<PAGE>
January 10, 1997
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.
<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) January 2, 1997
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 of File Number) Identification Number)
incorporation)
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 5 OTHER EVENTS
The information required by this item is incorporated by reference to a
press release and the Stock Purchase Agreement, both dated January 2, 1997,
which are attached as exhibits to this Form.
EXHIBITS EXHIBIT 2
Stock Purchase Agreement by and among International Wire Group,
Inc., Camden Wire Co., Inc. and Oneida Ltd. dated January 2, 1997.
EXHIBIT 99.1
Press Release dated January 2, 1997.
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.
By: /s/ CATHERINE H. SUTTMEIER
Catherine H. Suttmeier
Vice President, Secretary
and General Counsel
Dated: January 10, 1997
<PAGE>
EXHIBIT 2
STOCK PURCHASE AGREEMENT
by and among
INTERNATIONAL WIRE GROUP, INC.
CAMDEN WIRE CO., INC.
and
ONEIDA LTD.
January __, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE OF SHARES; PAYMENT OF COMPANY OBLIGATIONS
1
1.1 Purchase and Sale of the Shares 1
1.2 Determination and Payment of Purchase Price 2
1.3 Payment of Inter-Company Debt 5
ARTICLE II
THE CLOSING
5
2.1 The Closing 5
2.2 Deliveries at the Closing 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER
6
3.1 Corporate Organization 6
3.2 Corporate Authority; Absence of Conflicts 6
3.3 Outstanding Capital Stock; Title to Shares 7
3.4 Financial Statements 8
3.5 Absence of Undisclosed Liabilities 9
3.6 Absence of Material Adverse Changes 9
3.7 Real Property 11
3.8 Tangible Personal Property 12
3.9 Accounts Receivable 13
3.10 Accounts Payable 14
3.11 Inventory 14
3.12 Backlog 14
3.13 Computer Software 14
3.14 Material and Affiliated Contracts 14
3.15 Compliance with Laws 16
<PAGE>
3.16 Legal Proceedings 16
3.17 Ability to Conduct the Business 17
3.18 Labor Matters 17
3.19 Employee Benefit Plans 19
3.20 Environmental Matters 22
3.21 Products 24
3.22 Tax Matters 25
3.23 Insurance 26
3.24 Minute Books; Stock Record Books 26
3.25 Brokers' or Finders' Fees 27
3.26 Material Customers and Suppliers 27
3.27 Bank Accounts; Powers of Attorney 28
3.28 Books and Records 28
3.29 Sales Representatives and Other Sales
Agents/Sales Offices 28
3.30 Transaction Expenses 28
3.31 Schedules 28
3.32 Reliance 28
29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
29
4.1 Organization and Corporate Power 29
4.2 Corporate Authority; Absence of Conflicts 29
4.3 No Investigation 30
4.4 Securities Act of 1933 30
4.5 Reliance 30
4.6 Brokers' or Finders' Fees 30
4.7 Financing 30
ARTICLE V
AGREEMENTS OF THE PARTIES RELATED TO TRANSACTIONS
30
5.1 Full Access 30
5.2 Preservation of Business 31
5.3 Negative Covenants of Seller 31
5.4 Third Party Consents 33
5.5 Schedules Update 33
5.6 Tax Matters 33
<PAGE>
5.7 Transfer Taxes 34
5.8 Best Efforts and Certain Filings 35
5.9 Industrial Revenue Bonds 35
5.10 Insurance 35
5.11 Workers' Compensation 35
5.12 Use of Seller's Name 36
5.13 Third-Party Offers 36
5.14 Ketchum Letter Agreement 36
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
36
6.1 Representations and Covenants 37
6.2 Closing Certificate 37
6.3 Legal Opinion 37
6.4 Injunction 37
6.5 Lender's Consent 37
6.6 HSR Act 37
6.7 Company IRBs 37
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
37
7.1 Representations and Covenants 38
7.2 Closing Certificate 38
7.3 Legal Opinion 38
7.4 Injunction 38
7.5 Material Adverse Change 38
7.6 Directors Resignations 38
7.7 FIRPTA Affidavit 38
7.8 Bank Accounts/Powers of Attorney 38
7.9 HSR Act 39
7.10 Selected Material Contracts and Permits, Etc. 39
7.11 Seller Indebtedness 39
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
39
8.1 Survival of Representations and Warranties 39
<PAGE>
8.2 Seller's Agreement to Indemnify 40
8.3 Buyer's Agreement to Indemnify 40
8.4 Notification of Claims and Definitive Resolutions41
8.5 Special Indemnification for Tax Liabilities 42
8.6 Limitations on Indemnification 45
8.7 Exclusive Remedy 46
ARTICLE IX
CERTAIN COVENANTS
46
9.1 Access by Seller 46
9.2 Maintenance of Records 47
ARTICLE X
MISCELLANEOUS
47
10.1 Expenses 47
10.2 Brokers 47
10.3 Notices 47
10.4 Successors and Assigns 48
10.5 Entire Agreement and Modification 49
10.6 Section and Other Headings 49
10.7 Governing Law 49
10.8 Counterparts 49
10.9 Further Assurances 49
10.10 Severability 49
10.11 Confidentiality 50
10.12 No Third Party Beneficiaries 50
10.13 Termination by Buyer 50
10.14 Termination by Seller 50
<PAGE>
Schedules
Schedule Description Ref. Page #
3.1(a) Jurisdictions in which the 6
Company is Qualified to Transact Business
as a Foreign Corporation and is in
Good Standing
3.4 Financial Statements 8
3.5 Undisclosed Liabilities 9
3.6 Material Adverse Changes 9
3.7(a),(b),(d),(f) Real Property 11-12
3.8(a),(b) Tangible Personal Property 12-13
Subject to Encumbrances
3.11 Inventory 14
3.14(a),(b),(c) Material and Affiliated Contracts 14-16
3.16 Litigation 16
3.18(b),(c),(e) Labor Matters 18-19
3.19(b),(c),(d),(e) Employee Benefit Plans 20-21
3.20,(g),(k) Environmental Matters 22-23
3.21 Products Liability Claims 24
3.22(b),(d),(f) Tax Matters 25-26
3.23 Insurance 26
3.26(a),(b) Material Customers and Suppliers 27
3.27 Bank Accounts; Powers of Attorney 28, 32
3.28 Books and Records 28
3.29 Sales Representatives 28
<PAGE>
Exhibits
A Opinion of Weil, Gotshal & Manges LLP, Counsel to Buyer
B Opinion of Catherine H. Suttmeier, General Counsel to the Company and Seller
C FIRPTA Affidavit
D Resolution Memorandum
E Ketchum Letter Agreement
<PAGE>
Location of Defined Terms
Defined Term Section Page
Affiliate 8.5(b) 42
Agreement Preamble 1
Bank Accounts 3.27 28
Benefit Plan 3.19(a) 19
Buyer Preamble 1
Buyer's Accountants 1.2(c) 3
Buyer Indemnity Claim 8.2 40
CAC 1.1 2
CAC Stock Purchase Agreement 1.1 2
Closing 2.1 5
Closing Balance Sheet 1.2(b) 3
Closing Date 2.1 5
Closing Date Payment 1.2(a) 2
Code 3.22(h) 26
Common Control Entity 3.19(d) 20
Company Preamble 1
Company IRBs 5.9 35
Competitive Proposal 5.13 36
Costs 8.5(d) 43
Definitively Resolved 8.4(c) 41
Dispute Notice 1.2(c)(i) 3
Employee 3.18(a) 17
Encumbrance 3.7(b) 11
Environmental Law 3.20(l) 23
ERISA 3.19(a) 19
Final Resolution 8.5(f) 44
Former Employee 3.18(a) 17
Hazardous Substance 3.20(l) 24
HSR Act 3.2(b) 7
INA 3.18(e) 19
Instrument 3.2(b) 7
Latest Balance Sheet 3.4(b) 8
Latest Financial Statements 3.4(b) 8
Leased Real Property 3.7(a) 11
<PAGE>
Material Adverse Effect 3.5 9
Material Contracts 3.14(b) 16
Material Customer 3.26(a) 27
Material Disputed Items 1.2(c)(i) 3
Material Permits 7.10 39
Material Supplier 3.26(b) 27
near relatives 3.27 16
Neutral Accountants 1.2(c)(ii) 4
Other Real Property Interests 3.7(a) 11
Owned Real Property 3.7(a) 11
Parties' Accountants 1.2(c)(ii) 4
PBGC 3.19(d) 20
Permitted Liens 3.6(d) 11
Person 3.1(b) 6
Purchase Price 1.1 1
Purchase Price Cap 1.1 2
Purchase Price Floor 1.1 2
Purchase Price Collar 1.1 2
RCRA 3.20(l) 24
Real Property 3.7(a) 11
Related Party 3.14(b) 16
Resolution Memorandum 8.4(b) 41
Selected Material Contracts 7.10 39
Seller Preamble 1
Seller's Accountants 1.2(b) 3
Seller Indemnity Claim 8.3 40
Shares Preamble 1
Tax 3.22(a) 24
Tax Claim Termination Date 8.1(a) 39
Tax/ERISA Claim 8.1(a) 39
Tax Liability 8.5(c) 43
Tax Recoupment 8.5(i) 45
Third-Party Claim 8.4(d) 42
Total Stockholders' Equity 1.1 2
1996 Balance Sheets 3.4(a) 8
1996 Financial Statements 3.4(a) 8
<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of the 2nd day of January, 1997,
by and among International Wire Group, Inc., a Delaware corporation ("Buyer"),
Camden Wire Co., Inc., a New York corporation (the "Company"), and Oneida Ltd.,
a New York corporation ("Seller"), recites as a preamble the following:
I. Seller owns, beneficially and of record, all of the issued and
outstanding shares (the "Shares") of common stock, no par value, of the Company.
II. Buyer desires to purchase the Shares from Seller, and Seller desires to
sell the Shares to Buyer, upon the terms and subject to the conditions of this
Agreement.
NOW, THEREFORE, in view of the premises and in consideration of the
agreements and mutual covenants contained in this Agreement, the parties
intending to be legally bound, agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES; PAYMENT OF COMPANY OBLIGATIONS
1.1 Purchase and Sale of the Shares. At the Closing (as hereinafter
defined), Seller shall assign, transfer and deliver to Buyer, and Buyer shall
purchase and accept from Seller, the Shares, for an aggregate purchase price
(the "Purchase Price") equal to the sum of (i) $9,000,000 and (ii) the Total
Stockholders' Equity of the Company on the Closing Date (as hereinafter defined)
as shown on the Closing Balance Sheet (as hereinafter defined); provided,
however, in the event that the sum of (i) the Purchase Price (including any
adjustment thereto pursuant to Section 1.2), (ii) the aggregate amount of
intercompany debt and intercompany payables Buyer is obligated to pay pursuant
to Section 1.3, (iii) all indebtedness for borrowed money of the Company owing
as of the Closing Date, including (A) the Company's liabilities under the
Company IRBs (as hereinafter defined), (B) obligations as lessee under
capitalized leases, (C) all obligations for borrowed money evidenced by bonds,
debentures, notes, letters of credit, or other similar arrangements, (D)
obligations to pay the deferred purchase price of property or services
(excluding trade payables), (E) all debt of others guaranteed by the Company
and (F) all interest, charges, fees, expenses and penalties, including
prepayment penalties on or which become due as a result of mandatory payments
(payments related to the Company IRBs shall not be deemed
<PAGE>
mandatory to the extent such payments would have not been mandatory if Buyer
would have caused to be issued one or more letters of credit equal to the
outstanding balance of the Company IRBs) required to be made by the Company on
any indebtedness solely as a result of the consummation of the transaction
contemplated hereby, (iv) all fees and expenses paid or payable by the Company
to Camden Acquisition Company ("CAC") as a result of the termination of that
certain Stock Purchase Agreement (the "CAC Stock Purchase Agreement") dated
November 26, 1996 among CAC, the Company and Seller and (v) the gross amount of
all severance, parachute or similar payments to which any officer, director or
employee is entitled to receive from the Company as a result of the consummation
of the transaction contemplated hereby (without regard to taxes or other
withholdings), (I) exceeds $61 million (the "Purchase Price Cap"), then the
Purchase Price shall be reduced to an amount which when added to items (ii),
(iii), (iv) and (v) above would equal $61 million or (II) is less than $59
million (the "Purchase Price Floor" and together with the Purchase Price Cap the
"Purchase Price Collar"), then the Purchase Price shall be increased to an
amount which when added to items (ii), (iii), (iv) and (v) above would equal $59
million. For all purposes of this Agreement the term "Total Stockholders'
Equity," as of any date, shall mean an amount determined in accordance with
generally accepted accounting principles applied on a basis consistent with the
accounting principles and practices applied in the preparation of the 1996
Balance Sheet (as hereinafter defined) (provided, however, that Total
Stockholder Equity on the Closing Date shall be calculated before giving effect
to the repayment of the intercompany debt and intercompany payables pursuant to
Section 1.3, no liabilities or reserves reflected on the Latest Balance Sheet
shall be reduced prior to the Closing except in the ordinary course of business
consistent with past practices and no prepaid asset shall be included on the
Closing Date Balance Sheet unless the Company can utilize the benefit thereof
in the ordinary course of business after the Closing), and is intended to
correspond with the line on the 1996 Balance Sheet designated as Total
Stockholders' Equity.
1.2 Determination and Payment of Purchase Price. The Purchase Price shall
be determined and paid as follows:
(a) On the Closing Date, subject to the Purchase Price Collar, Buyer
shall pay to Seller an amount equal to the sum of (i) $9,000,000 and (ii) the
Total Stockholders' Equity of the Company reflected on the regularly prepared
financial statements of the Company as of the last day of the most recent fiscal
month of the Company, or if financial statements of the Company are not
available on the Closing Date for the most recent fiscal month of the Company,
for the next preceding fiscal month the "Closing Date Payment").
<PAGE>
The Purchase Price shall be subject to adjustment after the Closing
Date as follows:
(b) As soon as practicable after the Closing Date, but in any event
not more than ninety (90) days after the Closing Date, Seller shall cause
Coopers & Lybrand, independent public accountants to be retained by the Seller
for this purpose ("Seller's Accountants"), to audit and issue their report on
the balance sheet of the Company as at the Closing Date (the "Closing Balance
Sheet"). The Closing Balance Sheet shall be accompanied by a certificate of the
Seller's Accountants stating the Total Stockholders' Equity of the Company as of
the Closing Date as computed by them and certifying (i) that the Closing Balance
Sheet has been prepared in accordance with generally accepted accounting
principles applied in a manner consistent with the past practices of the
Company, and (ii) the Closing Balance Sheet fairly presents the financial
condition of the Company as of the Closing Date.
(c) Upon receipt of the Closing Balance Sheet and the certificate of
Seller's Accountants described in subsection (b), Buyer shall have thirty (30)
days within which to review the same and register any objections, provided that
Buyer may object to the Closing Balance Sheet only on the basis that the Closing
Balance Sheet (i) was not prepared in accordance with generally accepted
accounting principles applied on a basis consistent with those principles used
in preparing the 1996 Balance Sheet and the principles set forth in the proviso
in the last sentence of Section 1.1., or (ii) was not based on the application
of generally accepted auditing standards. If Buyer does not object to any
portion of the Closing Balance Sheet or such certificate within 30 days, it
shall countersign such certificate and the Closing Balance Sheet shall be deemed
to have been finally determined as the amount set forth therein. In the event
that Buyer or Buyer's accountants ("Buyer's Accountants") shall dispute any
item contained in the Closing Balance Sheet, or whether the computations set
forth in the Closing Certificate have been made in accordance with the
requirements of this Section 1.2, the following procedures will apply:
(i) Within thirty (30) days of receipt of the Closing Balance
Sheet, Buyer shall give written notice (the "Dispute Notice") to Seller setting
forth in reasonable detail the basis for any such dispute or controversy and, to
the extent practicable, the specific items in dispute and a good faith estimate
of the amount thereof. Buyer shall not be entitled to dispute any single line
item (i.e., all disputes relating to accounts receivable shall be treated as a
single line item) unless such line item involves $50,000 or more. If the
aggregate amount of the items in dispute (and with respect to line items, each
of which involves at least $50,000) is in excess of
<PAGE>
$500,000, all such items (the "Material Disputed Items") shall be resolved in
accordance with the remaining paragraphs of this subsection (c).
(ii) Upon receipt of a Dispute Notice by Seller involving
Material Disputed Items, Buyer's Accountants, on behalf of Buyer, and the
Seller's Accountants, on behalf of the Seller (such accountants being
hereinafter collectively referred to as the "Parties' Accountants"), shall
promptly commence good faith negotiations with a view to resolving the Material
Disputed Items and, in connection with such negotiations Seller's Accountants
shall provide access to its workpapers to Buyer's Accountants. If such dispute
or controversy shall not have been resolved by mutual agreement of the parties
or the Parties' Accountants within thirty (30) days after Seller's receipt of
the Dispute Notice, Buyer and Seller shall jointly appoint, within ten (10) days
thereafter, the Rochester, New York office of Peat Marwick or such other firm
of accountants as the parties may agree (the "Neutral Accountants"), to resolve
such Material Disputed Items.
(iii) The Neutral Accountants shall make their determination as
to such Material Disputed Items within thirty (30) days after their appointment.
