SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-14946
ARMOR ALL PRODUCTS CORPORATION
(exact name of registrant as specified in its charter)
DELAWARE 33-0178217
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
6 Liberty, Aliso Viejo, California 92656
(Address of principal executive offices) (Zip Code)
(714) 362-0600
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of voting stock held by nonaffiliates of
the Registrant at June 1, 1994:
$185,977,580
Number of shares of common stock outstanding at June 1, 1994:
21,172,986
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for
the fiscal year ended March 31, 1994 are incorporated by
reference into Parts II and IV of this report.
Portions of the Registrant's Proxy Statement for the Annual
Meeting of Stockholders to be held on July 22, 1994 are
incorporated by reference into Part III of this report.
<PAGE>
The undersigned registrant hereby amends the items, financial
statements, exhibits or other portions of its Annual Report on
Form 10-K for the fiscal year ended March 31, 1994 as set forth
below.
LIST OF ITEMS AMENDED
-----------------------
1. Amendment of Exhibit (10)Q
TEXT OF AMENDMENTS
------------------
1. Amendment of Exhibit (10)Q
--------------------------
Exhibit (10)Q is hereby amended by deleting the exhibit in
its entirety and replacing it with Exhibit (10)Q attached hereto
and filed herewith.
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to be
signed on its behalf by the undersigned, thereunto duly
authorized.
ARMOR ALL PRODUCTS CORPORATION
(Registrant)
Date: August 15, 1994 /s/ Nancy A. Miller
Nancy A. Miller
Vice President and Secretary
EXHIBIT (10)Q
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR ALL BRACKETED
PORTIONS OF THIS EXHIBIT AND SUCH PORTIONS HAVE BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION
ASSET PURCHASE AND SALE AGREEMENT
among
AGRI-PRODUCTS SPECIAL MARKETS, INC.
and
ARMOR ALL PRODUCTS CORPORATION
<PAGE>
ASSET PURCHASE AND SALE AGREEMENT
This Asset Purchase and Sale Agreement ("Agreement"), dated
as of January 26, 1994, among AGRI-PRODUCTS SPECIAL MARKETS,
INC., a Florida corporation ("Seller") and a majority-owned
subsidiary of AGRI-PRODUCTS, INC., a Florida corporation ("API"),
and ARMOR ALL PRODUCTS CORPORATION, a Delaware corporation ("Pur-
chaser").
WHEREAS, Seller wishes to sell to Purchaser and Purchaser
wishes to purchase from Seller, on the terms and for the
consideration hereinafter provided, substantially all of the
assets and business of Seller comprising the E-Z D-(r) and E-Z
Deck Wash-(r) brand deck and other home surfaces wash/cleaner
business as heretofore conducted by Seller (the "Business");
NOW, THEREFORE, in consideration of the mutual premises and
agreements contained in this Agreement, the parties agree as
follows:
1. PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets. Upon and subject to the
terms and conditions contained in this Agreement, and, except as
excluded by Section 1.2, Purchaser shall purchase from Seller and
Seller shall sell, convey, assign, transfer and deliver to
Purchaser, the following assets, properties and rights of Seller
related to the Business (collectively, the "Acquired Assets"), as
the same exist as of the Closing Date (as hereafter defined):
(a) Inventories. All saleable inventories of
E-Z D-(r) and E-Z Deck Wash-(r) brand home surface care products
listed on Schedule 1.1-A (the "Products") that are actually on
hand as of the Closing Date, whether within Seller's warehouse or
any public warehouse utilized by Seller, at packagers' facilities
or warehouses, on trucks or on consignment at customers'
locations; all useable inventory of parts, labels, raw materials,
unfinished goods in-process and testing materials; and all
advertising, promotional and sales materials, including materials
reflecting price and promotional terms (the "Inventories").
(b) Fixed Assets. Seller's equipment and furniture
listed on Schedule 2.14 and utilized for trade shows (the "Fixed
Assets").
(c) Books and Records. All books, papers and
records in Seller's care, custody, or control, including, without
limitation, the following: product specifications, customer
files, data and billing records, and marketing program and sales
records; all records related to the selection, clearance, first
usage, registration, opposition and cancellation of trademarks;
toxicity and product general health and safety information;
environmental control records; market research and development
project reports and records; personnel records with regard to
Hired Employees (as defined in Section 9.7); and evaluation
records relating to competitors.
(d) Patents and Trademarks and Other Intellectual
Property. All patents, trademarks, copyrights, trade secrets,
inventions, technology, ideas and know-how, and all
registrations, applications and other rights related to the
foregoing and listed in Schedule 2.13, and all capitalized legal
expenses with respect thereto (the "Intellectual Property").
(e) Prepaid Expenses. All of Seller's deposits and
prepaid expenses related to trade shows and listed in Schedule
2.11 (the "Prepaid Expenses").
(f) Other Intangibles. The following intangible
assets to the extent transferable (the "Intangible Assets"):
(i) supplier contracts, purchase orders and
rights; quotations and bids; customer
contracts, purchase orders and rights;
manufacturing, sales, distribution and
service agreements; promotional
contracts; the Covenant Not to Compete
(as defined in Section 2.18); and any
other contracts and agreements related to
the Business as listed in Schedule 1.1-F
(the "Assigned Contracts");
(ii) claims, interests and rights with respect
to the Acquired Assets (including rights
against suppliers under warranties);
(iii) customer and supplier lists together with
the goodwill associated therewith; and
Seller's means of distribution utilized
in the Business; and
(iv) licenses, permits, filings,
authorizations, consents or approvals, as
issued by any governmental branch,
department, commission, board, bureau,
agency or other instrumentality, to the
extent transferable.
1.2 Excluded Assets. Notwithstanding anything, express
or implied, to the contrary contained in Section 1.1, Schedule
1.2 describes certain properties, assets, and rights which are
excluded from the Acquired Assets (the "Excluded Assets").
1.3 Assumption of Liabilities.
(a) Subject to the terms and conditions of this
Agreement, effective as of and contingent upon the Closing,
Purchaser shall assume, pay and perform the following liabilities
or obligations arising out of the conduct of the Business and no
other liabilities or obligations:
(i) accrued, unpaid trade payables related to
Inventory as of the Closing Date related
to operations of the Business incurred in
the ordinary course of business and set
forth or reserved against on the Schedule
of Net Assets (as defined in Section
1.5);
(ii) obligations of Seller under the Assigned
Contracts which have not become due for
performance at the Closing Date but not
any additional liability or obligation of
Seller (x) which results or arises from a
breach by Seller of any representation,
warranty or agreement contained in such
Assigned Contracts or (y) any additional
liability or obligation resulting from a
default by Seller prior to the Closing
Date under such Assigned Contracts; and
(iii) obligations of Seller assumed in this
Agreement.
Nothing in this Section 1.3, however, shall restrain or limit
Purchaser from contesting or asserting defenses against third
parties with respect to any such liabilities or obligations
subject to Section 9.1(c)(ii).
(b) Without limiting the generality of Section 1.3(a)
hereof, and regardless of whether any of the following may be
disclosed to Purchaser pursuant to Section 2 hereof or whether
Purchaser may otherwise have knowledge of the same, Purchaser
shall not assume, and Seller shall retain sole responsibility for
any claim, liability, potential liability or obligation:
(i) relating to environmental, health and
safety matters arising or resulting from
any activity or omission of Seller prior
to the Closing Date, including but not
limited to, any liability of Seller as a
generator of Hazardous Material (as
defined below), an owner or operator of a
facility at the time of disposal or
release of a Hazardous Material, or as
one who transported to, or arranged for
treatment or disposal of, Hazardous
Material at a facility. As used herein
the term "Hazardous Material" means any
hazardous or toxic substance, material or
waste which is or becomes regulated by
any state or local government authority
in a state or locality in which Seller is
doing or has done business or by the
United States Government, including,
without limitation, any material or
substance which is (1) petroleum, (2)
asbestos, (3) designated as a "hazardous
substance" under Section 311 of the
Federal Water Pollution Control Act, 33
U.S.C. Section 1317, (4) defined as a
"hazardous waste" under Section 1004 of
the Federal Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et
seq., or (5) defined as a "hazardous
substance" under Section 101 of the
Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., as amended;
(ii) for federal, state or local taxes of
Seller based on or measured by net
income, or any interest, penalties or
additions to tax with respect thereto
(including without limitation any tax
liability of Seller arising out of or
resulting from the consummation of the
transactions contemplated hereby);
(iii) resulting from matters which are the
subject of any lawsuits, proceedings or
claims, whether or not listed or
described on Seller's Disclosure Schedule
(as hereafter defined) and arising or
resulting from matters occurring prior to
the Closing Date;
(iv) arising out of, based upon or resulting
from the conduct of any business of
Seller other than the acquired Business;
(v) arising out of or based upon claims of
negligence, breach of warranty, consumer
product labeling violation or product
liability in respect of products
manufactured by James Austin Company
("Austin");
(vi) respecting accrued or future benefits
under any Employee Plans (as hereafter
defined), whether or not any employees of
Seller, or workers leased by the
Corporation, are offered employment by,
or become employees of, Purchaser. As
used herein, the term "Employee Plan"
includes all present and prior (including
terminated and transferred) plans,
programs, agreements, arrangements, and
methods of contributions or compensation
(including all amendments to and
components of the same, such as a trust
with respect to a plan) providing any
remuneration or benefits, other than
current cash compensation, to any current
or former employee of the Corporation, or
workers leased by the Corporation, or to
any other person who provides services to
the Corporation, whether or not such plan
or plans, programs, agreements, arrange-
ments, and methods of contribution or
compensation are subject to the Employee
Retirement Income Security Act of 1974,
as amended ("ERISA"), and whether or not
such plan or plans, programs, agreements,
arrangements and methods of contribution
or compensation are qualified under the
IRC. The term Employee Plan includes,
but is not limited to, pension, retire-
ment, profit sharing, stock option, stock
bonus and nonqualified deferred compen-
sation plans. The term Employee Plan
also includes, but is not limited to,
disability, medical, dental, workers
compensation, health insurance, life
insurance or other death benefits,
incentive, severance plans, vacation
benefits, and fringe benefits. The term
Employee Plan also includes any employee
plan that is a multiemployer plan as
defined in Section 3(37) of ERISA. For
purposes of this Section 1.3(b)(vi), the
term "Corporation" means Seller, any
member of a controlled group (within the
meaning of Section 414(b) of the Internal
Revenue Code of 1986, as amended (the
"IRC")) of which Seller is a member, all
trades or businesses under common control
(within the meaning of IRC Section
414(c)) of which Seller is a member, and
all affiliated service groups (within the
meaning of IRC Section 414(m)) of which
Seller is a member.
