will help us better serve our
current customers as well as expand our base of business.
Oneida, incorporated in 1880, is the world's largest manufacturer
of stainless steel and silverplated flatware for both the consumer and
foodservice industries. The company's Buffalo China subsidiary
manufactures dinnerware for the foodservice industry, and Oneida also
markets foodservice dinnerware by Noritake and Schonwald.
<PAGE>