The Neutral Accountants shall act as arbitrators, and shall proceed to resolve
all Material Disputed Items in accordance with generally accepted accounting
principles applied on a basis consistent with those used in preparing the 1996
Balance Sheet and the principles set forth in the proviso in the last sentence
in Section 1.1. In resolving such Material Disputed Items, the Neutral
Arbitrators may follow such procedures as the Neutral Accountants deem
appropriate, including requesting written or oral explanations, submissions or
information from the parties. The determination of the Neutral Accountants shall
be a final determination of the Material Disputed Items, binding and conclusive
as between Buyer and the Seller absent fraud or manifest error. The respective
fees and disbursements of the Parties' Accountants under this Section 1.2(c)
shall be borne by the party that retained such firm. The fees and disbursements
of the Neutral Accountants shall be apportioned between Buyer and the Seller as
part of the determination of the relevant dispute or controversy, in such manner
as the Neutral Accountants shall deem equitable in light of the issues raised
and the degree to which each party shall have prevailed on each such issue, it
being the parties' intention that the prevailing party should not bear such
costs.
(d) The Closing Balance Sheet shall be deemed finally settled for
purposes of this Section 1.2 upon the earlier of (i) Buyer's failure to deliver
a Dispute Notice within thirty (30) days after receipt of the Closing Balance
Sheet, (ii) resolution of all Material
<PAGE>
Disputed Items by agreement of the parties or the Parties' Accountants as
provided in Section 1.2(c)(ii) above, or (iii) resolution of all Material
Disputed Items by the Neutral Accountants as provided in Section 1.2(c)(iii)
above. Once the Closing Balance Sheet is deemed finally settled, the Closing
Balance Sheet shall be revised to reflect all Material Disputed Items agreed to
by the parties or resolved by the Neutral Arbitrators. The amount of the
Purchase Price shall be re-calculated based upon the Total Stockholders' Equity
as reflected on the revised Closing Balance Sheet. Subject to the Purchase
Price Collar, if the Closing Date Payment is less than the sum of (i) $9,000,000
and (ii) the Total Stockholders' Equity as reflected on the revised Closing
Balance Sheet, Buyer shall pay such difference, without interest, within ten
(10) days after settlement of the revised Closing Balance Sheet. Subject to the
Purchase Price Collar, if the Closing Date Payment is greater than the sum of
(i) $9,000,000 and (ii) the Total Stockholders' Equity as reflected on the
revised Closing Balance Sheet, Seller shall refund such excess, without
interest, within ten (10) days after settlement of the revised Closing Balance
Sheet.
1.3 Payment of Inter-Company Debt. At the Closing, Buyer shall take all
action necessary to cause the Company to pay to Seller all inter-company debt
and inter-company payables owed by the Company to Seller as of the Closing Date,
which shall be paid simultaneously with the Purchase Price at the Closing,
subject to adjustments in accordance with the determination of the Closing
Balance Sheet.
ARTICLE II
THE CLOSING
2.1 The Closing. Subject to Articles VI and VII, the consummation of the
transactions contemplated at Article I (the "Closing") shall take place at the
offices of Bond, Schoeneck & King, LLP on January 17, 1997 or on such other ,
date or at such other place as the Buyer and Seller shall agree to in writing.
The day of closing is referred to herein as the "Closing Date."
2.2 Deliveries at the Closing. (a) At the Closing, Buyer shall pay to
Seller the amounts described in Sections 1.2(a) and 1.3 by wire or electronic
funds transfer in immediately available funds to accounts designated in written
instructions delivered by Seller to Buyer not less than three (3) business days
before the Closing Date.
(b) Simultaneously, Seller shall deliver to Buyer certificates (i)
evidencing the Shares, duly endorsed for transfer or accompanied by duly
executed stock powers assigning
<PAGE>
such Shares in blank, and with signature(s) guaranteed, in proper form for
transfer and with any applicable stock transfer stamps affixed, and (ii)
evidence satisfactory to Buyer that all inter-company debt of the Company to
Seller is discharged in full by the payment required by Section 1.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER
The Company and Seller hereby jointly and severally make the representations
and warranties set forth in this Article III, as of the date hereof and as of
the Closing Date:
3.1 Corporate Organization. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, and has all requisite corporate power and authority to own, lease and
operate the properties and assets it now owns, leases or operates and to carry
on its business as presently conducted or proposed to be conducted pursuant to
existing plans. The Company is duly qualified to transact business as a foreign
corporation and is in good standing in each of the jurisdictions set forth in
Schedule 3.1(a), which are the only jurisdictions where such qualification is
required by reason of the nature or location of the properties and assets owned,
leased or operated by it or the business conducted by it. Prior to the date
hereof, the Company has delivered to Buyer complete and correct copies of its
Certificate of Incorporation, as amended to date (certified by the competent
authority of the state of incorporation of the Company within thirty (30) days
of the date hereof), and its By-Laws, as amended to date (certified by the
Secretary of the Company within thirty (30) days of the date hereof). Neither
the Certificate of Incorporation nor the By-Laws of the Company will have been
amended since the respective dates of certification thereof, nor will any action
have been taken for the purpose of effecting any amendment of such
instruments. The minute books and stock record books of the Company shall be
delivered to Buyer at the Closing.
(b) The Company has no subsidiaries and does not own, of record or
beneficially, directly or indirectly, any equity or other proprietary interest,
or right to acquire any such interest, contingent or otherwise, in any other
corporation, partnership, joint venture, limited liability company, business
enterprise or other entity of any nature whatsoever (a "Person").
3.2 Corporate Authority; Absence of Conflicts. (a) Each of Seller and the
Company has full corporate power and authority to execute, deliver and perform
this Agreement. The
<PAGE>
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved by the Boards of
Directors of Seller and the Company, and no other corporate actions on the part
of Seller or the Company are necessary to authorize and approve the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
each of Seller and the Company and constitutes the valid and binding agreement
of each of Seller and the Company, enforceable against each of them in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to or
affecting creditors' rights.
(b) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance with the
terms hereof, will (i) conflict with or result in a breach of the Certificate of
Incorporation or By-Laws of Seller or the Company, nor (ii) except as set forth
on Schedule 3.14(c) attached hereto, violate, conflict with or result in a
breach of or default (or be any event which with the lapse of time or the giving
of notice or both would constitute an event of default) under any of the terms,
conditions or provisions of any material agreement, understanding, arrangement,
commitment, indenture, contract, lease, sublease, loan agreement, note, or other
document or instrument to which Seller or the Company is a party or by which
they are bound or to which they or their assets are subject (individually, an
"Instrument" and collectively, the "Instruments"), nor (iii) accelerate or give
to others any interests or rights, including rights of acceleration,
termination, modification or cancellation, under any Instrument or in or with
respect to the business or assets of Seller or the Company, nor (iv) result in
the creation of any Encumbrance (as hereinafter defined) on the assets, capital
stock or properties of Seller or the Company, nor (v) conflict with, violate or
result in a breach of or constitute a default under any law, statute, rule,
judgment, order, decree, injunction, ruling or regulation of any government,
governmental agency, authority or instrumentality, court or arbitration tribunal
to which Seller or the Company or any of their assets or properties are subject,
nor (vi) require Seller or the Company to give notice to, or obtain an
authorization, approval, order, license, franchise, declaration or consent of,
or make a filing with, any third party, including, any foreign, federal, state,
county, local or other governmental or regulatory body, other than such filings
as are required under the Hart-Scott-Rodino Antitrust Improvements Acts of 1976,
as amended (the "HSR Act").
3.3 Outstanding Capital Stock; Title to Shares. (a) The authorized capital
stock of the Company consists of 1,000 shares of common stock, no par value, of
which one (1.0) Share is issued and outstanding, which one (1) Share is owned,
beneficially and of record, by Seller. No other class of capital stock of the
Company is authorized or outstanding. All of the issued and outstanding Shares
are duly authorized and are validly issued, fully paid and
<PAGE>
nonassessable, and none of such Shares have been issued in violation of any
preemptive rights of shareholders. The Shares constitute all of the issued and
outstanding shares of capital stock of the Company.
(b) Seller is, and immediately following the Closing Buyer will be,
the beneficial and record owner of all of the Shares, free and clear of any
Encumbrances. There are no agreements, arrangements or understandings
(including, without limitation, options or rights of first refusal) to which
Seller is a party relating to the purchase, sale or other disposition of the
Shares or any interest therein.
(c) There is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement of any kind to purchase
or otherwise to receive from the Company or Seller any shares of the capital
stock or any other security of the Company, and there is no outstanding security
of any kind convertible into such capital stock.
3.4 Financial Statements. Attached hereto as Schedule 3.4 are the
following financial statements:
(a) The balance sheet of the Company as of January 27, 1996 (the
"1996 Balance Sheet"), and the related statements of income, retained earnings
and cash flows for the year then ended (the "1996 Financial Statements");
(b) The balance sheet of the Company as of November 23, 1996 (the
"Latest Balance Sheet") and the related statements of income, retained earnings
and cash flows for the ten-month period then ended (the "Latest Financial
Statements");
(c) The statements of income, retained earnings and cash flows for the
quarterly periods ended October 26, 1996, July 27, 1996 and April 27, 1996; and
(d) The balance sheets of the Company as of January 28, 1995 and
January 29, 1994, and the related statements of income, retained earnings and
cash flows for the years then ended.
Each of the said financial statements (i) fairly presents the financial
position, results of operations and cash flows of the Company for the respective
periods stated therein, (ii) has been prepared from and is consistent with the
books and records of the Company, (iii) is complete and correct in all material
respects, and (iv) has been prepared in accordance with generally accepted
accounting principles, consistently applied (in each case, as part of a
<PAGE>
consolidated group) subject, in the case of the Latest Financial Statements and
the quarterly financial statements described in subsection (c), to normal year
end adjustments consistent with prior periods. No notes are included in the
financial statements.
3.5 Absence of Undisclosed Liabilities. Except as set forth in Schedule
3.5, the Company does not have any liabilities or obligations of any nature,
whether accrued, absolute, contingent, unliquidated or otherwise, whether due or
to become due and whether arising out of transactions entered into or any
condition or state of facts existing on or prior to the date hereof, which would
in accordance with generally accepted accounting principles be reflected on, or
disclosed in the notes to, a balance sheet, other than (a) liabilities and
obligations set forth on the Latest Balance Sheet, and (b) liabilities and
obligations which have arisen after the date of the Latest Balance Sheet in the
ordinary course of business, all of which are properly reflected in the books
and records of the Company and which will not, individually or in the aggregate,
have a material adverse effect on the business, assets, liabilities, financial
condition, results of operations or operations of the Company (a "Material
Adverse Effect").
3.6 Absence of Material Adverse Changes. Except as set forth in Schedule
3.6 hereto, since the date of the Latest Balance Sheet, the Company has carried
on its business in the ordinary course and consistent with past practice. Except
as set forth in Schedule 3.6 hereto, since the date of the Latest Balance Sheet
(except as set forth in subsection (l) of this Section 3.6) the Company has not:
(a) incurred any obligation or liability (whether absolute, accrued,
contingent or otherwise), except in the ordinary course of business and
consistent with past practice;
(b) discharged or satisfied any Encumbrance, or paid any obligation or
liability, absolute, accrued, contingent, or otherwise, whether due or to become
due, other than obligations or liabilities incurred in the ordinary course of
the Company's business;
(c) suffered any damage, destruction or loss of physical property or
goods resulting in costs or expenses to the Company in excess of $100,000,
whether or not covered by insurance;
(d) mortgaged, pledged or subjected to any lien, charge or other
Encumbrance any of its assets, tangible or intangible, except for "Permitted
Liens" as that term is hereinafter defined or as set forth in one of the
Schedules hereto;
<PAGE>
(e) sold or transferred any of its assets or canceled or compromised
any of its debts, except, in each such case, in the ordinary course of business
and consistent with past practice, or waived any claims or rights of a material
nature;
(f) leased, licensed or granted to any person or entity any rights in
any of its assets or properties except in the ordinary course of business;
(g) experienced any material adverse change in its financial
condition, results of operations, cash flows, assets, liabilities, businesses,
prospects, or operations;
(h) experienced any material adverse change in its relationship with
any of its employees, salesmen, distributors, or independent contractors;
(i) made any capital expenditures or capital additions or betterments
in excess of an aggregate of Five Hundred Thousand Dollars ($500,000);
(j) revalued any of its assets;
(k) entered into any material transaction, contract or commitment of a
kind required to be disclosed on one of the Schedules, except as disclosed on
one of the Schedules hereto;
(l) since the date of the 1996 Balance Sheet, made any change in any
accounting principle or practice or in its method of applying any such principle
or practice;
(m) made any distributions (however characterized and whether payable
in cash or additional shares of stock) in respect of any shares of its capital
stock or declared or paid any dividends in a manner inconsistent with the
Company's customary practices with respect to dividends;
(n) repurchased or redeemed any shares of its capital stock;
(o) entered into any agreement to do any of the foregoing; or
(p) issued any additional shares of its capital stock or granted any
options, warrants or other rights to purchase, or any securities convertible
into or exchangeable for, shares of its capital stock.
<PAGE>
3.7 Real Property. (a) Schedule 3.7(a) sets forth a complete list and
summary description of (i) all real property owned by the Company (the "Owned
Real Property"), (ii) all real property leased or subleased by the Company (the
"Leased Real Property"), and (iii) all other rights or interests of the Company
in real property (the "Other Real Property Interests") (the Owned Real Property,
the Leased Real Property and the Other Real Property Interests are collectively
referred to herein as the "Real Property"). Prior to the date hereof, Seller has
delivered to Buyer true and correct copies of all leases, subleases, abstracts
of title, surveys, title opinions and title insurance policies in Seller's or
the Company's possession relating to all of the Real Property. None of the Real
Property reflected in the 1996 Balance Sheet or the Latest Balance Sheet has
been disposed of, and no real property has been acquired by the Company since
the date of the Latest Balance Sheet.
(b) Except for (i) liens disclosed in Schedule 3.7(b), (ii) liens for
current taxes not yet delinquent, (iii) covenants, conditions and restrictions
of record, all of which are reflected in the title documents, and none of which
materially impair the use of such property in the manner currently used or
impair the ability of the Company to deliver good and marketable title to
such Real Property, and (iv) any mechanic's, workmen's, repairmen's,
materialmen's, contractor's, warehousemen's, carrier's, supplier's or vendor's
lien, if payment is not yet due (the "Permitted Liens"), the Company has good
and marketable title in fee simple to all Owned Real Property, and a valid
leasehold interest in all Leased Real Property, free and clear of any
mortgage, pledge, security interest, lien, claim, charge, conditional sales
contract, restriction, reservation, option, right of first refusal, or other
encumbrance of any nature whatsoever (collectively, "Encumbrances"). Except as
set forth on Schedule 3.7(b), the Company has good and marketable title to all
structures, plants, leasehold improvements, systems, fixtures and other property
located on or about any of the Leased Real Property which are owned by the
Company, as reflected in the Latest Balance Sheet, free of any Encumbrances,
except for Permitted Liens and none of such assets is subject to any agreement,
arrangement or understanding for their use by any person other than the
Company.
(c) Each of the leases and subleases relating to the Leased Real
Property is in full force and effect, there is no default by the Company (or to
the best knowledge of the Company or Seller, by the lessor) under any such lease
or sublease, and each such lease and sublease will remain in full force and
effect following the Closing without any modification in the rights or
obligations of the parties under any such lease or sublease.
(d) Except as set forth in Schedule 3.7(d), no work has been performed
on or with respect to or in connection with any of the Real Property that would
cause such Real
<PAGE>
Property to become subject to any mechanic's, materialmen's, workmen's,
repairmen's, carrier's or similar liens aggregating in excess of $100,000.
(e) To the best of Seller's and the Company's knowledge, the
structures, plants, improvements, systems and fixtures (including, without
limitation, storage tanks or other impoundment vessels, whether above or below
ground) located on each such parcel of Real Property comply in all material
respects with all Federal, state and local laws, ordinances, rules, regulations
and similar governmental and regulatory requirements, and are in good operating
condition and repair, ordinary wear and tear excepted. To the best of Seller's
and the Company's knowledge, each such parcel of Real property (in view of the
purposes for which it is currently used) conforms in all material respects with
all covenants or restrictions of record and conforms with all applicable
building codes and zoning requirements and, to the best knowledge of Seller and
the Company, there is no proposed change in any such governmental or regulatory
requirements or in any such zoning requirements. All existing electrical,
plumbing, fire sprinkler, lighting, air conditioning, heating, ventilation,
elevator and other mechanical systems located in or about the Real Property are
in good operating condition and repair ordinary wear and tear excepted), except
for defects or deficiencies which would not have a Material Adverse Effect.
(f) The Other Real property Interests include all easements, rights-
of-way and similar rights necessary to conduct the Company's business as
presently conducted and to use all of its Real Property as currently used,
including, without limitation, easements and licenses for pipelines, power
lines, water lines, roadways and other access. Schedule 3.7(f) correctly lists
and describes all such easements and rights and all agreements and other
instruments (including any amendments) relating thereto which are not recorded.
All material easements and rights are valid, binding in favor of the Company and
in full force and effect; any amounts due and payable thereon to date have been
paid or have been fully accrued for in the Latest Balance Sheet or in the books
and records of the Company for periods after the date of the Latest Balance
Sheet, as applicable; neither the Company nor (to the best knowledge of the
Company and the Seller) any other party thereto is in default thereunder; and
there exists no event or condition affecting the Company or (to the best
knowledge of the Company and Seller) any other party thereto, which, with the
passage of time or notice or both, would constitute a default thereunder. No
material easement or right will be breached by, nor will any party thereto be
given a right of termination as a result of, the transactions contemplated by
this Agreement.