(vii) any other obligation related to Seller's
employment of Seller's employees or to
hire employees of Seller, or Seller's
agreement to lease employees. Seller
shall be solely responsible for and shall
satisfy all of Seller's obligations to
its employees and workers leased by the
Corporation on account of their
relationship with Seller, including,
without limitation, any liability for
employment agreements, accrued wages
(including salaries and commissions),
severance benefits, "COBRA" benefits,
vacation pay, pension and profit sharing
contributions, seniority rights or other
forms of benefits of any type or nature
on account of said person's relationship
with Seller.
The liabilities retained and/or assumed by Seller under this
Section 1.3(b) are hereinafter referred to collectively as the
"Retained Liabilities".
1.4 Purchase Price. The purchase price (the "Purchase
Price") for the Acquired Assets to be acquired by Purchaser
pursuant to this Agreement shall be an amount equal to the sum of
Five Million Two Hundred Fifty Thousand Dollars ($5,250,000) plus
the "Net Asset Amount" reflected on the Final Schedule of Net
Assets (as defined in Section 1.5). Purchaser and Seller agree
that the Estimated Purchase Price shall be allocated in accor-
dance with Schedule 1.4. The allocation, as adjusted, will be
used by the parties for all tax purposes, including, but not
limited to, any reporting form, such as Form 8594 (Asset
Acquisition Statement under Section 1060) and will be agreed upon
in connection with Section 1.5(c).
1.5 Payment of Purchase Price.
(a) Seller and Purchaser have cooperated in
preparing an Estimated Schedule of Net Assets (the "Estimated
Schedule of Net Assets"), a copy of which is attached hereto as
Schedule 1.5-A, on which basis Purchaser shall make the Closing
Payment (as hereafter defined). The Estimated Schedule of Net
Assets shall reflect an estimated net asset amount (the
"Estimated Net Asset Amount") determined in accordance with the
accounting policies described in the Valuation Memorandum
attached hereto as Schedule 1.5-B (the "Accounting Policies").
On the Closing Date, Seller shall pay to Purchaser, by wire
transfer, bank draft or cashier's check, the amount of $5,090,000
($5,250,000 less $160,000) plus fifty percent (50%) of the
Estimated Net Asset Amount (the "Closing Payment"). The amount
of $160,000 (the "Six-month Holdback"), representing the balance
of the Purchase Price, shall be paid by Purchaser to Seller six
(6) months following the Closing Date, subject to Purchaser's
right of setoff provided in Section 9.5.
(b) Immediately following the Closing on the Closing
Date, Seller will conduct a physical count of the Inventories
utilizing Seller's personnel. Purchaser's personnel may observe
the conduct of the physical count of the Inventories and may
otherwise review the work done (including, without limitation,
any relevant work papers) during the preparation of a final
schedule of net assets (the "Final Schedule of Net Assets").
Seller shall prepare and submit to Purchaser the Final Schedule
of Net Assets as soon as practicable but no later than five (5)
days following the Closing, reflecting the Net Asset Amount
determined in accordance with the Accounting Policies.
(c) In the event that Purchaser does not agree with
the Final Schedule of Net Assets, within five (5) days of receipt
of Seller's Final Schedule of Net Assets, Purchaser shall give
Seller a "Dispute Notice" setting forth in reasonable detail the
basis of its disagreement, and Purchaser and Seller shall, within
twenty (20) days after receipt by Seller of such Dispute Notice,
attempt to resolve such Dispute and agree in writing upon the
Final Schedule of Net Assets. In the event that Seller and
Purchaser are unable to resolve any such Dispute within the
twenty-day resolution period, then a qualified principal of the
certified public accounting firm of Price Waterhouse, Atlanta
office, or such other accounting firm or office as may be
mutually agreed upon (the "Arbitrator") shall be employed as
arbitrator hereunder to settle such dispute as soon as
practicable. The parties hereto shall give the Arbitrator access
to all documents, facilities and personnel within their
respective control necessary to perform its function as
arbitrator. The parties agree that the Arbitrator shall decide
only matters involving differences as to the application of the
Accounting Policies, and not any non-accounting matters involving
the construction or interpretation of this Agreement. Any
arbitration pursuant to this Section 1.5(c) shall be conducted
exclusively in Atlanta, Georgia. The arbitrator shall render a
decision within thirty (30) days from submission of all facts by
both parties.
(d) (i) In the event that the Net Asset Amount on
the Final Schedule of Net Assets is equal
to the Estimated Net Asset Amount,
Purchaser shall pay Seller the unpaid
balance of the Estimated Net Asset Amount
not paid at the Closing (the "Asset
Holdback Amount"). In case the Net Asset
Amount on the Final Schedule of Net
Assets is not equal to the Estimated Net
Asset Amount, a payment including an
adjustment of this difference shall be
made by one party to the other, as
follows:
(1) In case the Net Asset Amount is
greater than the Estimated Net Asset
Amount, an amount equal to the
excess of the Net Asset Amount over
the Estimated Net Asset Amount plus
the Asset Holdback Amount shall be
paid by Purchaser to Seller;
(2) In case the Net Asset Amount is
greater than the Asset Holdback
Amount but lower than the Estimated
Net Asset Amount, an amount equal to
the Net Asset Amount less 50% of the
Estimated Net Asset Amount shall be
paid by Purchaser to Seller; and
(3) In case the Net Asset Amount is
lower than the Asset Holdback
Amount, an amount equal to 50% of
the Estimated Net Asset Amount less
the Net Asset Amount shall be paid
by Seller to Purchaser.
(ii) All payments pursuant to this Section
1.5(d) will be made within five (5) days
of agreement thereon.
1.6 Transfer of the Purchased Assets. Seller shall
deliver to Purchaser, where necessary, consents authorizing the
transfer and assignment by Seller to Purchaser of all the
Acquired Assets. Without limiting any other rights of Purchaser
under this Agreement, to the extent any of the Acquired Assets
are not assignable to Purchaser or if any necessary consent to
such assignment shall not have been obtained by Seller, Seller
shall hold in trust for the benefit of Purchaser all Seller's
right, title and interest to such Acquired Asset and, insofar as
permissible, from time to time assign such interest to Purchaser.
Purchaser and Seller shall cooperate in any reasonable
arrangement to the end that Purchaser shall be provided the use
and benefits of such Acquired Asset, provided Purchaser has
assumed all liabilities and obligations related thereto as if
they had been assigned. Nothing in this Section 1.6, however,
shall release Seller from its obligation to defend, indemnify and
hold Purchaser harmless from any loss, liability or damage
suffered by Purchaser resulting from any failure by Seller to
transfer and assign the Acquired Assets as required by this
Agreement. This Agreement shall not constitute an agreement to
assign any Acquired Asset if the attempted assignment thereof
would constitute a breach thereof.
1.7 Non Compete Agreements. At the Closing, API, Timothy
B. Dutcher, Kenneth L. Ellis and H. Ross Arnold III, each being a
direct or indirect substantial shareholder of Seller (the
"Substantial Shareholders") shall each enter into a covenant not
to compete agreement (the "Non Compete Agreements") with
Purchaser in the form attached hereto as Exhibits G, H, I and M.
In consideration thereof, Seller shall pay by wire transfer, bank
draft , or cashier's check at the Closing, the following
respective amounts to the following persons:
(a) Timothy B. Dutcher. . . . . . . . . .$ 250,000
(b) Kenneth L. Ellis . . . . . . . . . .$ 1,000,000
(c) H. Ross Arnold III. . . . . . . . . .$ 1,000,000
2. REPRESENTATIONS AND WARRANTIES OF SELLER
Except as disclosed or excepted in the schedules delivered
concurrently with the execution and delivery of this Agreement
and made a part hereof (collectively, the "Disclosure Schedule"),
and as a material inducement to Purchaser to enter into and
perform its obligations under this Agreement, Seller represents
and warrants to Purchaser that as of the date hereof:
2.1 Authorization; Enforceability of Agreement. Seller
has full corporate right and power to enter into this Agreement
and to carry out the transactions contemplated hereby; the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all requisite corporate action of the Seller;
and this Agreement is the legal, valid and binding obligation of
the Seller, enforceable in accordance with its terms except as
the enforceability thereof may be limited by general principles
of equity and by bankruptcy, reorganization, insolvency or other
similar laws affecting the enforcement of creditors' rights
generally, and by general equitable principles (regardless of
whether the issue of enforceability is considered in a proceeding
in equity or at law). Seller may execute, deliver and perform
this Agreement without the necessity of obtaining any consent,
approval, authorization or waiver or giving any notice to or from
any person, other than consents, approvals, authorizations or
waivers which have been, or prior to the Closing Date will be,
obtained and on the Closing Date will be in full force and
effect, and such notices which have been or prior to the Closing
Date will be duly given.
2.2 Organization; Power. Seller is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Florida. Seller is qualified to transact
Business as a foreign corporation and is in good standing in each
jurisdiction where the Seller does business, owns property or is
otherwise required by law to be so qualified except for those
jurisdictions in which the absence of such qualification would
not have a material adverse effect on the Acquired Assets or
Business. Seller has all requisite corporate power and authority
to own, lease and operate its properties and assets and to carry
on its business as now being conducted. Seller has heretofore
delivered to Purchaser complete and correct copies of Seller's
corporate charter and bylaws, as amended and in effect on the
date hereof.
2.3 No Conflict. The transactions contemplated by this
Agreement will not violate in any material respect or be in
conflict with, in any material respect, (a) any existing
provision of applicable law, or any existing order, rule,
regulation, judgment or decree of any court, arbitrator or agency
of government, or (b) any existing provision of the Articles of
Incorporation or Bylaws of the Seller, nor will those
transactions as of the Closing Date (i) in any material respect,
violate, be in conflict with, result in a breach of, or
constitute (with or without notice or lapse of time or both) a
default under any material agreement or other instrument to which
Seller is a party or by which the Seller or the Business is
bound, or (ii) result in the creation or imposition of any lien,
charge or encumbrance upon any of the Acquired Assets.