3.8 Tangible Personal Property. (a) The Company has good and marketable
title to all of the equipment, machinery, motor vehicles, inventories, supplies,
furniture and fixtures and other tangible personal property owned by the
Company, free and clear of any Encumbrance
<PAGE>
of any kind or nature whatsoever except as set forth in Schedule 3.8(a) and
except for Permitted Liens. All items of equipment, machinery, vehicles,
furniture, fixtures and other tangible personal property currently owned or used
by the Company as of the date hereof are in good operating condition and repair,
ordinary wear and tear excepted (except for defects or deficiencies which would
not have a Material Adverse Effect), are physically located at or about the
Company's place of business and are owned outright by the Company or validly
leased under leases set forth in Schedule 3.8(b). None of such personal
property is subject to any agreement, arrangement or understanding for its use
by any person other than the Company. The maintenance and operation of such
personal property complies with all applicable laws, regulations, ordinances,
contractual commitments and obligations, except for such noncompliance as would
not have a Material Adverse Effect. Except as set forth in Schedule 3.8(a), no
item of tangible personal property owned or used by the Company as of the date
hereof is subject to any conditional sale agreement, installment sale agreement
or title retention or security agreement or arrangement of any kind. As to each
item of personal property subject to any such agreement or arrangement, Schedule
3.8(a) sets forth a brief description of the property in question and the amount
and repayment terms of the underlying obligation. Schedule 3.8(a) sets forth a
complete and correct fixed asset list of the Company dated December 10, 1996.
(b) Schedule 3.8(b) sets forth a complete and correct list and summary
description of all material tangible personal property leases to which the
Company is a party, together with a brief description of the property leased.
Prior to the date hereof, the Company has made available to Buyer complete and
correct copies of each lease (and any amendments thereto) listed in Schedule
3.8(b). Except as set forth in Schedule 3.8(b): (i) each such lease is in full
force and effect; (ii) all lease payments due to date on any such lease have
been paid, and neither the Company nor (to the best knowledge of the Company and
Seller) any other party is in default under any such lease, and no event has
occurred which constitutes, or with the lapse of time or the giving of notice or
both would constitute, a default by the Company or (to the best knowledge of the
Company and Seller) any other party under such lease; and (iii) there are no
disputes or disagreements between the Company and any other party with respect
to any such lease.
3.9 Accounts Receivable. The accounts receivable reflected on the Latest
Balance Sheet are, and the accounts and notes receivable of the Company created
from and after the date of the Latest Balance Sheet to the Closing Date will be,
free and clear of any Encumbrance. All accounts receivable of the Company (i)
arose from bona fide sales of goods or services in the ordinary course of
business and consistent with past practice, (ii) are accurately and fairly
reflected on the Latest Balance Sheet or, with respect to accounts receivable of
the Company created after the date thereof and through the date of this
<PAGE>
Agreement are accurately and fairly reflected in the books and records of the
Company, and (iii) are fully collectible, without offset or counterclaim, net
of reserves, within ninety (90) days.
3.10 Accounts Payable. All accounts payable to the Company (i) arose from
bona fide purchases in the ordinary course of business and consistent with past
practice, and (ii) are accurately and fairly reflected on the Latest Balance
Sheet or, with respect to accounts payable of the Company created after the date
thereof and through the date hereof, are accurately and fairly reflected in the
books and records of the Company.
3.11 Inventory. The inventory of the Company consists only of items of a
quality and quantity useful or saleable in the ordinary course of business of
the Company. The inventories as reflected on the 1996 Balance Sheet and the
Latest Balance Sheet are valued at the lower of cost (determined by the LIFO
method of accounting) or market value, subject, in the case of the inventories
reflected in the Latest Balance Sheet, to the computation of LIFO reserves at
year end. The inventory on hand on the date of this Agreement (and on the
Closing Date) was (or will be) purchased at prices and in quantities consistent
with the Company's custom in the ordinary course of business. Schedule 3.11 sets
forth a list of each location of inventory of the Company, and a list and
summary description of any agreements, including processing agreements and
consignment agreements, applicable to such inventory.
3.12 Backlog. All outstanding customer purchase orders for products of the
Company have been entered at prices and upon terms and conditions consistent
with the normal practices of the Company, and, to the best knowledge of Seller
and the Company, the completion of such orders will not have a Material Adverse
Effect. The Company and Seller have not been informed by any customer that any
material order included in its backlog is likely to be canceled or terminated
prior to its completion.
3.13 Computer Software. All computer software programs (excluding
noncustomized computer software available to the Company on an over-the-counter
basis through normal commercial channels) used by the Company in the conduct of
its business are owned or licensed by the Company free and clear of
Encumbrances, except for Permitted Liens, and to the best of Seller's and the
Company's knowledge do not infringe any copyright, trade secret, or trademark of
any other person.
3.14 Material and Affiliated Contracts. (a) Except as set forth in Schedule
3.14(a), the Company is not a party to, or subject to:
<PAGE>
(i) any contract, arrangement or understanding, or series of
related contracts, arrangements or understandings, which involves annual
expenditures or receipts by the Company of more than $100,000 or which provides
for performance, regardless of amounts, over a period in excess of six months
after the date of such contract, arrangement or commitment;
(ii) any license agreement, whether as licensor or licensee:
(iii) any agreement with suppliers or customers for discounts or
allowances:
(iv) any note, bond, indenture, credit facility, mortgage,
security agreement or other instrument or document relating to or evidencing
indebtedness for money borrowed or a security interest in or mortgage on the
assets of the Company;
(v) any warranty, indemnity or guaranty issued by the Company
(other than customary product warranties provided by the Company in the ordinary
course of business, which will be provided to Buyer pursuant to Section 3.21);
(vi) any contract, arrangement or understanding granting to any
person the right to use any property or property right of the Company, including
any lease;
(vii) any contract, arrangement or understanding restricting the
right of the Company to engage in any business activity or to compete with any
business;
(viii) any joint venture contracts;
(ix) any agreement granting to others the right to manufacture
or distribute products of the Company;
(x) any other material contract, arrangement or understanding
not made in the ordinary course of business and consistent with past practice;
or
(xi) any outstanding offer or commitment to enter into any
contract or arrangement of the nature described in subsections (i) through (x)
of this Section 3.14(a).
<PAGE>
(b) Schedule 3.14(b) contains an accurate and complete list and
description of all agreements, arrangements and understandings (including
outstanding indebtedness) which are currently in effect between the Company or
the Seller and any of the following (each, a "Related Party") and which involve
a value of $10,000 or more: (i) each director and officer of the Company; (ii)
the spouses, children, grandchildren, siblings, parents, grandparents, uncles,
aunts, nieces, nephews or first cousins of any director or officer of the
Company or their spouses (collectively, "near relatives"); (iii) any trust for
the benefit of any director or officer of the Company or any of their respective
near relatives; and (iv) any corporation, partnership, joint venture or other
entity owned or controlled by any director or officer of the company or any of
their respective near relatives.
(The contracts, arrangements and understanding described in Schedule 3.14(a) and
Schedule 3.14(b) are collectively referred to herein as "Material Contracts").
(c) Prior to the date hereof, Seller has delivered to Buyer complete
and correct copies of each written Material Contract (and any amendments
thereto), and Schedule 3.14(a) and Schedule 3.14(b) contain accurate summary
descriptions of all oral Material Contracts. Except as set forth in Schedule
3.14(c): (i) each contract to which the Company is a party or by which it is
bound is in full force and effect; (ii) neither the Company nor, to the best of
Seller's and the Company's knowledge, any other party s in default under any
such contract, and no event has occurred which constitutes, or which with the
lapse of time or the giving of notice or both would constitute, a default by the
Company or, to the best of Seller's and the Company's knowledge, by any other
party under such contract; and (iii) there are no disputes or disagreements
between the Company and any other party with respect to any such contract.
3.15 Compliance with Laws. To the best of Seller's and the Company's
knowledge, the Company is complying and has complied in all material respects
with all laws, statutes, rules, regulations, codes and, ordinances, and has
secured all necessary permits and authorizations and licenses issued by,
federal, state, local and foreign agencies and authorities, applicable to its
business, properties and operations, or to which the Company may be subject or
which are applicable to the operations, business or assets of the Company except
for such permits and authorizations, the absence of which would not have a
Material Adverse Effect. Neither the Company nor Seller has received any notice
alleging any such violation nor, to the best of Seller's and the Company's
knowledge is there any inquiry, investigation or proceedings relating thereto.
3.16 Legal Proceedings. Except as set forth in Schedule 3.16 hereto, there
are no suits, actions, proceedings (including, without limitation, arbitral and
administrative proceedings),
<PAGE>
claims or governmental investigations or audits pending or, to the best of
Seller's and the Company's knowledge, threatened against the Company or its
properties, assets or business, or pending or, to the best of Seller's and the
Company's knowledge, threatened against, relating to or involving any of the
officers, directors, Employees or agents of the Company in connection with the
business of the Company. There are no such suits, actions, proceedings, claims,
or investigations pending or, to the best of Seller's and the Company's
knowledge, threatened, challenging the validity or propriety of, or otherwise
relating to or involving, this Agreement or the transactions contemplated
hereby. Except as set forth in Schedule 3.16, there is no judgment, order, writ,
injunction, decree or award (whether issued by a court, an arbitrator, a
governmental body or agency thereof or otherwise) to which the Company is a
party, or involving the property, assets or business of the Company, which is
unsatisfied or which requires continuing compliance therewith by the company.
3.17 Ability to Conduct the Business. There is no agreement, arrangement or
understanding to which the Company is a party, nor any judgment, order, writ,
injunction or decree of any court or any governmental body or agency thereof
directed at the Company or in which the Company is named nor, to the best
knowledge of the Company and Seller, any other judgment, order, writ, injunction
or decree, that could in any such case) prevent the use by the Company of its
properties and assets or the conduct by the Company of its business as of the
date hereof. To the best of Seller's and the Company's knowledge, the Company
has in force, and has complied in all material respects with all of the
conditions and requirements imposed by, all permits, licenses, exemptions,
consents, authorizations and approvals used in or required for the conduct of
its business as presently conducted. Neither the Company nor Seller has received
any notice of, and neither the Company nor Seller has any knowledge of, any
intention on the part of any appropriate authority to cancel, revoke or modify,
or any inquiries, proceedings or investigations the purpose or possible outcome
of which is the cancellation, revocation or modification of any such permit,
license, exemption, consent, authorization or approval.
3.18 Labor Matters. (a) No union is certified as collective bargaining
agent to represent any Employee of the Company, and Seller and the Company have
no knowledge of any representation campaign which is currently under way. The
Company is not (a) a party to, involved in or threatened by any labor dispute,
unfair labor practice charge, labor arbitration proceeding or grievance
proceeding, (b) currently negotiating any collective bargaining agreement or
(c) aware of any threatened strike or filing with the National Labor Relations
Board by any employee or employee group seeking recognition as a collective
bargaining representative or unit, work stoppage or slowdown, picketing or
controversy involving employees or former employees of the Company (hereafter
referred to as "Employees" and "Former Employees", respectively).
<PAGE>
(b) Schedule 3.18(b) also sets forth the names of all directors and
officers of the Company (whether or not such persons are Employees or Former
Employees), together with the respective term of office and titles for each such
person and all remuneration payable to any such officers and directors who are
not Employees. The Company has delivered to Buyer, prior to the date hereof, a
statement, certified by an appropriate officer of the Company, setting forth:
(i) with respect to each officer or director of the Company, such person's date
of birth, date of employment, the current salary and commission terms of such
person, the date and amount of such person's most recent salary increase, the
amount of any bonuses or other cash compensation (other than regular salary or
commissions) paid since February 1, 1993 to such person and a description of all
compensation arrangements currently applicable to such person, and (ii) with
respect to all other Employees, their date of birth, date of employment, and
compensation for fiscal years 1996 and 1995.
(c) Except as set forth on Schedule 3.18(c), subject to normal year-
end adjustments the Company has accrued or reflected on the Latest Balance
Sheet, and will accrue or reflect on its books and records, all obligations for
salaries, vacations, medical, severance and other benefits and other
compensation of any kind with respect to its Employees and any of its Former
Employees, to the extent required by generally accepted accounting principles,
including, but not limited to, vacation pay, sick pay, medical, death, and
disability benefits, severance, bonuses, incentive, and pension, retirement,
profit sharing or other types of deferred compensation, and all commissions and
other fees payable to salespeople, sales representatives and other agents.
Except as set forth in Schedule 3.18(c) there are no outstanding loans from the
Company to any Employee except normal Employee advances in the ordinary course
of business. Complete and correct copies of all written agreements with or
concerning Employees and all employment policies, and all amendments and
supplements thereto, will be delivered to Buyer, and a list of all such
agreements and policies, whether written or oral is set forth on Schedule
3.18(c).
(d) Since January 27, 1996, the Company has not (i) except in the
ordinary course of business and consistent with past practice, increased the
salary or other compensation payable or to become, payable to or for the benefit
of any of the Employees or Former Employees, (ii) provided any of the Employees
with any increased security or tenure of employment, (iii) increased the amounts
payable to any of the Employees upon the termination of any such person's
employment or (iv) adopted, amended, or revised the terms of any Benefit Plan
(as hereinafter defined) with respect to the benefits granted to or for the
benefit of any of the Employees or Former Employees thereunder.
(e) To the best of Seller's and the Company's knowledge, the Company
has complied in all material respects with all laws, statutes, rules, and
regulations applicable with
<PAGE>
respect to Employees in each of the jurisdictions in which it operates and/or
does business. In particular, to the best of Seller's and the Company's
knowledge, the Company has complied with all Federal and
state laws, statutes, rules and regulations applicable to discriminatory
employment practices (including, without limitation, discrimination based on
race, age, handicap, sex or sexual preference or sexual harassment, in
particular with respect to employment, equal pay and/or discharge), workplace
safety, (including rules and regulations of the Occupational Safety and Health
Administration), workers' compensation, payment of minimum wages and overtime
rates, immigration, or otherwise relating to the conduct of employers with
respect to employees or prospective employees, except where the failure to so
comply will not have a Material Adverse Effect. There have been no claims made
or threatened thereunder against the Company arising out of, relating to or
alleging any violation of any of the foregoing, except for claims which are no
longer pending or which are set forth on Schedule 3.18(e). The Company has
complied in all material respects with the employment eligibility verification
form requirements under the Immigration and Naturalization Act, as amended
("INA"), in recruiting, hiring, reviewing and documenting prospective employees
for employment eligibility verification purposes and the Company has complied in
all material respects with the paperwork provisions and anti-discrimination
provisions of the INA. The Company has obtained and maintained the employee
records and I-9 forms in proper order as required by law. To the best of
Seller's and the Company's knowledge, the Company is not currently employing any
workers unauthorized to work in the United States.
3.19 Employee Benefit Plans. (a) For purposes of this Agreement, "Benefit
Plan" means and includes (i) any "employee benefit plan", within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), without regard to any exemption or exclusion therefrom under
Department of Labor regulations, and (ii) any deferred compensation agreement,
defined benefit and defined contribution plan, stock ownership plan, consulting
or employment agreement, executive compensation plan, bonus plan, incentive
compensation plan or arrangement, supplemental retirement plan or arrangement,
agreement with respect to temporary employees, vacation pay, sickness,
disability or death benefit plan (whether provided through insurance, on a
funded or unfunded basis or otherwise), retiree medical or life insurance plan,
employee stock option or stock purchase plan, severance pay, termination or
salary continuation plan, arrangement or practice, and (iii) each other employee
benefit plan, program or arrangement, which at any time has been maintained or
contributed to by the Company for the benefit of or relating to any of the
Employees or Former Employees and which is or remains legally binding on the
Company or in respect of which the Company has any liability or obligation,
whether imposed by a government program or run by any Governmental
administration or agency, or whether written or oral.
<PAGE>
(b) Schedule 3.19(b) sets forth a complete and correct list of each
Benefit Plan.
(c) The Company will not incur any liability under any severance
agreement, deferred compensation agreement, employment agreement or similar
agreement solely as a result of the consummation of the transactions
contemplated by this Agreement (including liability occurring as a result of the
passage of time or events outside the control of the Company). Except as set
forth in Schedule 3.19(c), the Company is not sponsoring or contributing to, and
since January 1, 1991 has not sponsored or contributed to, any Benefit Plan
which is an "employee pension benefit plan," as defined in section 3(2) of
ERISA, or which is subject to Title IV of ERISA or to section 412 of the Code.
No Benefit Plan is a "voluntary employees beneficiary association" (within the
meaning of section 501(c)(9) of the Code) and there are no other "welfare
benefit funds" relating to Employees or Former Employees within the meaning of
section 419 of the Code. No event or condition exists with respect to any
Benefit Plan that could subject the Company to any tax under section 4980B of
the Code or, for plan years beginning before January 1, 1989, section 162(k)
of the Code. With respect to each Benefit Plan, prior to the date hereof,
Seller has delivered to Buyer complete and correct copies of the following
documents, where applicable: (i) the annual reports (Form 5500 series), together
with schedules, as required, filed with the IRS, and any financial statements
and opinions required by section 103(a)(3) of ERISA for the three (3) most
recent plan years, (ii) the most recent determination letter issued by the IRS,
(iii) the most recent summary plan description and all modifications, as well as
all other descriptions distributed to Employees or set forth in any manuals or
other documents, (iv) the text of the Benefit Plan and of any trust, insurance
or annuity contracts maintained in connection therewith, (v) the actuarial
reports, if any, relating to any Benefit Plan for the three (3) most recent plan
years, (vi) the most recent actuarial valuation, study or estimate of any
retiree medical plan or supplemental retirement benefit plan; and (vii) the most
recent statement of plan assets for each Benefit Plan that is intended to meet
the requirements of section 401(a) of the Code.