2.4 Title to the Acquired Assets. Seller has good and
marketable title to all the Acquired Assets. Except as set forth
in the Disclosure Schedule, all the Acquired Assets are free and
clear of mortgages, liens, pledges, charges, encumbrances,
equities, claims, covenants, conditions, or other restrictions.
Except as set forth in the Disclosure Schedule, neither any
officer, director, employee or independent contractor of Seller,
nor any spouse, child or other relative of any of such persons,
owns, or has any interest, directly or indirectly, in any of the
Intellectual Property.
2.5 Litigation and Claims; Compliance with Law.
(a) Except as set forth in the Disclosure Schedule,
there is no action, suit, proceeding, claim or investigation in
any court or arbitration or before or by any federal, state or
other governmental department, commission, bureau, agency or
instrumentality, domestic or foreign, pending or, to the best
knowledge of Seller, threatened against Seller which could
adversely affect the Business or the Acquired Assets or their
condition (financial or otherwise), earnings, business assets,
properties, liabilities, operations or prospects or the
transactions contemplated by this Agreement; and there is no
factual or legal basis which could give rise in the future to the
pendency or threat of any such action, suit, proceeding, claim or
investigation which would adversely affect any of the same.
Seller has provided Purchaser with true, accurate and complete
copies of all correspondence, memoranda and notifications
concerning, or relating to, complaints or expressions of
dissatisfaction with the products, services or personnel of the
Business. Seller has not experienced any single paid claim or
series of paid claims aggregating more than $8,000 during each of
calendar years 1992 and 1993 with respect to any allegedly
defective, damaged or unsatisfactory E-Z Deck Wash-(r) or
E-Z D-(r) brand product, nor, to Seller's knowledge, are there
any outstanding unpaid claims greater than $10,000. Any matters
set forth in the Disclosure Schedule, if decided adversely to
Seller, are not reasonably expected by Seller to result in an
adverse change in the earnings, business, assets, or condition
(financial or other), operations or prospects of the Business or
Seller. Seller is not presently engaged in any legal action to
recover monies due to it or damages sustained by it in connection
with the conduct of the Business.
(b) The Business has been conducted, and the
Acquired Assets operated, in compliance in all material respects
with all laws, ordinances, regulations, rules and court orders or
decrees applicable thereto (including, but not limited to, all
environmental protection laws and laws regulating the labeling of
consumer products) and Seller has duly filed all reports required
to be filed by it with governmental authorities and has obtained
all governmental consents, approvals and authorizations, which,
if not obtained or filed, would have a material adverse effect on
the Business or operation of the Acquired Assets and there are no
such governmental licenses, permits, authorizations, consents and
approvals. The Business is not conducted under any restriction
imposed upon Seller but not generally imposed upon other persons
conducting similar businesses or operating similar assets for
similar purposes by any zoning, antipollution, health or other
law, ordinance, regulation, restrictive covenant, injunction or
decree.
2.6 Financial Information. Seller's books and records
are correct and complete, reflect fairly the income, expenses,
assets and liabilities of the Business and provide a fair basis
for the preparation of Seller's financial statements of the
Business. Seller has heretofore furnished to Purchaser the
unaudited balance sheets of the Business as of November 30, 1993,
and the audited balance sheets of the Business as of July 31,
1993 and 1992, and the related statements of income for the four
(4) months and the fiscal year, respectively, ended on such dates
(collectively, the "Financial Statements"). The Financial
Statements, copies of which are attached as Schedule 2.6, are in
agreement with Seller's books and records and present fairly
Seller's financial position at the respective dates of such
balance sheets, present fairly the results of operations for the
respective periods covered, and have been prepared on a
consistent basis throughout the periods involved.
2.7 Product Warranties; Advertising Claims; Labeling.
Except as set forth in the Disclosure Schedule and for warranties
implied by law, there are no express product or service
warranties granted by Seller applicable to the E-Z Deck Wash-(r)
or E-Z D-(r) brand home surface care products or the Business.
All product claims and other statements which currently appear in
Seller's advertising and promotional materials or on product
packaging and labeling are true and correct. All such material
claims are supported by laboratory test results, copies of which
have been furnished to Purchaser.
2.8 Absence of Certain Changes. Except as set forth in
the Disclosure Schedule, since November 30, 1993, the Business
has been operated only in the ordinary course and, without
limiting the generality of the foregoing, Seller has not with
respect to the Business:
(a) Sustained any damage, destruction or loss, by
reason of fire, explosion, earthquake, casualty, labor trouble,
requisition or taking of property by any government or agency
thereof, windstorm, embargo, riot, act of God or public enemy,
flood, accident, revocation of license or right to do business,
total or partial termination, suspension, default or modification
of contract, governmental restriction or regulation, other
calamity, or other similar or dissimilar event (whether or not
covered by insurance), materially and adversely affecting its
condition (financial or otherwise), earnings, business, assets,
liabilities, properties, operations or prospects;
(b) Executed, created, amended or terminated any
contract, agreement or license to which it is a party or by which
its properties are bound, except in the ordinary course of
business;
(c) Waived or released any right or claim or
canceled any debts or claims or voluntarily suffered any
extraordinary losses;
(d) Paid any obligation or liability (fixed,
contingent or otherwise), or discharged or satisfied any lien or
encumbrance, or settled any liability, claim, dispute,
proceeding, suit, or appeal, pending or threatened against it or
any of its assets or properties, except for current liabilities
included in the balance sheet dated November 30, 1993 in the
Financial Statements, and current liabilities incurred since said
date in the ordinary and usual course of its business;
(e) Had any material adverse change in its condition
(financial or otherwise), earnings, business, assets, properties,
liabilities, operations or prospects;
(f) Received notice that any customer or group of
customers which individually or in the aggregate represented more
than $20,000 in annual revenues during the preceding calendar
year will no longer be doing business with Seller;
(g) Mortgaged, pledged, otherwise encumbered or
subjected to lien any of the Acquired Assets, tangible or
intangible;
(h) Sold, assigned, transferred, conveyed, leased,
licensed or otherwise disposed of any asset or property, tangible
or intangible, except in the ordinary and usual course of
business, or discontinued any material product line or the
manufacture, sale or other disposition of any of its products or
services;
(i) Changed its accounting principles, methods,
practices regarding significant estimates (including, without
limitation, any change in depreciation or amortization policies
or rates), except as set forth in the Accounting Policies, or
revalued any of its assets;
(j) Had any other event of any character that has or
is reasonably expected to have a material adverse effect on the
condition (financial or otherwise), earnings, business, assets,
liabilities, properties, operations or prospects of the Business
or the Acquired Assets; or
(k) Agreed, committed or entered into any other
understanding to do any of the things described in the preceding
subsections (a) through (j).
2.9 Taxes. Except as set forth in the Disclosure
Schedule, Seller has, or on or before the Closing Date will have,
paid and discharged all material federal, state, local and
foreign taxes, interest, penalties, additions to tax or other
amounts required to be paid on or before the Closing Date, and
Seller has, or prior to the Closing Date will have, duly,
accurately and completely prepared and filed all such tax reports
and returns required to be filed by Seller on or before the
Closing Date. Seller has not received notice of any tax
deficiency or proposed tax deficiency. Seller has not executed
any waiver of any statute of limitations on the assessment or
collection of any tax or filed with the Internal Revenue Service
or any other taxing authority or executed any agreement now in
effect extending the period for assessment or collection of any
taxes. There are no tax liens upon, pending against or, to the
best knowledge of Seller, threatened against any of the Acquired
Assets.
2.10 Inventories. Schedule 1.1-A lists all of the
products of Seller's Business. Schedule 2.10 contains a summary
by class of items included in the Inventories as of November 30,
1993 to be sold to Purchaser pursuant to Section 1.1. The
Inventories consist of items of good and merchantable quality and
quantity, free from defects, and usable and saleable in the
normal course of business within six (6) months at present levels
of Business operations, and include all Inventories utilized
primarily in the Business except for obsolete and slow-moving
items and materials below standard quality which have been
written down on Seller's books in accordance with the Accounting
Policies and which are not being purchased by Purchaser (the
"Excluded Inventories"). All items included in such Inventories
are owned by Seller. No items included in the Inventories bear a
label, coupon or other consumer incentive which entitles the
purchaser at retail ("Consumer") to a rebate or any other thing
of value. No items included in the Inventories have been pledged
as collateral or are held by Seller on consignment from others.
Seller is not under any obligation with respect to the return of
inventory or products in the possession of others. All
Inventories are based on quantities determined by physical count
on November 30, 1993 and are valued at the lower of cost (first-
in, first-out) or market and on a basis consistent with that of
prior periods.
2.11 Prepaid Expenses. Schedule 2.11 contains an accurate
list of Prepaid Expenses. The Prepaid Expenses arose from bona
fide transactions in the ordinary course of business and are not
and will not be subject to any counterclaims or setoffs.
2.12 Contracts.
(a) Schedule 2.12 lists all Assigned Contracts that
are not freely cancelable on 30 days' notice without cause and
that are to be assigned to Purchaser pursuant to Section 1.1.
Seller has previously provided to Purchaser a true and complete
copy of all Assigned Contracts.
(b) Each Assigned Contract is valid and in full
force and effect and constitutes the legal, valid and binding
obligation of Seller and the other party or parties thereto;
there are no existing material defaults thereunder, and no
material event, act or omission has occurred which (with or
without notice, lapse of time or the happening or occurrence of
any other event) would result in a default thereunder. No
material default exists or will exist under any of the Assigned
Contracts as a result of the execution and delivery or
performance of this Agreement. The Disclosure Schedule lists any
Assigned Contract which (i) is in excess of the normal, ordinary
and usual requirements of the Business as conducted by Seller or
at an excessive term or price; (ii) is not cancelable following
the Closing on 90 days' notice or less and without liability,
penalty or premium; (iii) restricts Seller from carrying on the
Business anywhere in the world; (iv) contains a power-of-
attorney; or (v) except for orders in process from customers or
to suppliers entered in the ordinary course of business in arms-
length transactions, involves the payment by any party to such
Assigned Contract over the term thereof of more than $10,000 for
any single contract or $50,000 in the aggregate for all such
contracts.
2.13 Intellectual Property; Intangible Assets.
(a) Schedule 2.13 sets forth a true and complete
list of all Intellectual Property to be assigned to Purchaser
pursuant to Section 1.1.
(b) Seller is the record owner of the Intellectual
Property and Intangible Assets. Except as set forth in the
Disclosure Schedule, all Intellectual Property and Intangible
Assets are valid and subsisting, free and clear of any
encumbrances or rights of third parties which would restrict
Purchaser's exclusive right to use such Intellectual Property and
Intangible Assets in the manner in which they are now used by
Seller. Except as set forth in the Disclosure Schedule, no claim
by third parties with regard to any Intellectual Property and
Intangible Assets is pending or threatened, nor, to Seller's
knowledge, is there any basis for any such claim. To Seller's
knowledge, none of the Intellectual Property and Intangible
Assets is being used or infringed by others. Except as set forth
in the Disclosure Schedule there are no licenses or sublicense
agreements now in effect regarding the Intellectual Property or
Intangible Assets.
2.14 Fixed Assets. Schedule 2.14 contains a complete list
by type, location and book value of all Fixed Assets to be
assigned to Purchaser pursuant to Section 1.1. Except as stated
in the Disclosure Schedule, all Fixed Assets are in good
condition and repair and no Fixed Asset used by Seller in connec-
tion with the Business is held under any lease, security
agreement, conditional sales contract, or other title retention
or security arrangement, or is located other than in the
possession of Seller.
2.15 Labor Matters; Employees.
(a) Except as set forth in the Disclosure Schedule,
Seller has no employees, nor any obligation to employ or engage
any agent, consultant, employee, officer, director or
shareholder, or to provide bonuses or other current cash
compensation. Except as disclosed in the Disclosure Schedule,
Seller has no union contracts or collective bargaining agreements
with, or any other obligations to, employee organizations or
groups, nor is Seller currently engaged in any labor negotiations
excepting minor grievances not involving any employee
organization or group, nor is Seller the subject of any union
organization effort. There is no actual pending or threatened
labor dispute, strike or work stoppage affecting the Business.
(b) Schedule 2.15-B(1) contains a true and complete
list of the names of all of Seller's leased employees and
contract workers utilized in the Business employees as of
December 31, 1993.
(c) Seller has complied with all applicable federal
and state laws relating to the employment of labor, including but
not limited to, the provisions thereof relating to equal
employment opportunity, wages, hours and the payment of social
security taxes, and is not liable for any arrears of wages or any
tax or penalties for failure to comply with any of the foregoing.
(d) Seller has fewer than fifty (50) leased
employees utilized in connection with the Business and therefore
Seller does not intend to serve notice in advance of the Closing
Date pursuant to The Worker Adjustment and Retraining
Notification Act ("WARN") 102 Stat. 890, 29 U.S.C. Subparagraph
2102 et seq. (1988). There are no similar statutes under state
or local law relating to employees, former employees or leased
employees, of Seller affected by the purchase and sale of the
Acquired Assets and Business.
2.16 Customer Commitments; Sales Matters.
(a) Except as set forth in the Disclosure Schedule,
Seller has not granted any customer payment terms in excess of 30
days and/or cash discounts in excess of 2 percent. Except as set
forth in the Disclosure Schedule, Seller is not under any
obligation to any of its customers with respect to any rebate or
other consumer promotional program or for the payment of any
discount, rebate, advertising or promotional allowance or any
other similar consideration or promotional allowance. Schedule
2.16-A contains copies of each of Seller's marketing and sales
incentive programs relating to customers. Except as set forth in
the Disclosure Schedules, Seller is not under any obligation
with respect to any outstanding consumer rebate or coupon
programs.
(b) Schedule 2.16-B sets forth information,
organized by customer, as to all sales of inventory made by
Seller during its fiscal year ended July 31, 1993, and for the
five (5)-month period ended December 31, 1993, for all customers
to whom sales, in the aggregate, exceeded ninety percent (90%) of
Seller's total sales for the respective period. Said information
is true, complete and correct in all material respects. Seller
has no information, nor is it aware of any facts, indicating that
any of such customers intends to cease doing business with Seller
or alter the amount of the business that it is presently doing
with Seller.
2.17 Brokers. Other than fees to Quest Capital Corp.,
Seller has not incurred, nor will it incur, nor has it caused,
nor will it cause, Purchaser to incur, any liability to any
person for brokerage or finder's fees or agent's commissions in
connection with this Agreement and the transactions contemplated
hereby.
2.18 Related Party Disclosures. Seller has disclosed all
material facts concerning this Agreement to Mr. Timothy B.
Dutcher, a minority shareholder of Seller, and to all of the
parties other than Seller to that certain Agreement entitled
"Covenant Not to Compete" dated March 12, 1992 (the "Covenant Not
to Compete), such parties being Messrs. G. Todd Taylor, R. M.
Saunders, Charlie Aycock and W. Mark Spence who are hereinafter
collectively referred to as the "Covenantors."
2.19 Accuracy and Completeness of Representations and
Warranties. No representation or warranty made by Seller in this
Agreement and the schedules thereto contains or will contain any
untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which they
were made, not misleading.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that as of the
date hereof:
3.1 Authorization, Enforceability of Agreement.
Purchaser has full corporate right and power to enter into this
Agreement and to carry out the transactions contemplated hereby;
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all requisite corporate action of Purchaser;
and this Agreement is the legal, valid and binding obligation of
Purchaser, enforceable in accordance with its terms, except as
the enforceability thereof may be limited by general principles
of equity and by bankruptcy, reorganization, insolvency or other
similar laws affecting the enforcement of creditors' rights
generally, and by general equitable principles (regardless of
whether the issue of enforceability is considered in a proceeding
in equity or at law). Purchaser may execute, deliver and perform
this Agreement without the necessity of obtaining any
governmental or other consent, approval, authorization or waiver
or giving any notice to or from any person, other than consents,
approvals, authorizations or waivers which have been, or prior to
the Closing Date will be, obtained and on the Closing Date will
be in full force and effect, and such notices which have been or
prior to the Closing Date will be duly given.
3.2 Organization; Power. Purchaser 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 assets
and to carry on its business as now being conducted.
3.3 No Conflict. The transactions contemplated by this
Agreement will not violate in any material respect or be in
conflict with, in any material respect, (a) any existing
provision of applicable law, or any existing order, rule,
regulation, judgment or decree of any court, arbitrator or agency
of government, or (b) any existing provision of the Articles of
Incorporation or Bylaws of the Purchaser, nor will those
transactions as of the Closing Date in any material respect,
violate, be in conflict with, result in a breach of, or
constitute (with or without notice or lapse of time or both) a
default under any material agreement or other instrument to which
Purchaser is a party or by which the Purchaser or the Business is
bound.
3.4 Litigation and Claim. There is no action, suit,
proceeding, claim or investigation in any court or arbitration or
before or by any federal, state or other governmental department,
commission, bureau, agency or instrumentality, domestic or
foreign, pending or, to the best knowledge of Purchaser,
threatened against Purchaser which could materially adversely
affect the consummation of the transactions contemplated by this
Agreement.
3.5 Brokers. Purchaser has not incurred, nor will it
incur, nor has it caused, nor will it cause, Purchaser to incur,
any liability to any person for brokerage or finder's fees or
agent's commissions in connection with this Agreement and the
transactions contemplated hereby.
3.6 Accuracy and Completeness of Representations and
Warranties. No representation or warranty made by Purchaser in
this Agreement and the schedules thereto contains or will contain
any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which they
were made, not misleading.
4. COVENANTS OF SELLER
Seller agrees that, except as otherwise agreed in writing by
Purchaser, from the date hereof to the Closing Date:
4.1 Access to Information. Seller, upon reasonable
notice, shall (a) give or cause to be given to Purchaser and to
its accountants, counsel and other representatives, during
regular business hours access to all of the properties, documents
and records of Seller related to the Business, and (b) provide or
cause to be provided to Purchaser at its expense such copies or
extracts of Seller's documents and records related to the
Business as Purchaser may request.
4.2 Conduct of Business in Normal Course. Seller shall
carry on the Business and its activities lawfully, diligently and
in the same manner as they previously have been carried on, and
shall not make or institute any unusual or novel methods of pur-
chase, sale, lease, management, accounting or operation that will
vary from the methods used by Seller as of the date of this
Agreement, and, without limiting the generality of the foregoing,
Seller agrees to undertake collection of Accounts Receivable only
as consistent with past practices.
4.3 Consents and Notices. Seller will obtain, and
Purchaser will use its best efforts to cooperate with and assist
Seller in obtaining, all consents, waivers, amendments,
modifications, approvals, authorizations, permits and licenses of
third parties, and governmental and regulatory authorities, if
any, which may be necessary to effectuate this Agreement and to
transfer the Acquired Assets to Purchaser. Seller shall give all
notices to third parties (with copies to Purchaser) required to
be given by it in contemplation and as a result of the
transactions contemplated under this Agreement.
4.4 Preservation of Business and Relationships. Seller
shall, without making any commitments on behalf of Purchaser,
preserve its business organization intact, and use its best
efforts to keep available its present employees, and to preserve
its present relationships with suppliers, customers, and others
having business relationships with it.
4.5 Maintenance of Insurance. Seller shall continue to
carry its existing insurance.
4.6 Leased Employees and Compensation. Seller shall not
do, or agree to do, any of the following acts: (i) make any
change in salaries payable; or (ii) change benefits payable under
any bonus or pension plan or other contract or commitment.
Seller shall permit Purchaser to contact its leased employees at
all reasonable times for the purpose of discussing with such
leased employees prospective employment by Purchaser on or after
the Closing Date, and Seller shall use its best efforts to
encourage all leased employees to accept any employment offered
by Purchaser pursuant to Section 9.7. Seller shall seek from
each leased employee of Seller listed on Schedule 4.6 a severance
agreement, containing proprietary information and confidentiality
covenants in the form of Exhibit L (the "Severance Agreements").