(d) Since January 1, 1990 neither the Company nor any corporation or
other trade or business under common control with the Company (as determined
pursuant to section 414(b), (c), (m) or (o) of the Code) (a "Common Control
Entity") has maintained or contributed to or in any way directly or indirectly
has any liability whether contingent or otherwise) with respect to any "multi-
employer plan", within the meaning of section 3(37) or 4001(a)(3) of ERISA, or,
except as set forth in Schedule 3.19(d), any other plan which is subject to
Title IV of ERISA. No proceedings by the Pension Benefit Guaranty Corporation
(the "PBGC") to terminate any Benefit Plan have been instituted or threatened;
no event has occurred or condition exists which constitutes grounds for the PBGC
to so terminate any Benefit Plan; neither the Company nor any Common Control
Entity is a party to or has any
<PAGE>
liability under any agreement imposing secondary liability on it as a seller of
the assets of a business in accordance with section 4204 of ERISA or under any
other provision of Title IV of ERISA; no contingent or other liability with
respect to which the Company has, had or could have any liability under section
4063 or 4069 or other provision of Title IV of ERISA to the PBGC or to any
Benefit Plan; and no assets of the Company are subject to a lien under sections
4064 or 4068 of ERISA. All contributions required to be made to or with respect
to each Benefit Plan with respect to the service of Employees, Former Employees
or other individuals with the Company prior to the date hereof have been made
or have been accrued for in the Latest Balance Sheet or in the books and records
of the Company for periods after the date of the Latest Balance Sheet, as
applicable.
(e) Except as set forth on Schedule 3.19(e), none of the Benefit Plans
has been subject to a "reportable event," within the meaning of section 4043 of
ERISA (whether or not waived); to the best of Seller's and the Company's
knowledge, there have been no "prohibited transactions", within the meaning of
section 406 of ERISA or section 4975 of the Code; to the best of Seller's and
the Company's knowledge, each Benefit Plan has, in all material respects been
administered to date in accordance with the applicable provisions of ERISA, the
Code and applicable law and with the terms and provisions of all documents,
contracts or agreements pursuant to which such Benefit Plan is maintained; all
reports and information required to be filed with the Department of Labor, the
IRS, the PBGC or plan participants or beneficiaries with respect to any Benefit
Plan have been timely filed; there is no dispute, arbitration, claim, suit, or
grievance, pending or, to the best knowledge of the Company and the Seller,
threatened, involving a Benefit Plan (other than routine claims for benefits),
and, to the best knowledge of the Company and the Seller, there is no basis for
such a claim; none of the Benefit Plans nor, to the best of Seller's and the
Company's knowledge, any fiduciary thereof (in such person's capacity as such)
has been the direct or indirect subject of an order or, to the knowledge of the
Company and the Seller, an investigation by a governmental or quasi-governmental
agency, there are no matters pending as to which the Company has received notice
before the IRS, the Department of Labor, the PBGC or any other domestic or
foreign governmental agency with respect to a Benefit Plan; there have been no
claims, or notice of claims, filed under any fiduciary liability insurance
policy covering any Benefit Plan, and there has not been and there will not be
any "excess parachute payment" (as that term is defined in section 280G of the
Code) to any of the Employees prior to the Closing or as the result of the
transactions contemplated by this Agreement. To the best of Seller's and the
Company's knowledge, no event or set of conditions exists which would subject
the Company to any Tax under sections 4972, 4974-76, 4979, 4980, 4980B, 4999 or
5000 of the Code.
<PAGE>
3.20 Environmental Matters. (a) There are no actions, investigations,
inquiries (written or oral) or other proceedings, rulings, orders or citations
pending, or to the best knowledge of Seller and the Company, threatened by
government officials with respect to the Company as the result of any actual or
alleged failure of the Company to comply with any requirement of any
Environmental Laws (as that term is defined in subsection (l) below). Schedule
3.20 contains a complete list of all solid waste dumps and hazardous waste
disposal, treatment and storage facilities which are presently or formerly were
used by the Company for disposal of hazardous waste as that term is used in
the RCRA (a hereinafter defined) during the past seven years. Prior to the date
hereof, the Company has delivered to Buyer true and correct copies of all
hazardous waste manifests issued by it at any time since January 1, 1994.
Except as disclosed on Schedule 3.20:
(b) To the best of Seller's and the Company's knowledge, the Company
has received all permits and approvals, has kept all records, and has made all
filings required by applicable Federal, state, or local laws with respect to
emissions of Hazardous Substances into the environment (including solids,
liquids, and gases) at the Real Property and the proper disposal of such
materials (including solid waste materials).
(c) To the best of Seller's and the Company's knowledge, the Company
and all operations thereof are currently in compliance in all material respects
with all applicable Environmental Laws.
(d) To the best of Seller's and the Company's knowledge, neither the
Company nor its operations nor its property is the subject of any Federal,
state, or local investigation or inquiry evaluating whether any remedial action
is needed to respond to a release of any Hazardous Substances into the
environment, and there is no basis for any such investigation or inquiry.
(e) Since January 1, 1994, the Company has not filed, nor has it been
required to file, any notice under Federal, state or local laws indicating past
or present treatment, storage, or disposal of hazardous waste as defined under
40 C.F.R Parts 260-270 or any state equivalent or reporting a spill or release
of a contaminant at, on or under or about the Real Property.
(f) Prior to the date hereof, Seller has furnished Buyer with a
summary description of the Company's activities with respect to the generation,
transportation, treatment, storage or disposal of Hazardous Substances, as
defined in subsection 3.20(l), and
<PAGE>
Seller and the Company have made available to Buyer all reports, inventories and
plans in the possession of Seller or the Company relating to same.
(g) To the best of Seller's and the Company's knowledge, since the
effective date of any Environmental Law (if applicable), the Company has not
disposed of or released any Hazardous substance in or on the ground or into the
groundwaters of its Real Property, except the disposal of or release of
Hazardous Substances which (i) are permitted by law, (ii) have been remediated
in accordance with applicable law (provided that any remediation effected
pursuant to any judicial or administrative order or consent decree or as a
result of any governmental investigation, inquiry request, order or decree since
January 1, 1980 is summarily described in Schedule 3.20(g), hereto), or (iii)
would not have a Material Adverse Effect.
(h) No underground storage tanks or surface impoundments used for the
storage of Hazardous Substances are located at, on, or under the Real Property.
(i) No lien in favor of any governmental authority for (i) any
liability under any Environmental Laws or (ii) damages arising from or costs
incurred by such governmental authority in response to a release of a
contaminant into the environment has been filed or attached to the real property
of the Company.
(j) Since January 1, 1994, the Company and its Real Properties have
been found to be in substantial compliance with applicable Environmental Laws
following all inspections conducted by applicable regulatory bodies in
connection with the matters described in this Section.
(k) To the best of Seller's and the Company's knowledge, except as
disclosed in Schedule 3.20(k), none of the Real Property is located in an area
identified by an agency or department of Federal, state or local governments, or
identified by the Company or the Seller, as having special flood or mudslide
hazards or wetlands.
(l) For purposes of this Agreement, the term "Environmental Laws"
shall mean all applicable Federal, state and local laws, regulations or
ordinances relative to air quality, water quality, solid waste management,
hazardous or toxic substances or the protection of health, safety or the
environment, including, but not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. 9601
et seq.), the Hazardous Material Transportation Act (49 U.S.C. 1801 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C. 6901 et seq.)
<PAGE>
("RCRA"), the Clean Air Act, as amended (42 U.S.C. 2601 et seq.), the Toxic
Substances Control Act, as amended (15 U.S.C. 2601 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. 136 et seq.),
and the Clean Water Act of 1977, as amended (33 U.S.C. 1251 et seq.), as these
laws may have been amended or supplemented through the Closing Date, and any
analogous state or local statutes and the regulations promulgated pursuant
thereto. For purposes of this Agreement, the term "Hazardous Substance"
shall mean any product, substance, chemical, contaminant, pollutant, effluent,
waste or other material whose presence, nature, quantity and/or concentration,
use, manufacture, disposal, transportation, emission, discharge, spill, release
or effect, either by itself or in combination with other material located on any
of the Real Properties, is either (i) regulated or monitored by any governmental
authority, or (ii) defined or listed in, or otherwise classified pursuant to,
any statute, law, ordinance, rule or regulation (or any proposed statute, law,
ordinance, rule or regulation) as "hazardous substances," "hazardous materials,"
"hazardous wastes," "infectious wastes" or "toxic substances". Hazardous
Substances shall include, but not be limited to: (i)(A) any "hazardous
substance" as defined in the "Comprehensive Environmental Response, Compensation
and Liability Act, (B) any "regulated substance" as defined in the Solid Waste
Disposal Act or (C) any substance subject to regulation pursuant to the Toxic
Substances Control Act, as such laws are now in effect or may be amended
through the Closing Date and any rule, regulation or administrative or judicial
policy statement, guideline, order or decision under such laws, (ii) petroleum
and refined petroleum products, (iii) asbestos and asbestos-containing
products, (iv) flammable explosives, (v) radioactive materials, (vi) radon and
(vii) any other substance that is regulated or classified as hazardous or toxic
under any Federal, state or local law, statute, ordinance, rule or regulation.
3.21 Products. Prior to the date hereof, the Company has delivered to Buyer
copies of all standard and other warranties which are currently extended or
which have previously been extended by the Company with respect to products sold
by the Company and for which the Company may have continuing liability or
obligations as of the date hereof. Except as disclosed on Schedule 3.21, there
are no pending claims, and Seller and the Company know of no basis for any
claims, based on defective products, violation of product warranties, violation
of product packaging or labeling requirements or similar claims with respect to
any products manufactured or sold by the Company or delivered to customers on or
prior to the date hereof, nor have the Company or Seller received any notices
from any person threatening any such claim, except for product returns in the
ordinary course of business which in the aggregate do not have a Material
Adverse affect. All product warranties extended by the Company are in compliance
with applicable law.
<PAGE>
3.22 Tax Matters. (a) For purposes of this Agreement the terms "Tax" and
"Taxes" shall mean and include any and all Federal, state, local, foreign or
other taxes, assessments, Social Security obligations, deficiencies, fees,
export or import duties, or other governmental charges, including, without
limitation, income, gross receipts, ad valorem, value added, excise, real or
personal property, sales, use, license, and franchise taxes and any installment
payment for taxes and contributions or other amounts determined to be payable in
the nature of a Tax with respect to compensation paid to directors, officers,
employees or independent contractors, from time to time imposed by or required
to be paid by the Company to any governmental authority including penalties and
additions to tax thereon, penalties for failure to file a return or report, and
interest on any of the foregoing) and any amount payable by the Company pursuant
to any tax-sharing agreement or similar agreement with respect to any of the
foregoing.
(b) All returns and reports relating to Taxes or otherwise required
under applicable tax laws which were required to be filed by or with respect to
the Company on or before the date hereof (after giving effect to applicable
extensions) have been duly and timely filed and all such returns and reports are
complete and correct in all material respects. All Taxes imposed on or with
respect to the Company which have become due and payable on or before the date
hereof (including, but not limited to, estimated payments of Federal income
taxes) have been paid in a timely manner by the Company and there is no
liability (and no basis for any liability) for Taxes with respect to the Company
which has not (been in the case of Taxes which have become due and payable) paid
or (in the case of Taxes which are not yet due and payable) accrued on the books
of the Company. Except as set forth on Schedule 3.22(b) hereto, there are no
actions or proceedings which are currently pending or, to the best of Seller's
and the Company's knowledge, threatened against the Company by any governmental
authority for the assessment or collection of Taxes; no claim for the assessment
or collection of Taxes has been asserted or, to the best of Seller's and the
Company's knowledge, threatened against the Company; and there are no matters
under discussion by the Company or Seller with any governmental authority
regarding claims for the assessment or collection of Taxes against the Company.
There are no agreements, waivers or applications by the Company for an extension
of time for the assessment or payment of any Taxes. There are no Tax liens on
any of the assets of the Company (other than any lien for current Taxes not yet
due and payable). True and complete copies of all Tax returns, reports and other
Tax filings of the Company which have been filed for any periods since January
31, 1989 will be provided to Buyer upon request.
(c) All Federal, state and local income tax returns of the Company
with respect to the taxable period through the year ended January, 1987 have
been examined and closed.
<PAGE>
(d) Except as set forth in Schedule 3.22(d), within the past ten
years, the Company has not been a member of any affiliated group of corporations
(as defined in section 1504(a) of the Code) which has filed consolidated Tax
returns. For purposes of this Section 3.22(d), the term "Company" shall be
deemed to include the Company, any subsidiaries of the Company or any
predecessors of the Company or any of its subsidiaries.
(e) The Company has not made, is not obligated to make, and is not a
party to any agreement that under any circumstances could obligate it to make
payments the deductibility of which would be prohibited under section 280G of
the Code.
(f) Except as set forth in Schedule 3.22(f), the Company has not taken
any action which would have the effect of deferring its tax liability from any
taxable period ending on or before the Closing Date to any taxable period ending
after the Closing Date, except for ordinary tax planning of the Company
consistent with its historical practices in the ordinary course of business.
(g) The Company has at no time during the five (5) years preceding the
date of this Agreement been a "United States real property holding corporation,"
within the meaning of section 897(c)(2) of the Code, and the Shares do not
constitute "United States real property interests," within the meaning of
section 897(c)(1) of the Code.
(h) The Company has not, with regard to any assets or property held,
acquired or to be acquired by the Company, filed a consent to the application of
section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code").
(i) The Company is not a party to any Tax sharing, Tax allocation, Tax
indemnity or other similar agreement.
3.23 Insurance. Schedule 3.23 hereto sets forth a complete and correct list
and brief summary description of all insurance policies carried by, or covering,
the Company with respect to its business. Complete and correct copies of each
such policy will be made available to Buyer upon request. All such policies are
in full force and effect, and no notice of cancellation has been given with
respect to any such policy. All premiums due thereon have been paid in a timely
manner. Except as set forth on Schedule 3.23, there are no pending claims or
to the best knowledge of Seller and the Company, threatened claims, under any of
the Company's insurance policies.
3.24 Minute Books; Stock Record Books. True and correct copies of the
Company's minute books and stock record book have been provided to Buyer prior
to the date hereof.
<PAGE>
The minute books of the Company contain true and complete originals or copies of
all minutes of meetings of and actions by the stockholders, Board of Directors
and all committees of the Board of Directors of the Company, and accurately
reflect in all material respects all corporate actions of the Company which are
required by law to be passed upon by the Board of Directors or shareholders of
the Company. The stock record book accurately reflects all transactions in
shares of the Company's stock.
3.25 Brokers' or Finders' Fees. No agent, broker, investment banker, or
other person or firm acting on behalf of Seller is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly from any of the parties in connection with any of the transactions
contemplated by this agreement.
3.26 Material Customers and Suppliers. (a) Schedule 3.26(a) sets forth a
complete and correct list of the ten (10) largest customers of the Company in
terms of amounts invoiced to such customers during the fiscal year of the
company ended January 27, 1996), and a similar list for the nine month period
ending October 26, 1996 (each, a "Material Customer") showing the total amount
invoiced to each such customer for the period in question. Except as set forth
and described in Schedule 3.26(a), no Material Customer has given the Company
any notice terminating, suspending or reducing in any material respect, or
specifying an intention to terminate, suspend or reduce in any respect in the
future, or otherwise reflecting an adverse change in, the business relationship
between such customer and the Company; and there has not been any adverse change
in the business relationship of the Company with any such customer since the
date of the 1996 Financial Statements. No customer other than a Material
Customer accounted for more than five percent (5%) of the Company's gross sales
during the past three fiscal years.
(b) Schedule 3.26(b) sets forth a complete and correct list of the ten
largest suppliers of the Company in terms of amounts purchased from such
suppliers during the fiscal year of the Company ended January 27, 1996), and a
similar list for the nine month period ending October 26, 1996 (each, a
"Material Supplier") showing the total amount purchased from each such Material
Supplier for the period in question. Schedule 3.26(b) also correctly identifies
all current outstanding purchase orders of the Company for goods or services
with an aggregate value of $100,000 or more. Except as set forth in Schedule
3.26(b), no supplier identified in Schedule 3.26(b) has given the Company any
notice terminating, suspending or reducing in any respect, or specifying an
intention to terminate, suspend or reduce in any respect in the future, or
otherwise reflecting an adverse change in, the business relationship between
such supplier and the Company and there has not been any adverse change in
the business relationship of the Company with any such supplier since the date
of the 1996 Financial Statements.
<PAGE>
3.27 Bank Accounts; Powers of Attorney. Schedule 3.27 sets forth a complete
and correct list showing: (i) all banks in which the Company maintains a bank
account or safe deposit box (collectively, "Bank Accounts"), together with, as
to each such Bank account, the account number, the names of all signatories
thereof and the authorized powers of each such signatory and, with respect to
each such safe deposit box, the number thereof and the names of all persons
having access thereto; and (ii) the names of all persons holding powers of
attorney from the Company. True and correct copies thereof have been delivered
to Buyer prior to the date hereof.
3.28 Books and Records. Except as set forth on Schedule 3.28, all of the
records, data, information, databases, systems and controls maintained, operated
or used by the Company or in connection with the conduct or administration of
its business (including all means of access thereto and therefrom) are located
on the premises of the Company and are under the exclusive ownership or
direct control of the Company.
3.29 Sales Representatives and Other Sales Agents/Sales Offices. Schedule
3.29 hereto sets forth a complete and correct list of the names and addresses of
each sales representative or other sales agent currently engaged by the Company
who is not an Employee, and a summary description of the territory assigned to
each such person (noting whether such territory is exclusive or non-exclusive).
Schedule 3.29 also sets forth a list of all agreements between the Company and
any such person, complete and correct copies of which agreements will be
delivered to Buyer.