4.7 New Transactions. Seller shall not enter into any
contract, commitment, or transaction related to the Business not
in the usual and ordinary course of business without first
obtaining Purchaser's prior written consent.
4.8 No-shop Agreement. Seller will not sell, or place on
the market for sale to any person or entity other than Purchaser,
the Business or the stock or assets comprising the Business, nor
shall Seller solicit, encourage or respond to, directly or
indirectly, any inquiries, discussions or proposals for, or
provide any person or entity with information relating to, the
sale of the Business or the stock or assets comprising the
Business.
4.9 Certain Accounts. Seller will settle all outstanding
accounts receivable, payable and credit issues with [----], and
[----] at or before Closing, and with [----] within two (2)
business days following Closing.
4.10 Related Party Obligations. Seller will comply fully
with all of the provisions of Section 4 of the Covenant Not to
Compete and will satisfy all obligations to Mr. Dutcher and the
Covenantors.
4.11 Certain Tax Matters. Seller will make a federal tax
deposit with an authorized federal depository in the amount of
$15,000. At the Closing, Seller shall furnish a copy of the
related deposit coupon referencing Fiscal 1993 taxes and a
receipt from the depository institution.
4.12 Representations and Warranties True at Closing.
Seller agrees that, except as otherwise agreed in writing by
Purchaser, from the date hereof until the Closing Date, Seller
shall assure that all representations and warranties of Seller
set forth in this Agreement and in any schedules attached hereto
will also be true and correct in all material respects as of the
Closing Date as if made on that date and that all conditions
precedent to Closing shall have been met. In the event that
there exists or occurs any condition which would make untrue any
representation or warranty herein made by Seller, Seller shall
promptly give Purchaser notice of the existence or occurrence of
such condition; provided, however, no such notice shall relieve
Seller of its obligations hereunder.
5. COVENANTS OF PURCHASER
Purchaser agrees that, except as otherwise agreed in writing
by Seller, from the date hereof until the Closing Date,
Purchaser shall assure that all representations and warranties of
Purchaser set forth in this Agreement and in any schedules
attached hereto will also be true and correct in all material
respects as of the Closing Date as if made on that date and that
all conditions precedent to Closing shall have been met. In the
event that there exists or occurs any condition which would make
untrue any representation or warranty herein made by Purchaser,
Purchaser shall promptly give Seller notice of the existence or
occurrence of such condition; provided, however, no such notice
shall relieve Purchaser of its obligations hereunder. Purchaser
hereby waives compliance by Seller with all bulk sales laws
applicable to the transactions under this Agreement, subject to
Purchaser's right of indemnity pursuant to Section 9.1 hereof.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject, at Purchaser's option,
to the satisfaction at or prior to the Closing Date of each of
the following conditions:
6.1 Representations and Warranties; Covenants; Changes.
All representations and warranties of Seller contained in this
Agreement or in any document delivered at the Closing shall be
true in all material respects at and as of the Closing Date as
though made at and as of such time, and Seller shall have
performed and complied with all covenants, obligations and
conditions required by this Agreement to be performed or complied
with by Seller prior to or on the Closing Date; and Purchaser
shall have received certificates of an officer of Seller dated
the Closing Date, to that effect. Purchaser shall not have
become aware of any fact of which Purchaser had no knowledge as
of the date of this Agreement which, in the reasonable judgment
of Purchaser, has or is expected to have, individually or
collectively, a material adverse effect on the financial
condition, business, assets, liabilities, net assets, properties,
licenses, franchises, results of operations, value or prospects
of the Business.
6.2 Opinion of Counsel to Seller. Purchaser shall have
received a favorable opinion of Carr, Tabb and Pope, and Gorman
and Matthew, P.A., counsel to Seller, substantially in the form
of Exhibit C attached hereto.
6.3 Absence of Litigation. No action, suit, or
proceeding before any court or any governmental body or
authority, pertaining to the transactions contemplated by this
Agreement or to its consummation, shall have been instituted or
clearly indicated on or before the Closing Date.
6.4 Consents. All material consents, waivers, approvals,
licenses and authorizations of third parties (including without
limitation customers if required), and of governmental
authorities, if any, and all amendments or modifications to
existing material agreements with third parties, required to
consummate the transactions contemplated hereunder and to
transfer to Purchaser without impairment the Acquired Assets
shall have been obtained and shall be reasonably satisfactory in
form and substance to Purchaser. The foregoing covenant shall
not apply to the consent of any customer which Seller has not
obtained following a best efforts attempt to obtain consent in
writing. Seller shall have received, in form and substance
satisfactory to Purchaser, all documents and releases related to
Seller's agreements with Tim Dutcher, the Covenant Not To Compete
and the Barnett Bank of Tallahassee.
6.5 Condition of Assets. The Acquired Assets shall not
have been materially and adversely affected in any way as a
result of any fire, accident, storm or other casualty or labor or
civil disturbance or act of God.
6.6 Certain Written Agreements. Purchaser shall have
received from each Substantial Shareholder a Non Compete
Agreement. Seller shall not have, by action or omission,
impaired the assignability of the benefits of Seller's Covenant
Not To Compete with the Covenantors. Seller shall have received
from each leased employee listed on Schedule 4.6 a Severance
Agreement in the form of Exhibit L. Purchaser shall have
received from API a Guaranty in the Form of Exhibit E (the
"Shareholder Guaranty") guaranteeing the performance of Seller's
obligations under this Agreement.
6.7 Incumbency Certificate. Purchaser shall have
received an incumbency certificate dated the Closing Date
certifying the incumbency of each officer of Seller who has
signed this Agreement or any instrument delivered in connection
with this Agreement, which certificate shall contain specimens of
the signatures of each of the officers whose incumbency is
certified.
6.8 Warehousing Agreement. Purchaser and API shall have
entered into a warehousing agreement in the form of Exhibit F
(the "Warehousing Agreement") for the Madison, Florida,
warehouse.
6.9 Other Deliveries. Purchaser shall have received in
form and substance reasonably satisfactory to Purchaser all other
deliveries required to be delivered to Purchaser at the Closing
as specified in Section 8.3 of this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of the Seller to consummate the transactions
contemplated by this Agreement is subject, at Seller's option, to
the satisfaction at or prior to the Closing Date of each of the
following conditions:
7.1 Representations and Warranties; Covenants. All
representations and warranties of Purchaser contained in this
Agreement or in any document delivered at Closing shall be true
in all material respects at and as of the Closing Date as though
made at and as of such time, and Purchaser shall have performed
and complied with all material covenants, obligations and
conditions required by this Agreement to be performed or complied
with by Purchaser prior to or on the Closing Date; and Seller
shall have received Certificates of an officer of Purchaser,
dated the Closing Date, to that effect.
7.2 Opinion of Counsel to Purchaser. Seller shall have
received a favorable opinion of Leonard M. Patterson, counsel to
Purchaser, substantially in the form of Exhibit K attached
hereto.
7.3 Absence of Litigation. No action, suit, or
proceeding before any court or any governmental body or
authority, pertaining to the transaction contemplated by this
Agreement or to its consummation, shall have been instituted or
clearly indicated on or before the Closing Date.
7.4 Consents. All material consents, waivers, approvals,
licenses and authorizations of third parties (including without
limitation customers if required), and of governmental
authorities, if any, and all amendments or modifications to
existing material agreements with third parties, required to
consummate the transactions contemplated hereunder and to
transfer to Purchaser without impairment the Acquired Assets
shall have been obtained and shall be reasonably satisfactory in
form and substance to Seller. Seller shall have received, in
form and substance satisfactory to Seller, all documents and
releases related to Purchaser's agreements with Tim Dutcher, the
Covenant Not To Compete and the Barnett Bank of Tallahassee.
Seller shall have received from each leased employee listed on
Schedule 4.6 a Severance Agreement in the form of Exhibit L.
7.5 Incumbency Certificate. Seller shall have received
an incumbency certificate dated the Closing Date certifying the
incumbency of each officer of Purchaser who has signed this
Agreement or any instrument delivered in connection with this
Agreement, which certificate shall contain specimens of the
signatures of each of the officers whose incumbency is certified.
7.6 Other Deliveries. Seller shall have received in form
and substance reasonably satisfactory to Seller all other
deliveries required to be delivered to Seller at the Closing as
specified in Section 8.4 of this Agreement.
8. CLOSING
8.1 Closing Date. The closing of the purchase and sale
of the Acquired Assets (the "Closing") shall take place at the
offices of Purchaser, Aliso Viejo, California, effective on
January 28, 1994 (the "Closing Date") at 12:01 a.m., or at such
other time and place prior to February 2, 1994 as the parties may
agree.
8.2 Right of Termination. This Agreement may be
terminated and the proposed transaction abandoned at any time
prior to the Closing by notice given as provided below in Section
10.3:
(a) by mutual consent of the parties;
(b) by either party if a condition to that party's
obligations pursuant to this Agreement shall not have been
satisfied at or prior to the Closing in accordance with the terms
of this Agreement; or
(c) by either party if the Closing shall not have
taken place within four (4) business days of the date of this
Agreement.
Nothing in this Section 8.2 shall excuse a party from exercising
good faith and its reasonable best efforts toward the
satisfaction of the conditions to such party's obligations under
this Agreement. Termination of this Agreement shall not
adversely affect any rights or remedies of either party
hereunder, and the terms and conditions of the Confidentiality
Agreement dated September 13, 1993, shall survive any such
termination.
8.3 Seller Deliveries. At the Closing, Seller shall
deliver or cause to be delivered to Purchaser:
(a) An executed counterpart Instrument of Assignment
and Assumption in the form of Exhibit A, for all of the Acquired
Assets other than Inventory and Fixed Assets;
(b) An executed Bill of Sale in the form of Exhibit
B, for the Inventory and Fixed Assets;
(c) The opinion of counsel to Seller in the form of
Exhibit C;
(d) Certified resolutions of the shareholders and
board of directors of Seller authorizing consummation of the
transactions contemplated by this Agreement;
(e) Officers' certificate in the form of Exhibit D;
(f) Consents and approvals set forth in the
Disclosure Schedule;
(g) Charter and Good Standing Certificate of Seller
and API certified by the Florida Secretary of State;
(h) Shareholder Guaranty in the form of Exhibit E;
(i) Incumbency Certificate;
(j) Evidence that Seller has paid and discharged
certain federal taxes as described in Section 4.11;
(k) Warehousing Agreement in the form of Exhibit F;
(l) UCC termination statements or amendments
releasing any liens of record affecting the Acquired Assets; and
(m) Non Compete Agreements in the form of Exhibits
G, H, I and M executed by the Substantial Shareholders of Seller
in accordance with Section 1.7.