3.30 Transaction Expenses. The Company has not incurred or paid, and will
not prior to the Closing Date incur or pay, expenses relating to or arising out
of the sale of the Shares or the transactions contemplated by this Agreement,
including, without limitation, fees and expenses of counsel, accountants, and
investment bankers.
3.31 Schedules. Disclosures made in any Schedule apply to all of the
representations and warranties made in this Article III and shall not be
limited to any particular paragraphs in relation to which they may appear.
No schedule, certificate or certified information delivered or to be delivered
by the Company or Seller pursuant to this Agreement, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact necessary
to make the statements contained therein not misleading.
3.32 Reliance. The representations and warranties of the Company and the
Seller made in Article III of this Agreement are made by the Company and the
Seller with the knowledge and expectation that Buyer is relying thereon in
entering into, and performing its respective
<PAGE>
obligations under, this Agreement, and the same shall not be affected in any
respect whatsoever by any investigation heretofore or hereafter conducted by
or on behalf of Buyer, whether in contemplation of this Agreement or
otherwise.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Corporate Power. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions where the failure so to
qualify would have a material adverse effect on Buyer. Buyer has full corporate
power and authority to own, lease and operate the properties and assets which
it currently owns, leases or operates and to carry on its business as presently
conducted or proposed to be conducted pursuant to existing plans. Buyer has
full corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
4.2 Corporate Authority; Absence of Conflicts. (a) The execution and
delivery of this Agreement, and the consummation of the transactions
contemplated hereby have been duly approved by the Board of Directors of Buyer,
and no other corporate actions on the part of Buyer are necessary to approve and
authorize the execution and delivery of this Agreement, or the consummation of
the transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Buyer and constitutes a valid and legally binding
agreement of Buyer, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(b) The execution and delivery of this Agreement by Buyer,
consummation of the transactions herein contemplated and compliance with the
terms of this Agreement will not conflict with or violate any provision of the
Certificate of Incorporation or any By-Law of Buyer; nor do such actions
constitute a default of or require the consent or approval under any
agreement or instrument to which Buyer is a party or by which Buyer's assets are
bound, or require Buyer to obtain the approval or consent of any foreign,
Federal, state, county, local or other governmental or regulatory body, other
than such filings as are required under the HSR Act and except for the consent
of Buyer's lender(s), nor will such actions violate any applicable law, rule,
regulation, judgment, order or decree of any
<PAGE>
government, governmental instrumentality or court, domestic or foreign,
presently applicable to Buyer.
4.3 No Investigation. There exists no legal proceeding or investigation
by any governmental or regulatory authority, or any request for information or
action by any third party, known to Buyer which could result in the institution
of legal proceedings to prohibit or restrain the consummation or performance of
this Agreement or the transactions contemplated hereby.
4.4 Securities Act of 1933. Buyer is acquiring the Shares solely for its
own account and for the purpose of investment only and not with a view to any
distribution thereof. Buyer acknowledges that the Shares are not registered
under the Securities Act of 1933, as amended, and that such Shares may not be
transferred or sold except pursuant to the registration provisions of such Act
or pursuant to an applicable exemption therefrom and pursuant to applicable
state securities laws and regulations.
4.5 Reliance. The representations and warranties of Buyer made in this
Article IV are made by Buyer with the knowledge and expectation that the
Company and Seller are relying thereon in entering into, and performing their
obligations under, this Agreement, and the same shall not be affected in any
respect whatsoever by any investigation heretofore or hereafter conducted by or
on behalf of the Company or Seller, whether in contemplation of this Agreement
or otherwise.
4.6 Brokers' or Finders' Fees. No agent, broker, investment banker, or
other person or firm acting on behalf of Buyer is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly from any of the parties in connection with any of the transactions
contemplated by this Agreement.
4.7 Financing. Buyer has delivered to Seller prior to the date hereof
written commitment letters in respect of financing sufficient to pay at Closing
the amounts required to be paid under Sections 1.2 and 1.3 hereof and to cause
the issuance of one or more letters of credit equal to the outstanding balance
of the Company IRBs.
ARTICLE V
AGREEMENTS OF THE PARTIES RELATED TO TRANSACTIONS
5.1 Full Access. The Company shall afford to Buyer, its counsel,
accountants and other representatives reasonable access, during normal business
hours to, and the Company shall disclose and make reasonably available to them
(with the right to make copies), all of
<PAGE>
the books and records of the Company relating to the ownership of the
properties, operations, financial condition, assets, obligations and liabilities
of the Company, and the Company shall afford Buyer, its counsel, accountants
and other representatives with reasonable access to the facilities and
properties of the Company and to the officers and directors of the Company.
5.2 Preservation of Business. From the date hereof through the Closing
Date, the Company shall and the Seller shall cause the Company to conduct its
business consistent with past business practices, and use their best efforts
to preserve the Company's business organizations intact, keep available the
services of its present relationships with key employees, consultants and
agents, maintain its present material suppliers, customers, and others having
material business relationships with it and preserve their goodwill.
5.3 Negative Covenants of Seller. The Company and Seller covenant
and agree that from and after the date hereof through the Closing Date, the
Company shall not, except with the prior written consent of Buyer, or except as
directly related to the completion of the transactions contemplated by this
Agreement:
(a) Issue or sell any of its shares of capital stock or other
securities, or propose or effect a split or reclassification of its outstanding
capital stock or a recapitalization;
(b) Mortgage, pledge or otherwise encumber any properties or assets,
or dispose of, or make any agreement with respect to the mortgage, pledge, sale,
transfer or disposition of, any properties or assets except in the ordinary
course of business consistent with past practice;
(c) Make any capital commitment or expenditure of more than $250,000,
in the aggregate, or incur or become liable for any other obligation or
liability except obligations or liabilities in the ordinary course of business
consistent with past practice;
(d) Declare or pay any dividends, whether in cash, securities or other
property or distribute any assets to Seller or purchase, redeem or acquire any
shares of capital stock;
(e) Adjust in any way, either directly or indirectly, the
compensation or benefits paid or payable to (i) any officer, director, or
executive, or (ii) any other Employee of the Company if outside the ordinary
course of business consistent with past practice;
(f) Borrow or agree to borrow any funds or incur, or assume or become
subject to, whether directly or by way of guarantee or otherwise, any obligation
or liability
<PAGE>
(absolute or contingent) except (i) borrowings from Seller for working capital
purposes in the ordinary course of business consistent with past practices and
(ii) liabilities or obligations incurred in the ordinary course of business
consistent with past practices;
(g) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice of liabilities or obligations reflected or reserved against in the
Latest Balance Sheet or incurred in the ordinary course of business and
consistent with past practice since the date of the Latest Balance sheet;
(h) Prepay any obligation having a fixed maturity of more than 90 days
from the date such obligation was issued or incurred except in the ordinary
course of business;
(i) Pay, loan or advance any amount to, or sell transfer or lease any
properties or assets to, or enter into any agreement or arrangement with, any of
its officers or directors or any affiliate, associate or near relative of
any of its officers or directors;
(j) Except in the ordinary course of business consistent with past
practice, write down (or write up) the value of any inventory or write off as
uncollectible any notes or accounts receivable;
(k) Cancel any debts or waive any claims or rights of substantial
value, other than in the ordinary course of business consistent with past
practice or cancel or terminate any Material Contract or other material
agreement;
(l) Dispose of or permit to lapse any rights to the use of any
patent, trademark, trade name, copyright or other intangible asset, or dispose
of or disclose to any person any trade secret, formula, process or know-how
not theretofore a matter of public knowledge;
(m) Change any of the banking or safe deposit arrangements described
in Schedule 3.27 hereto, except in the ordinary course of business;
(n) Grant or extend any power of attorney or act, as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise, in respect of
the obligation of any person, corporation, partnership, joint venture,
association, organization or other entity;
(o) make any change in financial or tax accounting methods, principles
or practices or make or cause to be made any change in any elections on Tax
returns of the Company, unless required by generally accepted accounting
principles or applicable law;
<PAGE>
(p) extend credit in the sale of products, collection of receivables
or otherwise, other than in the ordinary course of business consistent with
past practices (provided that refraining from pursuing collection of delinquent
accounts shall not be deemed to be extending credit);
(q) fail to maintain its books, accounts and records in the usual,
regular and ordinary manner on a basis consistent with prior years;
(r) adopt or amend in any material respect any collective bargaining
agreement or Employee Benefit Plan other than as required by law;
(s) grant to any executive officer any increase in compensation or in
severance or termination pay, grant any severance or termination pay, or enter
into to any employment agreement with any executive officer, except as may be
required under employment or termination agreements in effect on the date of
this Agreement; or
(t) agree, whether in writing or otherwise, to do any of the
foregoing.
5.4 Third Party Consents. Seller and the Company shall use their best
efforts to obtain at the earliest practicable date all consents of third
parties necessary to the consummation of the transactions contemplated hereby,
the absence of which would have a Material Adverse Effect, and will provide
to Buyer copies of each such consent promptly after it is obtained.
5.5 Schedules Update. From time to time after the date hereof, but in any
event not later than the Closing Date, the Company will promptly supplement or
amend the Schedules hereto with respect to any matter which, if it existed or
occurred on or prior to the date hereof, would have been required to be set
forth or described in any such Schedule or which is necessary to correct any
information set forth in any such Schedule which has been rendered inaccurate
thereby; provided, however, that no supplement or amendment to any such Schedule
shall have any effect for the purpose of determining whether any breach of this
Agreement existed prior to such supplement or amendment or whether the condition
set forth in Section 7.1 of this Agreement has been satisfied.
5.6 Tax Matters. (a) Seller shall prepare and file or cause to be
prepared and filed on or before the relevant due dates therefor (after giving
effect to all applicable extensions) all Federal, state, local and foreign
Tax returns and reports of the Company attributable to any taxable period
ending on or prior to the Closing Date, accompanied by the full and complete
payment of all Taxes due with respect to such periods. Any Tax refunds received
by the Company attributable to periods prior to the Closing shall belong to
Seller and shall be
<PAGE>
promptly remitted to Seller upon receipt, reduced by any increase in Taxes in a
period ending after the Closing Date which is directly attributable to Seller's
claim for a refund.
(b) Buyer shall prepare and file or cause to be prepared and filed on
or before the relevant due dates therefor (after giving effect to all applicable
extensions) all Federal, state, local and foreign Tax returns and reports of the
Company attributable to any taxable periods ending after the Closing Date,
accompanied by the full and complete payment of all Taxes due with respect to
such periods.
(c) During the period between the Closing Date and the Tax Claim
Termination Date (as hereinafter defined), Seller shall provide reasonable
access during normal business hours to the books and records of Seller,
including work papers, to the extent such access is reasonably requested in
writing in advance by the Buyer for purposes of responding to any inquiry, audit
or proceeding involving the Tax Returns of the Company for the periods ending
prior to the Closing Date. After the Closing, Seller shall make available to
Buyer all work papers, records of estimated tax payments and Tax Returns as have
been used or filed for the fiscal year of the Company commencing prior to the
Closing.
(d) Buyer shall not, and after the Closing shall not permit the
Company to, amend any Tax return, report or filing with respect to Tax
periods prior to the Closing without Seller's prior written consent or as
required by applicable law. To the extent permitted by applicable law, at
Seller's request and expense, Buyer shall, and shall cause the Company to (or
in the case of Seller's consolidated Tax Return, Seller shall), file an
amendment to a Tax Return, report or filing made with respect to Tax periods
prior to the Closing, provided that Seller shall pay any additional
Taxes resulting from such amended filing, and provided further that Seller
shall be entitled to receive any refund resulting from such amended
filing, reduced by any increase in Taxes paid by the Company which is
directly attributable to Seller's claim for a refund. Following the Closing,
Buyer shall not, and shall not permit the Company to, make any elections or
changes in accounting methods if such elections or changes will materially
adversely affect the Tax liabilities of the Company or the Seller for a Tax
period ending on or prior to the Closing Date, except as required by law after
written notice to Seller.
(e) The parties agree not to make any election or deemed election
under Section 338(g) or 338(h)(10) of the Code or any similar provision under
state law with respect to the transactions contemplated by this Agreement.
5.7 Transfer Taxes. Buyer shall be responsible for, and shall pay or
reimburse promptly when and if due, all applicable sales, transfer, excise,
use, documentary stamps or
<PAGE>
any other similar Taxes which may be imposed on or made payable in any
jurisdiction, or by any authority, in connection with or arising from the
consummation of the transactions contemplated by this Agreement. Buyer shall
prepare and file all appropriate sales, transfer, excise, use, documentary
stamps and other tax returns and other documents due in connection with the
transactions contemplated hereunder. For purpose of paying any New York real
property transfer tax resulting from the transactions contemplated hereby, the
parties agree that the amount of the Purchase Price allocable to the Company's
Real Property shall be the book value thereof at the Closing Date.
5.8 Best Efforts and Certain Filings. Subject to the terms and conditions
of this Agreement, Buyer and Seller will use their best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable to consummate the transactions contemplated by this
Agreement and to maintain the accuracy of their representations and
warranties hereunder. Each of Seller and the Company will not take, agree to
take or knowingly permit to be taken any action to do or knowingly permit to
be done anything in the conduct of the business of the Company, or otherwise,
which would be contrary to or in breach of any of the terms or provisions of
this Agreement. Buyer and Seller agree to make their respective filings under
the HSR Act on or prior to January 9, 1997.
5.9 Industrial Revenue Bonds. Seller agrees to cooperate with Buyer in
Buyer's efforts to ensure that the 1985 City of Pine Bluff Industrial Revenue
Bonds and the 1996 City of El Paso Industrial Revenue Bonds issued on behalf of
the Company (collectively, the "Company IRBs") will remain in force and effect
following the Closing, upon the terms and conditions as presently are in effect
but without any liability of Seller subsequent to the Closing. The parties
shall use their best efforts to secure Seller's release from any liability under
the Company IRBs after the Closing.
5.10 Insurance. All insurance (other than group health and workers'
compensation programs) covering the property, and employees of the Company is
provided through Seller, and the Company is charged by Seller for its insurance
cost. All such insurance coverage provided through policies maintained by
Seller shall terminate at the Closing, and any return premiums received upon
termination shall be retained by or paid over to Seller upon receipt. Buyer
shall be responsible, at the cost of Buyer or the Company, for procuring
replacement insurance coverage following the Closing.
5.11 Workers' Compensation. Workers' compensation and disability benefits
for Employees of the Company are provided through a self-insured plan sponsored
by the Seller and administered by a third-party administrator. Coverage for
workers' compensation
<PAGE>
benefits for Employees of the Company under Seller's self-insured plan shall
be terminated as of the Closing. On or prior to the Closing, Buyer shall make
all necessary arrangements (including, but without limitation, posting one or
more surety bonds and/or letters of credit in amounts required by applicable
regulations) to implement its own self-insured workers' compensation program
for Employees of the Company or to procure an insurance policy providing
workers' compensation benefits for Employees of the
Company. From and after the Closing, neither Seller nor Seller's self-insured
workers' compensation program shall have any further obligations with respect
to workers' compensation or disability benefits or claims by Employees or
Former Employees of the Company, including, without limitation, claims or
benefits arising out of injuries or occurrences prior to or after the Closing.
5.12 Use of Seller's Name. Within 30 days after the Closing, Buyer
shall cause the Company to discontinue use of and destroy any signs,
letterhead, promotional materials, business forms and other documents bearing
the name or logo of Seller or which in any way indicate a continuing
affiliation between the Company and Seller.
5.13 Third-Party Offers. Seller and the Company shall not, nor shall
Seller or the Company authorize or permit any subsidiary or any of its or a
subsidiary's respective officers, directors, employees, investment bankers,
attorneys or other advisors or representatives to, (i) solicit or
initiate any Competitive Proposal (as defined below) or (ii) participate in
any discussions or negotiations regarding, or furnish to any person any
information with respect to, a Competitive Proposal. For purposes of this
Agreement, "Competitive Proposal" means a proposal from any person to acquire
all or a substantial part of the assets of the Company or more than 50% of the
equity securities of the Company or any merger, consolidation or business
combination involving the Company, other than the transactions contemplated by
this Agreement.
5.14 Ketchum Letter Agreement. At the Closing, the parties shall execute
and deliver the Letter Agreement attached hereto as Exhibit E.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligations of Seller hereunder are subject to the
fulfillment of the following conditions, any one of which may be waived in
writing by Seller:
<PAGE>
6.1 Representations and Covenants. All representations and warranties
of Buyer contained herein shall be true and correct in all material respects
on and as of the Closing Date with the same force and effect as though made on
and as of the Closing Date. Buyer shall have performed and complied with
all covenants and agreements contained herein and required to be
performed or complied in all material respects with by it on or prior to the
Closing Date.
6.2 Closing Certificate. Buyer shall have delivered to Seller a
certificate signed by its President or a Vice President, dated as of the
Closing Date, to the effect set forth in Section 6.1.
6.3 Legal Opinion. Seller shall have received the opinion of Weil,
Gotshal & Manges LLP, counsel for Buyer, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit A.
6.4 Injunction. No order or decree prohibiting or restraining the
consummation of this Agreement shall have been issued by any court or
governmental or regulatory body.
6.5 Lender's Consent. Seller shall have received the consent of its
senior lenders to the consummation of the transactions contemplated
hereby.
6.6 HSR Act. The waiting period under the HSR Act shall have expired
or been earlier terminated without objection of the U.S. Department of
Justice.