Simultaneously with the consummation of the transfer, Seller,
through its officers, agents, and employees, shall put Purchaser
into full possession and enjoyment of all the Acquired Assets to
be conveyed and transferred by this Agreement.
8.4 Purchaser Deliveries. At the Closing, Purchaser
shall deliver to Seller the following instruments and documents:
(a) Wire transfer, cashier's check or bank draft in
the amount of the Closing Payment;
(b) An executed counterpart of an Instrument of
Assignment and Assumption in the form executed by Seller; and
(c) Officer's certificate in the form of Exhibit J.
(d) The opinion of counsel to Purchaser in the form
of Exhibit K;
(e) Certified resolutions of the board of directors
of Purchaser authorizing consummation of the transactions
contemplated by this Agreement;
(f) Charter and Good Standing Certificate of
Purchaser certified by the Delaware Secretary of State;
(g) Incumbency Certificate;
(h) Warehousing Agreement in the form of Exhibit F.
9. POST CLOSING AGREEMENTS
9.1 Indemnification by Seller.
(a) Subject to the provisions of Section 9.4, Seller
agrees to defend, indemnify and hold Purchaser and each of its
subsidiaries, affiliates and parent companies and the respective
officers, directors and employees of Purchaser and such
subsidiaries, affiliates and parent companies (collectively, the
"Indemnified Parties") harmless from and against any and all
liabilities, obligations, damages, losses, claims, demands,
recoveries, deficiencies, costs or expenses (including, without
limitation, interest, penalties, additions to tax and reasonable
attorneys' fees and expenses) connected with, resulting from or
arising out of any of the following:
(i) any untruth or error in or breach of any
representation or warranty contained in
this Agreement or in any schedule
included in the Disclosure Schedule and
any certificate, exhibit or other
instrument delivered by Seller at the
Closing of the transactions under this
Agreement;
(ii) any failure by Seller to perform, carry
out or comply with its obligations under
this Agreement, including the exhibits
hereto;
(iii) any and all Retained Liabilities and
other debts, liabilities or obligations
of Seller, direct or indirect, fixed,
contingent or otherwise, whether existing
at or as of the Closing Date or which
arise after the Closing Date, but which
are based upon or arise from any act,
transaction, circumstance, sale of goods
or services, state of facts or other
condition which occurred or existed on or
before the Closing Date, whether or not
then known, due or payable, except as
otherwise specifically provided herein;
(iv) any brokers fees claimed by Quest Capital
Corp.;
(v) failure of Seller to comply with any
applicable bulk sales law in connection
with the transactions contemplated by
this Agreement;
(vi) actions or decisions, directly or
indirectly affecting the employment of
employees or former employees of Seller,
that are implemented by Seller either (a)
in connection with, incident to or as a
result of the sale, or (b) prior to or
including the Closing Date;
(vii) any employment termination, layoff or
reduction in hours occurring in
connection with, incident to or as a
result of, the sale, or prior to or
including the Closing Date affecting
employees, or former employees, of
Seller;
(viii) any decisions or actions taken or
implemented by Seller affecting
employees, or former employees, of
Seller, in connection with, incident to
or as a result of Seller's agreement or
dealings with any labor organizations or
employees;
(ix) any liability of Seller pursuant to the
Multiemployer Pension Plan Amendment Act
of 1980, as amended.
(x) [----]
(such matters listed in clauses (i) through (x) above being
herein referred to collectively as "Claims" and singly as
"Claim"). Notwithstanding anything herein to the contrary, no
Claim shall consist of any matter described in Section 9.4. Any
such Claim shall be adjusted to take into account any tax benefit
to, or tax burden on, the Indemnified Parties incident to the
matter giving rise to such Claim or to the indemnification
payment hereunder.
(b) If the Indemnified Parties shall incur or
receive notice of the existence of any Claim (liquidated or
unliquidated, accrued or contingent), Purchaser shall promptly
give written notice thereof to Seller. Purchaser shall furnish
to Seller in reasonable detail such information as Indemnified
Parties may have with respect thereto (including in any lawsuit,
copies of any summons, complaint or other pleading which may have
been served on it and any written claim, demand, invoice, billing
or other document evidencing or asserting the same); provided,
however, that no failure or delay by Purchaser in the performance
of the foregoing shall reduce or otherwise affect the obligation
of Seller to indemnify and hold the Indemnified Parties harmless,
except to the extent that such failure or delay shall have
materially prejudiced Seller's ability to defend against, settle
or satisfy such Claim.
(c) The right of indemnification contained in this
Section 9.1 with respect to any Claims resulting from the
assertion of liability by third parties shall be subject to the
following terms and conditions:
(i) Except for matters involving the
Indemnified Parties' tax filings, Seller,
at its expense, shall have the right to
pay, compromise, settle or otherwise
dispose of any such Claims. Unless
Purchaser otherwise agrees, however, no
such settlement shall limit, restrict or
otherwise affect the right of any of the
Indemnified Parties to carry on or
conduct its business (then or in the
future), or require any payment to be
made by any of the Indemnified Parties
(except as may be paid or reimbursed by
Seller), or limit, restrict, make more
expensive or less profitable or otherwise
adversely affect the manner in which any
of the Indemnified Parties carries on or
conducts its business (then or in the
future). In addition, no settlement
shall be entered into which does not
include the delivery by the settling
third party of a full and final release
of the Indemnified Parties from all
liability in respect of such Claim.
(ii) Except for matters involving the
Indemnified Parties' tax filings, Seller,
at its expense, shall be entitled to
participate in and to the extent they
wish, to direct the defense (including
the selection of counsel reasonably
satisfactory to Purchaser) of any such
Claims. Purchaser shall at all times
have the right to participate in the
defense of any Claim and to employ its
own counsel, but the fees and expenses of
such counsel shall be Purchaser's own
expense unless the employment of such
counsel shall have been authorized by
Seller in connection with the defense of
any such Claims, or unless and so long as
Seller shall not have employed counsel to
have charge of the defense of any such
Claims within a reasonable period after
notice thereof, in either of which events
such fees and expenses shall be borne by
Seller.
(iii) Notwithstanding anything in this Section
9.1 to the contrary, if there is a
reasonable probability that any of the
Claims may materially and adversely
affect Purchaser or any of the other
Indemnified Parties, other than as a
result of money damages or other money
payments, Purchaser or such other
Indemnified Party shall have the right,
at its own cost and expense, to defend,
compromise or settle such Claim,
provided, that Seller shall not be liable
for any payment in settlement of such
Claim without its prior consent and shall
be reimbursed for any payment Seller has
made to Purchaser pursuant to Section
9.10 or otherwise incurred in connection
with such Claim.
(iv) No Claim hereunder shall give rise to a
right of indemnification unless and until
the total value of all Claims shall
exceed the aggregate amount of $10,000
whereupon Purchaser may seek indemnity
for each and every Claim, including those
Claims comprising the initial $10,000
thereof. Seller's indemnity hereunder is
limited to a maximum aggregate amount of
$1,250,000; provided, however, no
indemnity for any Claim under Section
9.1(a)(x) shall be applied against this
limit, nor shall this limit affect any
indemnity for any Claim under Section
9.1(a)(x).
9.2 Indemnification by Purchaser.
(a) Purchaser agrees to defend, indemnify and hold
Seller and each of its subsidiaries, affiliates and parent
companies and the respective officers, directors and employees of
Seller and such subsidiaries, affiliates and parent companies
(collectively, the "Purchaser-Indemnified Parties") harmless from
and against any and all liabilities, obligations, damages,
losses, claims, demands, recoveries, deficiencies, costs or
expenses (including, without limitation, interest, penalties,
additions to tax and reasonable attorneys' fees and expenses)
connected with, resulting from or arising out of any of the
following:
(i) any untruth or error in or breach of any
representation or warranty contained in
this Agreement or in any certificate,
exhibit or other instrument delivered by
Purchaser at the Closing of the
transactions under this Agreement;
(ii) any failure by Purchaser to perform,
carry out or comply with the liabilities
of the Business expressly assumed by
Purchaser in Section 1.3 and its other
obligations under this Agreement,
including the exhibits hereto;
(iii) any and all debt, liabilities or
obligations of Purchaser, direct or
indirect, fixed, contingent or otherwise
arising out of Purchaser's conduct of the
Business following the Closing or the
conduct of any other business of
Purchaser prior to or after Closing;
(iv) any decisions or actions taken or
implemented by Purchaser prior to the
Closing affecting Purchaser's business.
(such matters listed in clauses (i) through (iv) above being
herein referred to collectively as "Claims" and singly as
"Claim"). Any such Claim shall be adjusted to take into account
any tax benefit to, or tax burden on, the Purchaser-Indemnified
Parties incident to the matter giving rise to such Claim or to
the indemnification payment hereunder.
(b) If the Purchaser-Indemnified Parties shall incur
or receive notice of the existence of any Claim (liquidated or
unliquidated, accrued or contingent), Seller shall promptly give
written notice thereof to Purchaser. Seller shall furnish to
Purchaser in reasonable detail such information as Purchaser-
Indemnified Parties may have with respect thereto (including in
any lawsuit, copies of any summons, complaint or other pleading
which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the
same); provided, however, that no failure or delay by Seller in
the performance of the foregoing shall reduce or otherwise affect
the obligation of Purchaser to indemnify and hold the Purchaser-
Indemnified Parties harmless, except to the extent that such
failure or delay shall have materially prejudiced Purchaser's
ability to defend against, settle or satisfy such Claim.
(c) The right of indemnification contained in this
Section 9.2 with respect to any Claims resulting from the
assertion of liability by third parties shall be subject to the
following terms and conditions:
(i) Except for matters involving the
Purchaser-Indemnified Parties' tax
filings, Purchaser, at its expense, shall
have the right to pay, compromise, settle
or otherwise dispose of any such Claims.