6.7 Company IRBs. If the parties shall have been unable to secure
Seller's release from liability pursuant to Section 5.9, Buyer shall (or
shall have caused the Company to) have furnished one or more letters of credit
or otherwise have provided indemnification reasonably satisfactory to Seller
to protect Seller against any liability after the Closing Date in connection
with the Company IRBs.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligation of Buyer to enter into and complete the Closing
is subject to the fulfillment on or before the Closing Date of each of the
following conditions, any one of which may be waived in writing by Buyer:
<PAGE>
7.1 Representations and Covenants. All representations and warranties
of Seller contained herein shall be true and correct in all material respects
on and as of the Closing Date with the same force and effect as though made on
and as of the Closing Date. Seller shall have performed and complied in all
material respects with all covenants and agreements contained herein and
required to be performed or complied with by it on or prior to the Closing
Date.
7.2 Closing Certificate. Seller shall have delivered to Buyer a
certificate signed by it or on its behalf dated as of the Closing Date, to the
effect set forth in Section 7.1.
7.3 Legal Opinion. Buyer shall have received the favorable opinion of
Catherine H. Suttmeier, General Counsel for the Company and Seller dated as of
the Closing Date, in substantially the form attached hereto as Exhibit B.
7.4 Injunction. No order, decree, statute, rule or regulation
prohibiting or restraining the consummation of this Agreement shall have
been issued by any court or governmental or regulatory body.
7.5 Material Adverse Change. The Company shall not have suffered any
material adverse change in its business or financial condition since November
23, 1996, including, without limitation (i) any loss or notice of loss of
any Material Customer (other than to Buyer or one of its affiliates) or
Material Supplier as those terms are herein defined, or (ii) any loss on
account of fire, flood, accident, strike or other calamity which has or
reasonably may have a Material Adverse Effect.
7.6 Directors Resignations. Buyer shall have received the written
resignation of each of the directors of the Company effective as of the
Closing Date.
7.7 FIRPTA Affidavit. Buyer shall have received an affidavit from the
Seller in the form of Exhibit C attached hereto that the Company is not, and
has not been at any time during the five (5) year period preceding the date of
this Agreement been, a United States real property holding corporation under
the Foreign Investment in Real Property Tax Act of 1980.
7.8 Bank Accounts/Powers of Attorney. Any changes of signatories to
Company bank accounts or cancellation of powers of attorney requested by
Buyer shall have been made effective as of the Closing.
<PAGE>
7.9 HSR Act. The waiting period under the HSR Act shall have expired
or been earlier terminated without objection of the U.S. Department of
Justice.
7.10 Selected Material Contracts and Permits, Etc. The completion of the
transactions contemplated at Article I of this Agreement shall not impair the
ability of the Company to enforce or continue to receive the benefits provided
to it under (i) any contract, agreement or arrangement described at paragraph
(i), (ii), (iv) or (viii) of subsection 3.14(a) ("Selected Material Contracts"),
or (ii) any material permits, licenses, exemptions, consents, authorizations and
approvals ("Material Permits"), upon the consummation of the transactions
contemplated by this Agreement, and all consents necessary to preserve the
Company's continuing ability to enforce or receive the benefits pursuant to
each Selected Material Contract and Material Permit shall have been obtained
by the Company or Seller.
7.11 Seller Indebtedness. Seller shall have caused the Company to be
released from any liability (as a guarantor, co-maker or otherwise) with
respect to the indebtedness of Seller.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1 Survival of Representations and Warranties. All representations,
warranties, obligations, covenants and agreements of the parties contained
herein, or in any Schedule or Exhibit hereto, and the rights of the parties to
seek indemnification with respect thereto, shall survive the Closing and,
except in respect of any claims for indemnification as to which notice shall
have been duly given prior to the relevant expiration date set forth below
(or in the case of the representations set forth in Section 3.3, or claims for
indemnification arising therefrom, which shall have an indefinite duration),
shall expire on the following dates:
(a) in the case of Buyer Indemnity Claims as defined in Section 8.2
below based in whole or in part on a breach of the representations and
warranties set forth in Section 3.19 or 3.22 ("Tax/ERISA Claims"), the day
(the "Tax Claim Termination Date") which is the forty-fifth (45th) day
following the third (3rd) anniversary of the earliest date on which all of the
Company's Tax returns for its fiscal year ending on the Closing Date have been
duly filed; provided, however, that if any governmental entity shall commence
an audit of the Company on or before the Tax Claim Termination Date with respect
to any taxable periods of the Company ending on or before the Closing Date,
Buyer shall have the right to assert a Buyer Indemnity Claim hereunder at any
time on or before the Tax Claim Termination Date for the estimated amount of
all Tax Liabilities and Costs (as those terms are hereinafter defined) which
could potentially be assessed or otherwise be asserted by such
<PAGE>
governmental entity in connection with such audit and, provided further, that in
the case of Tax Liabilities described in Section 8.5(c)(ii), the Tax Claim
Expiration Date shall be the forty-fifth day following the expiration of the
applicable statute of limitations (including extensions) for the assessment of
Taxes for the respective consolidated, combined, affiliated Tax Returns;
(b) in the case of all other Buyer Indemnity Claims, the later of May
31, 1998 or the end of the sixteenth calendar month after the Closing Date; and
(c) in the case of any Seller Indemnity Claim, the later of May 31,
1998 or the end of the sixteenth calendar month after the Closing Date.
8.2 Seller's Agreement to Indemnify. Seller shall defend, indemnify and
hold harmless Buyer and the Company from and against any Buyer Indemnity Claims
arising under this Agreement. For purposes of this Agreement, the term "Buyer
Indemnity Claim" shall mean (i) any Tax Liability or Cost (as defined in Section
8.5), or (ii) any loss, damage, deficiency, claim, liability, obligation, suit,
action, proceeding, demand, assessment, judgment, fee, cost or expense of any
nature whatsoever (including, without limitation, all interest and penalties
in connection with the foregoing and all out-of-pocket costs and expenses
incident to the investigation, settlement or disposal of any of the foregoing,
including, without limitation, reasonable fees and disbursements of accountants
and counsel) arising out of, based upon or resulting from (A) any breach
of any representation and warranty of the Company or Seller which is contained
in this Agreement or the certificate delivered under Section 7.2 of this
Agreement, (B) any breach or nonfulfillment of, or any failure to perform, any
of the covenants, agreements or undertakings of the Company or the Seller
which are contained in or made pursuant to this Agreement, and (C) the
termination of the CAC Stock Purchase Agreement; provided, however, that
Buyer shall be entitled to indemnification for Buyer Indemnity Claims under
subsection (ii)(A) (other than under Sections 3.3., 3.25 and 3.30) of this
Section 8.2 only to the extent that the aggregate amount of all Buyer
Indemnity Claims which have been Definitively Resolved (as that term is
hereinafter defined) in favor of Buyer under the terms of this Agreement shall
exceed $1,000,000 and only to the extent of such excess. Any payments
made by Seller hereunder with respect to a Buyer Indemnity Claim shall
be deemed to be a reduction of the Purchase Price.
8.3 Buyer's Agreement to Indemnify. Buyer hereby agrees to indemnify
and hold the Seller harmless from, and to reimburse the Seller for any Seller
Indemnity Claims (as that term is hereinafter defined) arising under the terms
and conditions of this Agreement. For purposes of this Agreement, the term
"Seller Indemnity Claim" shall mean any loss, damage, deficiency, claim,
liability, obligation, suit, action, proceeding, demand, assessment,
<PAGE>
judgment, fee, cost or expense of any nature whatsoever (including, without
limitation, all interest and penalties in connection with the foregoing and all
out-of-pocket costs and expenses incident to the investigation, settlement or
other disposal of any of the foregoing, including, without limitation,
reasonable fees and disbursements of accountants and counsel) arising out of,
based upon or resulting from (i) any breach of any representation and warranty
of Buyer which is contained in this Agreement or any certificate or other
instrument or document delivered pursuant hereto, or (ii) any breach or
nonfulfillment of, or failure to perform, any of the covenants, agreements or
undertakings of Buyer contained in or made pursuant to the terms and conditions
of this Agreement.
8.4 Notification of Claims and Definitive Resolutions. (a) Subject to the
provisions of Section 8.5 below, upon the occurrence of an event which
constitutes or is claimed to constitute a Buyer Indemnity Claim or a Seller
Indemnity Claim, as applicable, such party shall provide the indemnifying
party or parties with prompt written notice of such event and shall
otherwise make available to the indemnifying party all relevant information
which is material to the claim and which is in the possession of the
indemnified party but in no event later than the time period set forth in
Section 8.1. (For all purposes of this Section 8.4, in the case of
Seller "indemnified party" or "indemnifying party" refers to Seller and
not the Company.) Following receipt of a notice of any such indemnity claim
asserted under this Section 8.4(a), the indemnifying party shall have sixty (60)
days (or such longer period as may be agreed in writing by the indemnified
party) to make such initial investigation of the claim as the indemnifying
party deems necessary or desirable. For the purpose of such investigation,
the indemnified party shall make available to the indemnifying party any
books and records relied upon by it to substantiate the claim. At or prior
to the expiration of such sixty-day period (or any extension thereof which
shall have been agreed to by the indemnified party in writing), the
indemnifying party shall notify the indemnified party as to whether or not
it disputes the indemnified party's claim in whole or in part.
(b) If the indemnifying party does not dispute the indemnified
party's claim, the two shall execute a memorandum (hereinafter referred to
as a "Resolution Memorandum"), in the form of Exhibit D hereto, which shall
recite the amount of the Buyer Indemnity Claim or Seller Indemnity Claim. If
the indemnifying party notifies the indemnified party within 60 days that it
disputes such claim, then, for a period not to exceed 30 days following receipt
of such notice from the indemnifying party, the parties shall confer with one
another and endeavor in good faith to resolve any dispute regarding the claim.
If the parties reach an agreement regarding the existence and amount of the
Buyer Indemnity Claim or Seller Indemnity Claim, the parties shall execute a
Resolution Memorandum as aforesaid.
<PAGE>
(c) For purposes of this Agreement, a Buyer Indemnity Claim or Seller
Indemnity Claim shall be deemed to have been "Definitively Resolved" when
(i) a Resolution Memorandum has been signed by Buyer and Seller; or (ii) there
is a decision, judgment, decree or other order by any court of competent
jurisdiction, which disposes of all or part of a Buyer Indemnity Claim or Seller
Indemnity Claim, which decision, judgment, decree or other order is not
appealable or with respect to which the time for appeal has expired, or (iii) a
period of sixty (60) days has expired since notice of a Buyer Indemnity Claim
or Seller Indemnity Claim has been delivered to the indemnifying party and
the indemnifying party has not notified the indemnified party that it disputes
such claim. Upon the Definitive Resolution of a Buyer Indemnity Claim in favor
of Buyer, the amount of such claim shall be paid by Seller to Buyer within
thirty (30) days, subject to the provisions of Section 8.2(ii) hereinabove.
(d) If any indemnity claim asserted under Section 8.4(a) involves
the claim of any third party (a "Third-Party Claim"), the indemnifying party
shall have the right to elect to join in the defense, settlement, adjustment
or compromise of any such Third-Party Claim, and to employ counsel to assist
such indemnifying party in connection with the handling of such claim, at the
sole expense of the indemnifying party, and no such claim shall be settled,
adjusted or compromised, or the defense thereof terminated, without the prior
consent of the indemnifying party unless and until the indemnifying party shall
have failed, after the lapse of a reasonable period of time, but in no event
more than thirty (30) days after written notice to it of the Third-Party
Claim, to join in the defense, settlement, adjustment or compromise of the
same. An indemnified party's failure to give timely notice or to furnish the
indemnifying party with any relevant data and documents in connection with
any Third-Party Claim shall not constitute a defense in part or in whole) to
any claim for indemnification by such party, except and only to the extent
that such failure shall result in any material prejudice to the indemnifying
party. If so desired by any indemnifying party, such party may elect, at such
party's sole expense, to assume control of the defense, settlement,
adjustment or compromise of any Third-Party Claim, insofar as such claim
relates to the liability of the indemnifying party, provided that such
indemnifying party shall obtain the consent of all indemnified parties before
entering into any settlement, adjustment or compromise of such claim, or
ceasing to defend against such claim, if as a result thereof, or pursuant
thereto, there would be imposed on an indemnified party any liability or
obligation not covered by the indemnity obligations of the indemnifying
parties under this Agreement (including, without limitation, any injunctive
relief or other remedy).
8.5 Special Indemnification for Tax Liabilities. (a) Seller shall
indemnify and hold harmless Buyer, the Company and each Affiliate (as that
term is
<PAGE>
hereinafter defined) of Buyer, from and against the payment of any and all Tax
Liabilities (as that term is hereinafter defined). Except as may otherwise
be expressly provided for in this Agreement, the term "Buyer Indemnity Claims"
shall be deemed to include all claims for Tax Liabilities.
(b) For purposes of this Section 8.5, the term "Affiliate" shall mean
any corporation or other entity which is, directly or indirectly, controlled by
Buyer, or any successor in interest to, or transferee of, Buyer, as the case
may be, as determined from time to time, including, without limitation, the
Company and any successor in interest to, the Company.
(c) For purposes of this Agreement, the term "Tax Liabilities"
shall mean and include (i) any and all liabilities for Taxes which are or
shall be incurred by the Company (or by Buyer with respect to the Company)
with respect to any taxable year or any other period prior to the Closing,
other than Taxes for which provision was made on the Closing Balance Sheet,
and (ii) any and all Taxes of any member of an affiliated, consolidated,
combined or unitary group (other than Taxes allocable to the Company) of
which the Company is or was a member on or prior to the Closing Date by reason
of the liability of the Company pursuant to Treas. Reg. 1.1502-6(a) or
any similar state, local or foreign law.
(d) In the event the indemnitee receives notice of a claim made by
any Federal, state, local, foreign or other governmental authority which, if
successful, would result in an obligation to indemnify pursuant to this Section
8.5 (hereinafter, referred to as a "claim"), the indemnitee shall give prompt
notice to Seller of the same in writing but in no event later than the time
period specified in Section 8.1(a)), specifying in reasonable detail the basis
of such claim, and the facts pertaining thereto, and shall not make payment of
the Taxes claimed for at least 30 days after the giving of such notice. Seller
shall have the right to control the defense of any such claim, subject in all
cases to its obligation to indemnify Buyer and the Company with respect to
Tax Liabilities. If Seller wishes the indemnitee to contest such claim, Seller
shall, within 30 days after notice by the indemnitee to Seller of such claim,
or, if earlier, the period required by law, request that such claim be
contested. If the indemnitee agrees to do so, it shall contest the claim;
provided, if the indemnitee so requests, Seller shall first furnish an opinion
of independent tax counsel selected by Seller and reasonably satisfactory to the
indemnitee, that there is a reasonable defense to the claim, and Seller shall
agree to pay the indemnitee from time to time on demand, an amount which shall
be equal to all costs and expenses which the indemnitee may incur in connection
with contesting such claim, including, without limitation, fees and
disbursements of attorneys, accountants and other experts (hereinafter referred
to as the "Costs"). If indemnitee chooses not to contest the claim, Seller
shall have the right to do so; provided, that Buyer shall (and shall cause
the Company to) cooperate with and assist Seller, at Seller's expense, in
contesting such claim. If any such claim shall be made by the IRS or other
governmental
<PAGE>
authority and Seller shall have requested the indemnitee to contest such claim,
as above provided, and shall have duly complied with all of the terms of this
Section 8.5, the indemnitee hereby agrees to consult with Seller in good faith
with respect to the actions to be taken by the indemnitee in connection with
contesting any such claim; provided, however, that in determining the
actions to be taken by the indemnitee, the overall tax and other interests of
the indemnitee and its Affiliates shall be taken into account; and provided
further that; (i) the indemnitee may either pay the Taxes claimed and sue for
a refund in the appropriate court of proper jurisdiction, as the Seller
shall elect, or contest such claim without first paying the Taxes claimed, and
(ii) if the Seller requests the indemnitee to pay the taxes claimed and then
seek a refund, the indemnitee will be provided with sufficient funds by
Seller, on an interest-free basis, to pay the full amount of such Taxes. The
indemnitee agrees to notify Seller in a timely manner in writing of any
action taken or proposed to be taken from time to time by the governmental
authority with respect to such claim, and to make available to Seller any
relevant information relating to such claim which may be particularly within
the knowledge of Buyer or any Affiliate and to otherwise cooperate with Seller
in good faith in order to contest effectively any such claim. For the purpose
of all dealings with Buyer or other indemnitee hereunder, Seller shall act
exclusively through one designated counsel, and the indemnitee is hereby
authorized by the Seller to deal with such designated counsel.
(e) Any liability of the Seller under this Section 8.5 shall become
fixed upon a Final Resolution of the liability of the indemnitee and any
amounts due to Buyer or other indemnitee under this Section 8.5 shall be paid
within 30 days after such Final Resolution subject to the limitations in
Section 8.2. An indemnitee's failure to give timely notice or to provide
copies of documents or to furnish relevant data in connection with any such
claim shall not constitute a defense (in whole or in part) to such claim for
indemnification for such indemnitee, except to the extent such failure or
delay results in prejudice to Seller.
(f) For purposes of this Section 8.5, a "Final Resolution" shall be
deemed to occur with respect to a proposed or other adjustment when (i)
there is a decision, judgment, decree or other order by any court of
competent jurisdiction, which decision, judgment, decree or other order has
become final with respect to the indemnitee (i.e., all allowable appeals taken
pursuant to this Section 8.5 have been exhausted by either party to the
action), (ii) there is a closing agreement made under section 7121 of the Code
binding in respect of the indemnitee or other administrative settlement with the
IRS or other government authority, (iii) the time for instituting a claim
for refund in respect of the indemnitee has expired, or, if a claim was
filed, the time for instituting suit with respect thereto has expired or
(iv) the Taxes which are the subject of a proposed or other adjustment are
paid, and, pursuant to
<PAGE>
written agreement between Seller and Buyer or other indemnitee, no claim for
refund is filed, and no other contest of such proposed or other adjustment is
made.