Unless Seller otherwise agrees, however,
no such settlement shall limit, restrict
or otherwise affect the right of any of
the Purchaser-Indemnified Parties to
carry on or conduct its business (then or
in the future), or require any payment to
be made by any of the Purchaser-
Indemnified Parties (except as may be
paid or reimbursed by Purchaser), or
limit, restrict, make more expensive or
less profitable or otherwise adversely
affect the manner in which any of the
Purchaser-Indemnified Parties carries on
or conducts its business (then or in the
future). In addition, no settlement
shall be entered into which does not
include the delivery by the settling
third party of a full and final release
of the Purchaser-Indemnified Parties from
all liability in respect of such Claim.
(ii) Except for matters involving the
Purchaser-Indemnified Parties' tax
filings, Purchaser, at its expense, shall
be entitled to participate in and to the
extent they wish, to direct the defense
(including the selection of counsel
reasonably satisfactory to Seller) of any
such Claims. Seller shall at all times
have the right to participate in the
defense of any Claim and to employ its
own counsel, but the fees and expenses of
such counsel shall be Seller's own
expense unless the employment of such
counsel shall have been authorized by
Purchaser in connection with the defense
of any such Claims, or unless and so long
as Purchaser shall not have employed
counsel to have charge of the defense of
any such Claims within a reasonable
period after notice thereof, in either of
which events such fees and expenses shall
be borne by Purchaser.
(iii) Notwithstanding anything in this Section
9.2 to the contrary, if there is a
reasonable probability that any of the
Claims may materially and adversely
affect Seller or any of the other
Purchaser-Indemnified Parties, other than
as a result of money damages or other
money payments, Seller or such other
Indemnified Party shall have the right,
at its own cost and expense, to defend,
compromise or settle such Claim,
provided, that Purchaser shall not be
liable for any payment in settlement of
such Claim without its prior consent.
(iv) No Claim hereunder shall give rise to a
right of indemnification unless and until
the total value of all Claims shall
exceed the aggregate amount of [----]
whereupon Seller may seek indemnity for
each and every Claim, including those
Claims comprising the initial [----]
thereof. Purchaser's indemnity hereunder
is limited to a maximum amount of [----].
9.3 Non Compete Agreement.
(a) Seller and API will restrict their activities so
that Purchaser's reasonable expectations with respect to the
goodwill, business reputation, employee relations and prospects
connected with the Acquired Assets will not be impaired. In
furtherance of, but not in limitation of, this general
obligation, Seller and API agree that neither Seller nor API
will, at any time within the 5-year period immediately following
the Closing Date, (i) participate, engage or have any interest
in, directly or indirectly, any person, firm, corporation, or
business (whether as an investor, employee, officer, director,
agent, controlling security holder, creditor, or consultant, or
in any other capacity which calls for the rendering of personal
services, advice, acts of management, operation or control) which
carries on any business or activity, competitive with, similar
to, or an outgrowth of, the Business as heretofore engaged in by
Seller anywhere in the United States, and Canada and anywhere
else in the world, in which Seller did Business prior to the
consummation of the transactions hereunder; provided, however,
that this restriction shall not apply to Seller's activities
pursuant to Section 9.4.
(b) The parties intend that the covenant contained
in Section 9.3(a) shall be construed as a series of separate
covenants, one for each separate legal jurisdiction in which such
covenant applies. If, in any judicial proceeding, a court shall
refuse to enforce any of the separate covenants included herein,
then such unenforceable covenant shall be deemed eliminated from
these provisions for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants to be
enforced. Notwithstanding the foregoing, it is the intent and
agreement of Purchaser and Seller that these covenants be given
the maximum force, effect and application permissible under
applicable law.
(c) During the period specified in Section 9.3(a) of
this Agreement, neither Seller nor API shall (i) divulge,
communicate, use to the detriment of Purchaser or for the benefit
of any other person or persons, or misuse in any way, any
confidential information or trade secrets of the Business,
including personnel information, secret processes or processes
for which a patent is pending, know-how, computer programs,
customer lists, price lists or pricing data, formulas, or other
technical data; or (ii) divert or attempt to divert any business
of the kind comprising the Business.
(d) Seller and API have knowledge of the affairs,
trade secrets, customers, potential customers and other
proprietary information of the Business, and Seller and API
acknowledge and agree that compliance with the covenants
contained in this Section 9.3 is necessary for the protection of
the goodwill and other proprietary interests of the Business
which Purchaser is acquiring. Seller and API acknowledge and
agree that in the event of a breach of such covenants, neither
the Purchaser nor any successors or assigns would have an
adequate remedy at law, and Purchaser and any successor or assign
shall be entitled to injunctive relief in addition to any other
remedies which may be available to it hereunder.
9.4 Product Returns; Defective Product.
(a) Seller and Purchaser will cooperate in handling
Products manufactured prior to the Closing Date which are deemed
defective or unsaleable, or returned to Purchaser or Seller by a
consumer or former customers of Seller after the Closing Date, as
follows:
(i) In the event a previous customer of
Seller notifies Purchaser that the
customer has SKU's in inventory which
exceed [----] levels based upon the
customer's seasonally adjusted previous
twelve (12) months' sales ("Overstocked
Product"), Purchaser and the customer
will confer on adjusting inventory
distribution of all Overstocked Product
among the customer's retail outlets. If
the customer nonetheless wishes to
receive a credit or reimbursement in
respect of the Overstocked Product,
Purchaser may credit or reimburse the
customer in the amount of the Seller's
original net sales price to the customer
plus shipping and handling. Seller shall
reimburse Purchaser within 21 days of
Purchaser's written request for the
amount of any credit in excess of [----]
in the aggregate given to any single
customer in respect of inventory of
Overstocked Product. The amount of
Seller's reimbursement shall be reduced
by the amount of any sales of Product
made by Purchaser to the customer
following the Closing Date and (in the
case of Overstocked Product produced
within 18 months of its return) Seller's
original acquisition cost of Overstocked
Product placed in Purchaser's inventory
for resale. Seller's obligation to
Purchaser hereunder shall expire with
respect to Overstocked Product accepted
by Purchaser at 12:01 a.m. on the 181st
day after the Closing Date (counting the
Closing Date as one day). Purchaser will
not disclose to customers the existence
of these Overstocked Product
reimbursement arrangements. Purchaser
grants Seller the right to review all
documents in Purchaser's possession
related to any customer claim of
Overstocked Product for which Purchaser
shall seek reimbursement from Seller.
(ii) In the event a consumer or a previous
customer of Seller notifies Purchaser
within [----] from the Closing Date of
defective Product manufactured by [----],
Purchaser may issue a refund, or, in the
case of a customer, issue a credit, in
the amount of the acquisition cost
incurred by the consumer or customer,
plus applicable stocking, shipping and
handling charges. Purchaser will apply
to [----] for reimbursement; provided,
however, if [----] does not reimburse
Purchaser within 21 days of Purchaser's
written request, Purchaser will notify
Seller of that fact and Seller will
reimburse Purchaser within 21 days of
notice by Purchaser. Purchaser will be
xentitled, pursuant to this subsection
(ii), to reimbursement of the amount of
all such defective merchandise credits
and refunds to the extent that aggregate
credits and refunds for defective
merchandise manufactured by [----] have
then exceeded [----].
(iii) With respect to defective Product
manufactured by [----] other than such
Product returned by customers or
consumers, Purchaser will apply to [----]
for reimbursement; provided, however, if
[----] does not reimburse Purchaser
within 21 days of Purchaser's written
request, Seller shall refund to Purchaser
within 21 days of notice by Purchaser,
all costs of acquiring, shipping and
handling defective Product manufactured
by [----] and included in Purchaser's
inventory.
(b) Purchaser shall accept and place into inventory
all Overstocked Product produced within [----] prior to its
return. Seller shall arrange for the lawful disposal of all
other Product returned pursuant to this Section 9.4 or included
in the Excluded Inventory not purchased by Purchaser hereunder.
Seller may close-out Excluded Inventory and dated Overstocked
Product through industrial or institutional sales channels only,
or Seller may donate Excluded Inventory and dated Overstocked
Product for charitable purposes free-of-charge. Defective
Product, shall be shipped at Seller's cost to [----] or such
other location designated by Seller, and shall be lawfully
destroyed.
(c) Any reimbursement due to Purchaser from Seller
under Section 9.4 shall first be offset by Purchaser against any
remaining amount of the Six-month Holdback, and only after the
depletion of the Six-month Holdback shall Purchaser make a claim
of indemnity therefor against Seller.
(d) Any and all claims, liabilities, potential
liabilities, or obligations arising out of or based upon claims
of negligence, breach of warranty, consumer product labeling
violation, product liability, or product returns for defective or
Overstocked Product in respect of Products manufactured by any
manufacturer other than [----] before or after the Closing shall
be the sole responsibility of Purchaser.
9.5 Right of Offset; Sales in Excess of Forecast.
(a) Either party's obligation to pay to the other
party any amounts owing under this Agreement, or any other
agreement delivered pursuant to this Agreement, is in each case
subject to any right of offset which such party may have against
the other. Without limiting the foregoing, such right of offset
shall apply to the amount of the Six-month Holdback.
(b) In the event Seller's sales during the period
from December 1, 1993 to the Closing Date exceed [----], Seller
shall promptly credit all or any portion of the amount of such
difference to Seller's accounts receivable identified by
Purchaser. Seller shall give to Purchaser the right to rebill
such balance. Purchaser shall reimburse Seller the amount of
Seller's acquisition cost of the corresponding Product. In the
event Purchaser does not choose to accept and rebill accounts in
the total amount of such difference, Purchaser may make a Claim
for indemnity in the amount of the difference between unaccepted
accounts receivable and Seller's cost of such Product.
9.6 Transition Assistance.
(a) Immediately following the Closing, Seller shall
supply to Purchaser duplicate copies of letters addressed to
customers advising them of the sale, signed by an officer of
Seller, in a form prepared by Purchaser and reasonably
satisfactory to Seller. Purchaser shall receive a sufficient
quantity of such executed letters on Seller's stationery,
together with Seller's envelopes and three sets of self-adhesive
pre-addressed customer labels, including name and address, to
enable Purchaser to mail the letters to all customers immediately
following the Closing.