(g) Upon a Final Resolution, the Seller shall become obligated for any
payment, as provided above (less any amounts already advanced to the indemnitee
as provided above), and the indemnitee shall become obligated to pay to Seller
any refund (including interest thereon, to the extent actually paid by the
relevant governmental authority) received or credited with respect to such
claim (plus any amounts advanced to the indemnitee, as provided above, not
depleted in satisfaction of the obligations of the Seller to the indemnitee).
The obligations of the indemnitee and the Seller shall first be set off against
each other and any difference owing by either party shall be paid within 30
days after such final determination.
(h) If any such claim referred to in subsection 8.5(d) hereof
shall be made by any Federal, state, local, foreign or other governmental
authority and Seller, after having received notice thereof, shall have failed
(i) to request the indemnitee to contest or not to contest such claim, as above
provided, or (ii) to comply with any of the other material terms of this
Section 8.3, Seller shall become obligated to pay the indemnitee upon a Final
Resolution, an amount which shall be equal to the Taxes which ultimately
are paid as a result of contesting such claim and, from time to time upon
demand, the costs which the indemnitee may incur in connection with contesting
such claim.
(i) In the event that Seller pays a Tax Liability pursuant to this
Section 8.5 which arises from the disallowance in one fiscal year of a
deduction or tax credit, which payment results in a reduction of the Federal or
state income tax liability of the Company (or the consolidated group of
which the Company is a member) for one of the first four (4) tax periods
beginning after the Closing Date ("a "Tax Recoupment"), Buyer or the Company
shall pay to the Seller an amount equal to the Tax Recoupment, within 30 days
after Final Resolution of all Buyer Indemnity Claims with respect to Tax
Liabilities or, with respect to Tax Recoupments arising during the fourth tax
period beginning after the Closing. within 30 days after the filing of the
federal and state income tax returns for such period.
8.6 Limitations on Indemnification. Notwithstanding anything in this
Agreement to the contrary, Seller shall have no obligation to indemnify the
Buyer or the Company for a Buyer Indemnity Claim to the extent the matter
giving rise to such claim (a) relates to any matter which is provided for,
reserved or otherwise taken into account in the Closing Balance Sheet, (b)
relates to any loss to the extent Buyer or the Company is covered by
insurance, (c) arises or is increased as a result of any change in the basis
or method of application or calculation of, or an increase in rates of,
taxation after the Closing Date or the passing of any legislation
<PAGE>
or any change in generally accepted accounting principles after the Closing
Date, or (d) arises or is increased as a result of a change in Environmental
Law after the Closing Date. The amount of any indemnification required to be
paid by Seller under this Article VIII shall be reduced by the amount by which
the Federal or state income tax of the Company (or the consolidated group of
which the Company is a member) is actually reduced due to a reduction of its
net income for the tax period in which the liability or obligation giving rise
to the indemnification is satisfied by the Company. In no event shall the
liability of Seller under this Article VIII exceed the Purchase Price
(except in the case of Tax Liabilities described in Section 8.5(c)(ii)).
8.7 Exclusive Remedy. After the Closing, the indemnification provisions
of this Agreement shall constitute the sole and exclusive remedy of
Buyer for any breach by Seller or Company of any representation or warranty
or covenant contained in this Agreement. Buyer shall not be entitled to
assert against Seller any claim for damages, indemnification or otherwise
relating to the transactions under this Agreement except pursuant and subject
to the provisions of this Article VIII or to the extent such claim is based on
fraud. Without limiting the generality of the foregoing, Buyer agrees that
the rights accorded to it by Section 8.2 are the sole and exclusive remedy
against Seller with respect to all liabilities under any Environmental Laws.
Buyer (on its own behalf and on behalf of the Company after the Closing) and
its successors and assigns hereby waive any right to seek contribution or other
recovery from Seller or any of its affiliates under any Environmental Law, and
Buyer unconditionally releases Seller from any and all claims, demands and
causes of actions that it may now have or in the future have against Seller for
recovery under any Environmental Law except pursuant to Section 8.2 hereof.
After the Closing, Seller and its successors and assigns hereby waive any right
to seek contribution or other recovery from the Company in connection with any
representation made jointly and severally hereunder by the Company and Seller
or any covenant made by the Company if Buyer is entitled to indemnification
under this Article for a breach or violation of any such representation or
covenant.
ARTICLE IX
CERTAIN COVENANTS
9.1 Access by Seller. The Company shall, from and after the Closing
Date, provide reasonable access to Seller (and to the Seller's Accountants
for purposes of preparation and audit of the Closing Balance Sheet and the
preparation or audit of the Tax returns of the Company for the period ending
on or prior to the Closing Date) during normal business hours, to the
books and records and personnel of the Company, to the extent that such
access is reasonably requested in writing in advance by Seller.
<PAGE>
9.2 Maintenance of Records. Buyer shall cause the Company to maintain
all books and records of the Company existing as of the Closing Date for a
period of ten years after the Closing and shall not destroy such books and
records during such period without giving Seller sixty (60) days prior written
notice.
ARTICLE X
MISCELLANEOUS
10.1 Expenses. Seller shall be responsible for the expenses which Seller
and the Company incur in connection with the transactions provided for herein
or contemplated hereby including, without limitation, the fees and expenses
of counsel, accountants and investment bankers, and Seller shall not cause
or permit the Company to pay or be liable for such costs. Buyer shall bear
the expenses which it incurs in connection with the transactions provided
for herein or contemplated hereby, including the fees and expenses of its
counsel and accountants. The fees for filing of pre-merger notification
reports under the HSR Act shall be paid by Buyer.
10.2 Brokers. Neither Buyer nor Seller nor the Company has employed a finder
or broker or other person entitled to a commission or fee in respect of this
Agreement and the transactions contemplated hereby.
10.3 Notices. Any notice, request, demand or other communication given by
any party under this Agreement (each a "notice") shall be in writing, may be
given by a party or its legal counsel, and shall be deemed to be duly given (i)
when personally delivered, or (ii) upon delivery by United States Express Mail
or similar overnight courier service which provides evidence of delivery, or
(iii) when five days have elapsed after its transmittal by registered or
certified mail, postage prepaid, return receipt requested, addressed to the
party to whom directed at that party's address as it appears below or another
address of which that party has given written notice to the other parties
hereto, or (iv) when transmitted by telex (or equivalent service), the sender
having received the answer back of the addressee, or (v) when delivered by
facsimile transmission if a copy thereof is also delivered in person or by
overnight courier. Notices of address change shall be effective only upon
receipt notwithstanding the provisions of the foregoing sentence.
(a) Notice to Buyer shall be sufficient if given to:
International Wire Group, Inc.
101 South Hanley Road, Suite 400
St. Louis, Missouri 63105
<PAGE>
Facsimile No.: (314) 746-2251
Attention: David M. Sindelar
with copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Facsimile No.: (214) 740-7313
Attention: Lawrence D. Stuart, Jr.
Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
Facsimile No.: (314) 746-2299
Attention: David M. Sindelar
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Facsimile No.: (214) 746-7777
Attention: David J. Webster
(b) Notice to Seller or the Company (prior to Closing) shall be
sufficient if given to:
Oneida, Ltd.
Kenwood Avenue
Oneida, New York 13421
Attn: Catherine H. Suttmeier, General Counsel
Facsimile: (315) 361-3700
10.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
This Agreement or any part thereof may not be assigned without the prior written
consent of the other party, which consent may be withheld in the sole discretion
of the other party; provided, however, this Agreement may be assigned to any
affiliate of Buyer but such assignment shall not relieve Buyer of any of its
obligations hereunder.
<PAGE>
10.5 Entire Agreement and Modification. This Agreement, the Schedules to
be provided hereunder, Exhibits hereto and agreements executed concurrently
herewith (all of which are incorporated by reference into and considered part of
this Agreement) supersede all prior agreements and understandings between the
parties or any of their respective affiliates (written or oral) relating to the
subject matter of this Agreement and are intended to be the entire and complete
statement of the terms of the agreement between the parties, and may be amended
or modified only by a written instrument executed by the parties. The waiver
by one party of any breach of this Agreement by any other party shall not be
considered to be a waiver of any succeeding breach (whether of a similar or a
dissimilar nature) of any such provision or other provision or a waiver of any
such provision itself. No representation, inducement, promise, understanding,
condition or warranty not set forth herein has been made or relied upon by
either party hereto.
10.6 Section and Other Headings. The section and other headings contained
in this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
10.7 Governing Law. This Agreement and the respective rights, duties and
obligations of the parties hereunder, shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
the conflicts of laws provisions thereof.
10.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, and such
counterparts shall together constitute one and the same instrument.
10.9 Further Assurances. Each of the parties shall, at any time and from
time-to-time after the Closing Date and at the expense of the other parties but
without further consideration, execute and deliver such further instruments,
assignments or documents and other papers and take such further actions as
may be reasonably required to carry out the provisions hereof and the
transactions contemplated hereby. Each party shall use its reasonable efforts
to fulfill or obtain the fulfillment of the conditions to the Closing.
10.10 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition and unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
<PAGE>
10.11 Confidentiality. Seller and Buyer agree to keep the terns of this
Agreement and any amendments to it or transactions arising from it confidential
except as required by applicable securities laws or to discharge the obligation
of each of the parties to file submissions and data with respect to the
proposed transaction pursuant to the HSR Act or as otherwise agreed by the
parties.
10.12 No Third Party Beneficiaries. Neither this Agreement nor any
provision hereof is intended to confer upon any person (other than the parties
hereto) any rights or remedies hereunder.
10.13 Termination by Buyer. If Seller fails to comply with Section 2.2(b)
or if any of the conditions to Closing specified in Article VII are not
satisfied in all material respects, at or prior to January 25, 1997 (unless
Seller is diligently undertaking to comply with Section 2.2(b) or to satisfy
the conditions to Closing specified in Article VII in which case such date
will be extended for 15 days), and such failure is not waived in writing by
Buyer, then Buyer may, without liability of Buyer to any party, terminate this
Agreement, provided Buyer has satisfied (or stood ready to satisfy) all of
Seller's conditions to Closing specified in Article VI, or such conditions have
otherwise been satisfied or waived, by written notice to Buyer.
10.14 Termination by Seller. If Buyer fails to comply with Section 2.2(a)
or if any of the conditions to Closing specified in Article VI are not satisfied
in all material respects at or prior to January 25, 1997 (unless Buyer is
diligently undertaking to comply with Section 2.2(a) or to satisfy the
conditions to Closing specified in Article VI, in which case such date shall be
extended for 15 days), and such failure is not waived in writing by Seller, then
Seller may, without liability of Seller to any party, terminate this
Agreement, provided Seller has satisfied (or stood ready to satisfy) all of
Buyer's conditions to Closing specified in Article VII, or such conditions have
otherwise been satisfied or waived, by written notice to Seller.
[THE REMAINEDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
ONEIDA LTD.
By: /s/ Peter J. Kallet
Peter J. Kallet
President
CAMDEN WIRE CO., INC.
By: /s/ Catherine H. Suttmeier
Catherine H. Suttmeier
Secretary
INTERNATIONAL WIRE GROUP, INC.
By: /s/ Ellen Lipsitz
Name: Ellen Lipsitz
Title: Vice President
<PAGE>
Exhibit A
January ___, 1997
Oneida Ltd.
Kenwood Avenue
Oneida, New York 13421
Ladies and Gentlemen:
We have acted as counsel to International Wire Group, Inc., a Delaware
corporation ("Buyer"), in connection with the preparation, authorization,
execution and delivery of, and the consummation of the transactions
contemplated by, the Stock Purchase Agreement (the "Agreement"), dated as of
January _, 1997, by and among Buyer, Camden Wire Co., Inc., a New York
corporation (the "Company"), and Oneida Ltd., a New York corporation ("Seller").
Capitalized terms defined in the Agreement and used but not otherwise defined
herein are used herein as so defined.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Agreement and such corporate records,
agreements, documents and other instruments, and such certificates or
comparable documents of public officials and of officers and representatives
of Buyer, and have made such inquiries of such officers and representatives as
we have deemed relevant and necessary as a basis for the opinions hereinafter
set forth.
In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions
of fact material to this opinion that have not been independently established,
we have relied upon certificates or comparable documents of officers and
representatives of Buyer and upon the representations and warranties of Buyer
contained in the Agreement.
<PAGE>
Based on the foregoing, and subject to the qualifications stated herein,
we are of the opinion that:
1. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.
2. Buyer has all requisite corporate power and authority to execute and
deliver the Agreement and to perform its obligations thereunder. The execution,
delivery and performance of the Agreement by Buyer and the consummation by
Buyer of the transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of Buyer. The Agreement has been duly and
validly executed and delivered by Buyer and (assuming the due authorization,
execution and delivery thereof by the Company and Seller) constitutes the
legal, valid and binding obligation of Buyer, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability,
to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).
3. The execution and delivery of the Agreement, the consummation of
the transactions contemplated thereby and compliance by Buyer with any of
the provisions thereof will not conflict with, constitute a default under or
violate (i) any of the terms, conditions or provisions of the certificate of
incorporation or By-Laws of Buyer, (ii) any of the terms, conditions or
provisions of any document, agreement or other instrument to which Buyer is a
party or by which it is bound of which we are aware, (iii) any New York,
Delaware corporate or federal law or regulation (other than federal and state
securities or blue sky laws, as to which we express no opinion), or (iv) any
judgment, writ, injunction, decree, order or ruling of any court or governmental
authority binding on Buyer of which we are aware.
4. No consent, approval, waiver, license or authorization or other action
by or filing with any New York, Delaware corporate or federal governmental
authority is required in connection with the execution and delivery by Buyer of
the Agreement or the consummation by Buyer of the transactions contemplated
thereby, except for (i) those required under the HSR Act and (ii) those already
obtained.
<PAGE>
5. To our knowledge, there is no litigation, proceeding or governmental
investigation pending or overtly threatened against Buyer that relates to any
of the transactions contemplated by the Agreement.
The opinions expressed herein are limited to the laws of the State of New
York, the corporate laws of the State of Delaware and the federal laws of the
United States, and we express no opinion as to the effect on the matters
covered by this letter of the laws of any other jurisdiction.
The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. Those opinions may not be
used or relied upon by any other person, nor may this letter or any copies
thereof be furnished to a third party, filed with a governmental agency, quoted,
cited or otherwise referred to without our prior written consent.
Very truly yours,
<PAGE>
Exhibit B
[Letterhead of Catherine H. Suttmeier]
______________, 1997
International Wire Group, Inc.
[address]
Dear Sir or Madam
I am General Counsel of Oneida Ltd., a New York corporation (the "Seller"),
and have acted as counsel to the Seller and Camden Wire Co., Inc. (the
"Company"), in connection with the proposed purchase of all of the issued and
outstanding shares of common stock of the Company (the "Shares") by
International Wire Group, Inc., a Delaware corporation (the "Buyer"), pursuant
to a Stock Purchase Agreement dated January ____, 1997 by and among Seller,
the Company, and Buyer (the "Stock Purchase Agreement"). This opinion is being
rendered pursuant to Section 7.3 of the Stock Purchase Agreement. Capitalized
terms not otherwise defined herein are used herein as defined in the Stock
Purchase Agreement.
In rendering this opinion, I have examined originals or copies certified
or otherwise identified to my satisfaction of (i) the Stock Purchase Agreement;
(ii) the Resolutions adopted by the Boards of Directors of Seller and the
Company relating to the approval and adoption of the Stock Purchase Agreement
and the transactions contemplated thereby; (iii) the Certificates of
Incorporation and By-Laws of Seller and the Company, as mended to date; and (iv)
such other documents as I have deemed necessary or appropriate as a basis for
the opinions set forth below. In my examination, I have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as original
documents, the conformity to original document of all documents submitted as
certified or photostatic copies and the authenticity of the originals of all
such non-original documents. As to certain matters of fact material to this
opinion, I have relied upon certificates of officers of Seller and the Company
and certificates of public officials. I have assumed the accuracy of the
material factual information contained in all such certificates.
I am admitted to the Bar of the State of New York and no opinion is
expressed herein as to the laws of any jurisdictions other than the laws of the
United States and the laws of the State of New York.
<PAGE>
Based upon the foregoing and on my examination of such questions of law as
I have considered necessary or appropriate, I am of the opinion that:
1. Seller and the Company are duly organized, validly existing and in
good standing under the laws of the State of New York, and, based solely upon
the certificates of good standing or qualification described on Attachment I,
hereto, the Company is duly qualified to do business and is in good standing
as a foreign corporation in each of the jurisdictions set forth on Schedule 3.1
(a) of the Stock Purchase Agreement.
2. The Company has all requisite corporate power and authority to
own, hold, lease and operate its assets and properties as now owned,
held, leased and operated and to conduct its business as now conducted. To
the best of my knowledge, the Company has in full force and effect all
necessary licenses, permits and similar evidences of authority required to
conduct the business presently conducted by it in each jurisdiction in which
such business is conducted and the consummation of the transactions
contemplated by the Stock Purchase Agreement will not result in any change or
modification in, or cause any termination or cancellation of, any such
license permit or authorization, except as set forth in any Schedule to
the Stock Purchase Agreement.