(b) For a period of ninety (90) days following the
Closing Date, Seller agrees to use best efforts to retain the
services of Bret Buhler and Ken Ellis, and for a period of up to
sixty (60) days, as requested by Purchaser as set forth below,
following the Closing Date, Seller agrees to use best efforts to
retain the services of Dean Hill. As requested by Purchaser,
Seller shall make available to Purchaser during such ninety (90)
day period the services of either Ken Ellis or Bret Buhler, as
may reasonably be requested by Seller upon reasonable advance
notice, for up to fifteen (15) days. In addition, Seller shall
make available to Purchaser during such sixty (60) day period the
services of Dean Hill on a full-time basis during the initial
thirty (30) days of such period and thereafter, Seller shall make
available to Purchaser the services of Mr. Hill on a full-time
basis for individual periods of five (5) working days each,
subject to termination by Purchaser upon fourteen (14) days'
advance notice. Purchaser shall be under no obligation to
reimburse Seller for any costs of salary, vacation or other
benefits for the services of Messrs. Ellis and Buhler. Purchaser
shall pay Seller for the services of Dean Hill the aggregate
amount of $2,500 for five (5) working days of service and no
other costs of salary, vacation or other benefits. Payment shall
be made to Seller, when due to Seller's employee leasing company.
Expense reimbursement shall be in accordance with Purchaser's
policies and agreed to in advance. Seller shall also make
available to Purchaser free-of-charge during such period office
space and copies, telephones and other equipment at Seller's
offices in Tallahassee, Florida for use by Seller's employees and
any leased employees of Seller providing transition assistance to
Purchaser. Purchaser shall reimburse Seller for the actual cost
of Purchaser's long distance telephone, copying and facsimile
charges. All other charges will be agreed in advance.
(c) Through July 1, 1994, Seller hereby grants to
Purchaser the right to manufacture product and use labels
included in the Acquired Assets and bearing Seller's address,
phone numbers, trademarks and other identifying information.
Seller shall cooperate with Purchaser, referring to Purchaser's
attention all correspondence and other inquiries made to
Purchaser. At Closing, Seller will assign to Purchaser, at
Purchaser's cost, Seller's 800 telephone number.
9.7 Hired Employees. On the Closing Date, Purchaser
shall offer employment to Dan Solway (Western Regional Manager),
Ken Miller (Eastern Regional Manager), and Debby Cusack (Customer
Service) for a minimum of 180 days from the Closing Date. If any
of these employees voluntarily resigns during or refuses any
requested relocation during such 180 day period, compensation and
benefits shall be discontinued immediately. In the event
Purchaser requires an employee to relocate, the employee shall be
eligible for Purchaser's Employee Relocation Program. Nothing
herein shall be construed to restrict Purchaser from making
offers of employment on or after the Closing Date to Seller's
leased employees not designated herein by Purchaser. Any
employee of the Business offered a position with Purchaser who
accepts such offer shall be deemed a "Hired Employee." Seller
will cause its employee leasing Company to terminate the
employment of all Hired Employees of the Business, effective as
of 12:01 a.m. on the Closing Date, and will give such notices and
perform such other obligations as may be required in connection
therewith and the transactions contemplated by this Agreement.
It is understood and agreed that employment by, or an offer of
employment to, Seller's leased employees by Purchaser shall not
constitute any commitment, contract, obligation or understanding
(express or implied) on the part of Purchaser to a post-Closing
Date employment relationship of any fixed term or duration in
excess of 180 days or to any terms or conditions other than those
Purchaser may establish. Subject to Purchaser's obligation to
employ the above-designated individuals for a term of 180 days,
any employment with Purchaser may be terminated by Purchaser at
any time for any reason. Purchaser agrees to provide benefits to
all Hired Employees after the Closing Date in accordance with its
medical and other benefit plans.
9.8 Sales, Use and Transfer Taxes. All applicable state
and local sales, use and transfer taxes, filing and recording
fees, and other similar expenses payable in connection with the
transactions contemplated by this Agreement shall be paid fifty
percent (50%) by Purchaser and fifty percent (50%) by Seller.
Purchaser shall prepare and file all appropriate returns and
reports.
9.9 Further Assurances; Access to Books and Records.
(a) Seller, at any time after the Closing Date,
shall execute, acknowledge, and deliver any further assignments,
conveyances, and other assurances, documents, and instruments of
transfer reasonably requested by Purchaser and shall take any
other action consistent with the terms of this Agreement that may
reasonably be requested by Purchaser for the purpose of
assigning, transferring, granting, conveying, and confirming to
Purchaser, or reducing to possession, any or all of the Acquired
Assets. If requested by Purchaser, Seller further agrees to
prosecute or otherwise enforce in its own name for the benefit of
Purchaser any claims, rights, or benefits that are transferred to
Purchaser by this Agreement and that require prosecution or
enforcement in Seller's name.
(b) If requested by Seller, for a period of seven
(7) years following the Closing Date, Purchaser shall preserve
all books and records acquired hereunder as Seller may reasonably
request and give Seller access at Purchaser's location to all
books and records included in the Acquired Assets.
9.10 [----]
9.11 [----]
[----]
10. MISCELLANEOUS
10.1 Fees and Expenses. Each party hereto shall pay all
of its expenses incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including
the fees and expenses of its counsel, accountants and other
experts.
10.2 Survival of Representations. The representations and
warranties of the parties contained in this Agreement and in any
certificate delivered or to be delivered pursuant to this
Agreement and in connection with the consummation of the
transactions contemplated hereby shall survive the Closing for a
period of two (2) years from the Closing Date.
10.3 Notices. All notices, consents or other
communications shall be in writing, and shall be deemed to have
been duly given when delivered personally or by messenger, or
when mailed by registered or certified mail, return receipt re-
quested, postage prepaid, or when received via telecopy, telex or
other electronic transmission, in all cases addressed to the
party for whom intended at its address set forth below:
If to Purchaser:
Armor All Products Corporation
6 Liberty
Aliso Viejo, CA 92656
Attn: Office of the President
with a copy to:
McKesson Corporation
One Post Street
San Francisco, CA 94104
Attn: Vice President & General Counsel
If to Seller:
Agri-Products, Inc.
P.O. Box 12728
Tallahassee, FL 32317
Attn: Ken Ellis
with a copy to:
Judy Tabb, Esq.
Carr, Tabb & Pope
1355 Peachtree, Suite 2000
Atlanta, GA 30309
10.4 Successors and Assigns. All covenants, promises and
agreements by or on behalf of the parties contained in this
Agreement shall be binding upon and shall inure to the benefit of
the "Permitted Assigns" (as hereafter defined) of the parties;
but nothing in this Agreement, express or implied, is intended to
confer on any party the right to assign its rights or obligations
hereunder before Closing, which assignment (by operation of law
or otherwise) is prohibited. "Permitted Assigns" shall include
any entity controlled by, or under common control with, any such
party. Notwithstanding the foregoing, the covenants and
agreements set forth in Section 9.3 are freely assignable by
Purchaser without the consent of Seller and shall inure to the
benefit of Purchaser's successors and assigns.
10.5 No Third Party Rights. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons
other than the parties to it and their respective successors and
assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision give any third
persons any right of subrogation or action over or against any
party to this Agreement.
10.6 Amendments, Supplements, Waivers. No amendment,
supplement or waiver of any provision of this Agreement shall be
effective unless the same shall be in writing and signed by
authorized officers of all parties in the case of an amendment or
supplement and by the waiving party in the case of a waiver.
10.7 Recovery of Litigation Costs. In any legal action or
any arbitration or other proceeding arising out of or related to,
or for the enforcement of this Agreement, or misrepresentation in
connection with this Agreement, the successful or prevailing
party or parties shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they
may be entitled.
10.8 Entire Agreement. Except for the Confidentiality
Agreement dated September 13, 1993 which shall survive until the
Closing, this Agreement sets forth the entire agreement of the
parties hereto with regard to the subject matter hereof and
supersedes and replaces all prior agreements, understandings and
representations, oral or written, with regard to such matters,
including, without limitation, the Letter Agreement between the
parties dated December 15, 1993, as amended.
10.9 Headings. Headings in this Agreement are for
reference purposes only and shall not be deemed to have any
substantive effect.
10.10 Publicity. All publicity relating to this Agreement
and the transactions contemplated hereby shall be released
jointly with the approval of each of the parties hereto, except
as otherwise required by applicable law or regulation.
10.11 Counterparts. This Agreement may be executed
concurrently in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
10.12 Governing Law.
(a) This Agreement shall be construed in accordance
with the internal laws of the State of California, without regard
to conflict of laws principles.
(b) Any dispute arising out of or related to this
Agreement which is related to the Intellectual Property, or any
action to enforce, defend or determine any rights or obligations
related to the Intellectual Property under this Agreement, shall
be litigated exclusively in the state or federal court located in
Memphis, Tennessee. The parties expressly waive any right to a
jury trial in such litigation. The parties hereto consent to the
jurisdiction, and waive any right to object to that venue.
(c) Any controversy or claim not related to the
Intellectual Property arising out of or relating to this
Agreement or any action to enforce, defend or determine any
rights or obligations not related to the Intellectual Property
under this Agreement shall be settled by arbitration. The
arbitration shall be conducted by a panel of three arbitrators,
one of which shall be selected by Seller, a second by Purchaser
and the third of which shall be selected by the two arbitrators
selected by the parties. The arbitration shall be held in
Memphis, Tennessee, and conducted in accordance with the then
obtaining Rules of the American Arbitration Association. This
Agreement shall be enforceable and judgment upon any award
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rendered by all or a majority of the arbitrators may be entered
in any court having jurisdiction, or application may be made to
such court for a judicial acceptance of the award and an order of
enforcement, as the case may be.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first above written.
ARMOR ALL PRODUCTS CORPORATION
By /s/ Mervyn J. McCulloch
Title: Exec. Vice President and
Chief Financial Officer
AGRI-PRODUCTS SPECIAL MARKETS, INC.
By /s/ Kenneth L. Ellis
Title: President