3. Seller and the Company have full corporate power and authority to
execute and deliver the Stock Purchase Agreement and to consummate the
transactions contemplated thereby. The Board of Directors of each of Seller and
the Company have duly approved and have duly authorized the execution and
delivery of the Stock Purchase Agreement and the consummation of the
transactions contemplated thereby, and no other corporate proceedings on the
part of either Seller or the Company are necessary to approve and authorize the
execution or delivery of the Stock Purchase Agreement or the consummation
of the transactions contemplated thereby. The Stock Purchase Agreement has
been duly executed and delivered by both Seller and the Company and constitutes
the valid and binding agreement of Seller and the Company, enforceable
against Seller and the Company in accordance with its terms.
4. Seller is the beneficial and record owner of all of the Shares,
free and clear of any Encumbrances. All of the Shares are duly authorized and
are validly issued, and are fully paid and nonassessable.
5. The execution and delivery of the Stock Purchase Agreement and
the consummation of the transactions contemplated thereby will not: (i) violate
or conflict with any provision of the Certificates of Incorporation or By-Laws
of Seller or the Company; or, to the best of my knowledge after reasonable
investigation: (ii) except as disclosed on Schedule 3.14(c) to the Stock
Purchase Agreement, violate, conflict with or result in a breach of or default
(or be
<PAGE>
any event with which the lapse of time or the giving of notice or both would
constitute an event of default) under any of the terms, conditions or
provisions of any Instrument; (iii) except as disclosed on one of the
Schedules, accelerate or give to others any interests, including rights of
acceleration, modification or cancellation, under any Instrument or in or with
respect to the business or assets of Seller or the Company; (iv) result in the
creation of any Encumbrance on the assets, capital stock or properties or the
Company; (v) except as set forth on one of the Schedules, conflict with violate
or result in a breach of or constitute a default under any law, statute,
rule, judgment, order, decree, injunction, filing or regulation of any
government, governmental agency, authority or instrumentality, court or
arbitration tribunal to which Seller or the Company or any of their assets or
property are subject, or require Seller or the Company to give notice to,
or obtain an authorization, approval, order, license, franchise, declaration or
consent, or make a filing with, any third party, including any foreign,
Federal, state, county, local or other governmental or regulatory body, other
than such filings as are required under the HSR Act.
6. Except as set forth in Schedule 3.16 to the Stock Purchase
Agreement, there are no suits, actions, proceedings, including, without
limitation, arbitral and administrative proceedings, claims or governmental
investigations or audits pending or, to the best of my knowledge after
reasonable investigation, threatened against the Company or its properties,
assets or business or pending or, to the best of my knowledge after reasonable
investigation, threatened against, relating to-or involving any of the officers,
directors, Employees or agents of the Company in connection with the business
of the Company, including, without limitation, any suit, action, proceeding,
claim or investigation challenging the validity or propriety of, or otherwise
involving the Stock Purchase Agreement or the transactions contemplated
thereby. To the best of my knowledge, except as set forth on Schedule 3.1 to
the Stock Purchase Agreement, there is no judgment, order, writ, injunction,
decree, or award (whether issued by a court, an arbitrator, a governmental body
or agency thereof, or otherwise) to which the Company is a party or involving
the property, assets, or business of the Company, which is unsatisfied or
which requires continuing compliance therewith by the Company.
The opinion set forth in paragraph 3 with respect to enforceability is
subject to applicable bankruptcy, insolvency, conservatorship, receivership,
reorganization, moratorium, fraudulent conveyance and similar state or
Federal laws or equitable principles relating to or affecting creditors'
rights generally, and to the application of general equitable principles in
any legal or equitable proceeding involving the enforcement of any of the
provisions of the Stock Purchase Agreement.
<PAGE>
This opinion is furnished only to you, solely in connection with the Stock
Purchase Agreement and the consummation of the transactions contemplated
thereby and may not be otherwise used by you, published, circulated, quoted, or
otherwise referred to by you nor relied upon by any other person or party or
for any other purpose, without my prior written consent.
Very truly yours,
<PAGE>
Exhibit C
AFFIDAVIT
STATE OF NEW YORK )
) ss:
COUNTY OF ______________ )
The undersigned, as an officer of Oneida Ltd., hereby swears, affirms and
certifies the following to be true relative to the sale of the capital stock of
Camden Wire Co., Inc., a wholly owned subsidiary of Oneida Ltd., to
International Wire Group, Inc.:
The capital stock of Camden Wire Co., Inc. is not, and has not been at any
time during the period specified under section 897 of the Internal Revenue Code
of 1986, as amended (the "Code"), a United States real property interest within
the meaning of-sections 897 and 1445 of the Code, and Camden Wire Co., Inc. is
not, and has not been at any time during such period, a United States real
property holding corporation within the meaning of sections 897 and 1445 of the
Code.
This Affidavit is given under penalties of perjury in order to comply with
Sections 897 and 1445 of the Code.
ONEIDA LTD.
Date: _______________ By: _______________________
Name: _____________________
Title: _______________________
The foregoing affidavit was acknowledged and sworn to before me this ____
day of January, 1997, by _______________________, ___________________________,
of Oneida Ltd., a New York corporation, on behalf of said corporation.
___________________________
Notary Public
My Commission Expires: ________
<PAGE>
Exhibit D
RESOLUTION MEMORANDUM
This Resolution Memorandum is made pursuant to section _____ of the Stock
Purchase Agreement dated as of January ____, 1997 (the "Stock Purchase
Agreement") by and among Oneida, Ltd. ("Seller"); Camden Wire Co., Inc. (the
"Company"); and International Wire Group, Inc. ("Buyer").
(Check and complete one)
_______ Seller and Buyer have reached final agreement as to the amount of the
Buyer Indemnity Claim (as defined in section 8.2 of the Stock Purchase
Agreement) incurred by Buyer as a result of the events or circumstances
described in the notice of indemnity claim attached hereto. The parties agree
that the amount of the Buyer Indemnity Claim is $ and that the same shall be
paid by Seller to Buyer within thirty (30) days of the date of this Resolution
Memorandum, subject to the provisions of clause ii) of section 8.2 of the Stock
Purchase Agreement.
_______ Seller and Buyer have reached final agreement as to the amount of the
Seller Indemnity Claim (as defined in section 8.3 of the Stock Purchase
Agreement) incurred by Seller as a result of the events or circumstances
described in the notice of indemnity claim attached hereto. The parties agree
that the amount of the Seller Indemnity Claim is $___________ and that the
same shall be paid by Buyer to Seller within thirty (30) days of the date
of this Resolution Memorandum.
INTERNATIONAL WIRE ONEIDA LTD.
GROUP, INC.
By:__________________________ By: _______________________
Name:________________________ Name: _____________________
Title:_________________________ Title: _______________________
<PAGE>
Exhibit E
[Date]
International Wire Group, Inc.
101 South Hanley Road, Suite 400
St. Louis, Missouri 63105
Camden Wire Co., Inc.
12 Masonic Avenue
Camden, New York
Gentlemen:
Reference is made to the Stock Purchase Agreement dated ___________
("Stock Purchase Agreement") among International Wire Group, Inc. ("Buyer"),
Oneida Ltd. ("Seller"), and Camden Wire Co., Inc. (the "Company") pursuant to
which Seller has agreed to sell to Buyer all of the outstanding capital stock
of the Company. Capitalized terms used in this letter shall have the
meanings given such terms in the Stock Purchase Agreement.
Seller has disclosed in the Schedules to the Stock Purchase Agreement a
potential contingent liability arising out of personal injuries suffered by two
of the Company's employees, Raymond and Darrin Ketchum, in an industrial
accident occurring in October 1992 at the Company's facility in Camden, New
York (hereafter referred to as the " 1992 Accident"). Raymond and Darrin
Ketchum have commenced separate legal actions against the manufacturer of the
equipment involved in the 1992 Accident and such actions are pending in New
York Supreme Court, Oneida County under the
following captions (hereafter referred to as the "Ketchum Actions"):
Raymond Ketchum, Jr., as Guardian Ad Litem of
Raymond Ketchum III and Dina Johnson, as Parent
and Natural Guardian of Dakota Ray Johnson, an
Infant v. National Standard Company, Inc.,
National Standard Bartell Wagner Division,
National Standard Machinery Systems Division,
Bartell Machinery Systems Co. and Rig All, Inc.
<PAGE>
Darrin Ketchum v. National Standard Company,
Inc., National Standard Bartell Wagner
Division, National Standard Machinery Systems
Division, Bartell Machinery Systems Co. and Rig
All, Inc.
Seller and the Company are proposing to commence litigation against the
Seller's and the Company's insurance carriers to confirm the existence and
scope of insurance coverage for any claims, expenses and liabilities
asserted against or incurred by Seller or the Company in connection with
the 1992 Accident, including any third-party actions which may be initiated
against Seller or the Company as a result of the Ketchum Actions.
Seller desires to control all claims, third party actions, settlement
discussions and negotiations which arise out of the 1992 Accident. Buyer is
willing to allow Seller to control all proceedings relating to the 1992
Accident upon the condition that Seller indemnify Buyer and the Company after
the Closing from all losses, liabilities, claims, costs and expenses
suffered or incurred by Buyer or the Company in connection with the 1992
Accident.
The purpose of this letter is to set forth the rights and obligations of
the parties with respect to matters relating to the 1992 Accident. Accordingly,
it is hereby agreed that:
1. Following the Closing, Seller shall have the sole and exclusive
right to control, through counsel selected by Seller or its insurance carriers,
all matters and proceedings relating to the following and to represent the
interests of the Company in such matters and proceedings:
(a) The defense of the Ketchum Actions (to the extent Seller or
the Company is able to play a role therein) and any legal actions or
proceedings which may hereafter be asserted against the Company to recover
for, or seek contribution for, personal injuries suffered by Raymond and
Darrin Ketchum (or damages suffered by any family member) as a result of the
1992 Accident;
(b) The prosecution of an action or proceeding against any
insurance company seeking to confirm insurance coverage for and on behalf of
Seller and the Company for any claims, lawsuits, judgments, settlements, defense
costs or losses arising out of the 1992 Accident: and
(c) The disposition of any lien which the Company may have
against any judgment or settlement in favor of Raymond and Darrin Ketchum to
recover workers' compensation benefits paid by the Company to Raymond and
Darrin Ketchum;
<PAGE>
provided, however, that if Seller or its insurer fails to take reasonable steps
necessary to defend diligently any claim or third party action related to or
arising out of the 1992 Accident within 10 calendar days after receiving
written notice from the Company or Buyer that the Company or Buyer, as
applicable, reasonably believes Seller or its insurer has failed to take such
steps, the Company may assume its own defense, and Seller will be liable for
all reasonable costs or expenses paid or incurred in connection therewith.
The right to control the foregoing matters shall include, but is not limited
to (i) the right to make all strategic and tactical decisions relating to the
manner in which the foregoing matters are to be handled and resolved, (ii)
the right to settle any of the foregoing on terms acceptable to Seller,
provided that the consent of Buyer must be obtained before any settlement is
entered into which would impose upon Buyer or the Company any liability or
obligation which is not covered by the indemnification provided for in
Section 5 below, and (iii) the right to enter into agreements or
arrangements with any other party who may be liable for the 1992 Accident.
2. Seller shall bear all costs and expenses, including all attorney's
fees and disbursements, incurred by Seller or the Company in connection with the
control and disposition of any of the matters and proceedings described in
paragraph 1 to the extent such costs and expenses are not covered by insurance.
3. At Buyer's request, Seller shall keep Buyer and the Company
informed of the status of the proceedings arising out of the 1992 Accident.
Buyer may elect, at its cost, to participate in, or to engage separate
counsel on behalf of the Company to participate in, any of the matters or
proceedings described above, subject to Seller's right to direct and control
the disposition thereof.
4. Buyer agrees to fully cooperate, and following the Closing to cause
the Company and its employees to fully cooperate, with Seller and Seller's
counsel in connection with the matters and proceedings described in paragraph
1. Such cooperation shall include, but is not limited to (a) assisting Seller
in investigating the circumstances surrounding the 1992 Accident, (b) furnishing
Seller with documentary evidence relative to the 1992 Accident, (c) assisting
Seller in responding to pretrial discovery requests and preparing for trial, and
(d) providing testimony at depositions and at trial. Seller shall reimburse
Buyer and the Company for all out-of-pocket expenses incurred by Buyer and the
Company or any of their employees in providing the foregoing assistance to
Seller, but Seller shall not be responsible for the salaries, wages, fringe
benefits, or other direct or indirect labor costs of personnel of Buyer or
Company who provide assistance to Seller.
<PAGE>
5. Without prejudice to any other obligation of Seller to provide
indemnification under the Stock Purchase Agreement, Seller hereby agrees to
indemnify and hold harmless Buyer and the Company from and against any loss,
damage, claim, liability, obligation, suit, action, proceeding, judgment,
costs or expense (including reasonable fees and disbursements of counsel)
arising out of or related to the 1992 Accident to the extent the same
are not covered by insurance. A claim for indemnification set forth above
shall be deemed a "Buyer Indemnity Claim" for purposes of Article VIII of the
Stock Purchase Agreement (including the procedures spelled out therein),
provided that (a) the $1,000,000 "basket" set out in Section 8.2(ii) of the
Stock Purchase Agreement shall not apply to any indemnification required to be
provided by this Section 5, and (b) the terms of this Section 5 shall survive
the Closing indefinitely and shall not expire.
6. Seller shall be entitled to the benefit of any lien against
a settlement, judgment or other recovery by Raymond or Darrin Ketchum
resulting from workers' compensation benefits paid by the Company to or on
behalf of Raymond or Darrin Ketchum. Any monies received by Buyer or the
Company in respect of such workers' compensation lien shall be promptly
remitted to Seller upon receipt.
7. The Company hereby assigns to Seller, which assignment shall be
effective upon the Closing, all rights which the Company may have in respect of
any insurance policy providing coverage for the Ketchum Actions, including,
without limitation, the right to receive all insurance proceeds and other monies
payable under any insurance policy providing coverage for the Ketchum Actions,
and all rights of action against the Company's insurance carriers. In the
event the foregoing assignment is not recognized by the Company's insurance
carriers or would negate the Company's coverage under any insurance policy,
the foregoing assignment shall be null and void, in which event the Company,
following the Closing, agrees (a) to pay over to Seller, upon receipt, all
insurance proceeds and other monies received by the Company in respect of the
Ketchum Actions or in respect of any proceeding against the Company's insurance
carriers relative to the Ketchum Actions, and (b) to take (at Seller's expense)
any and all action reasonably requested by Seller in order to more fully vest in
Seller the benefit of all insurance policies providing coverage for the Ketchum
Actions.
This letter supplements the Stock Purchase Agreement, and the rights and
obligations of the parties hereunder are subject to the terms of the Stock
Purchase Agreement. In the event of an inconsistency between this letter and the
Stock Purchase Agreement, the terms of this letter shall control in respect of
all matters arising out of the 1992 Accident.
If you are in agreement with the terms outlined in this letter, please
signify your assent by signing in the space provided below.
<PAGE>
Sincerely,
ONEIDA LTD.
By: ________________________
Title:
AGREED:
INTERNATIONAL WIRE GROUP, INC.
By: __________________________________
Title:
CAMDEN WIRE CO., INC.
By: __________________________________
Title:
<PAGE>
EXHIBIT 99.1
For Immediate Release: Contact: David A. Gymburch (315) 361-3271
January 2, 1997 Corporate Public Relations
http://www.prnewswire.com (Co. News section)
ONEIDA LTD. ACCEPTS NEW OFFER TO SELL CAMDEN WIRE SUBSIDIARY TO INTERNATIONAL
WIRE; REPLACES PREVIOUS AGREEMENT WITH AARQUE
Oneida, N.Y. - Oneida Ltd. (NYSE/OCQ) today entered into a new agreement
to sell its Camden Wire Co. subsidiary to International Wire Group Inc. of
St. Louis, Mo., in a transaction valued at approximately $60 million. The
agreement replaces a previous agreement to sell Camden to a subsidiary of
Aarque Capital Corp. in a transaction valued at approximately $51 million.
Oneida Chairman William D. Matthews said the Aarque agreement, announced on
November 26, included terms that permitted the Oneida board to consider
alternative offers by other parties, one of which was International Wire.
Aarque was founded by R. Quintus Anderson, a member of the Oneida Ltd. Board of
Directors.
"We were required to entertain other offers for Camden, even though we had an
agreement with Aarque, as part of the validation process that occurs when a
pending buyer has any type of connection with the company making the sale," Mr.
Matthews explained. "The International Wire offer is significantly higher, and
the board, including Mr. Anderson, accepted it in the best interests of Oneida
and its shareholders."
The International Wire transaction will result in an after-tax gain for Oneida
of approximately $3.5 million equal to 32 cents per share. It includes a cash
payment to Oneida of approximately $44.5 million and International Wire's
assumption of Oneida's guarantee on $15.5 million in Camden Wire debt. Closing
of the transaction is subject to the satisfaction of certain conditions,
but it is expected to be completed in February 1997, Mr. Matthews said.
International Wire is a wire and harness manufacturer. Its non-
insulated wire division is conducted through Omega Wire Inc., which is
headquartered in Williamstown, N.Y.
Mr. Matthews said the Camden Wire sale is part of Oneida's strategy to focus on
its tableware operations. Oneida is the world's largest manufacturer of
stainless steel and silverplated flatware for the consumer and foodservice
tableware industries, and is also a major marketer of commercial dinnerware.
Camden Wire has been a wholly owned subsidiary of Oneida since 1977.
Camden Wire, based in Camden, N.Y., is a fabricator of non-insulated
conductor wire that is used by original equipment manufacturers in markets
including the electronics, transportation and consumer products industries.
the 1995 fiscal year, Camden Wire accounted for approximately $149 million
of Oneida's total sales of nearly $514 million.
