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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 14D-9
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SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
AMERICAN CONSUMER PRODUCTS, INC.
(NAME OF SUBJECT COMPANY)
AMERICAN CONSUMER PRODUCTS, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, $.10 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
025236-10-0
((CUSIP) NUMBER OF CLASS OF SECURITIES)
STEPHAN W. COLE
PRESIDENT
AMERICAN CONSUMER PRODUCTS, INC.
31100 SOLON ROAD
SOLON, OHIO 44139
(216) 248-7000
(NAME, ADDRESS AND TELEPHONE NUMBER
OF PERSON AUTHORIZED TO RECEIVE NOTICE AND
COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
COPY TO:
GREGORY A. SMITH, ESQ.
THOMPSON, HINE AND FLORY
1100 NATIONAL CITY BANK BUILDING
629 EUCLID AVENUE
CLEVELAND, OHIO 44114
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The subject company is American Consumer Products, Inc., a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 31100 Solon Road, Solon, Ohio 44139. The title of the class of
equity securities to which this Statement relates is the Common Stock, par value
$.10 per share of the Company not owned by the Purchaser (as hereinafter
defined).
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer (the "Offer") made by Vista
2000, Inc., a Delaware corporation (the "Purchaser"), to purchase all
outstanding shares of common stock, par value $.10 per share, of the Company not
owned by the Purchaser (the "Shares") at a price of $5.30 per share (the "Offer
Price"), net to the seller in cash. According to the Tender Offer Statement on
Schedule 14D-1, dated August 30, 1995, filed by Purchaser with the Securities
and Exchange Commission on August 30, 1995 (the "Schedule 14D-1"), the address
of the principal executive offices of Purchaser is 11660 Alpharetta Highway,
Suite 330, Roswell, Georgia 30076.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this statement, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements and understandings and
actual and potential conflicts of interest between the Company and its
affiliates and certain of its executive officers, directors and affiliates are
described in Annex A hereto, which description is incorporated herein by
reference in its entirety.
Certain other contracts, agreements, arrangements and understandings and
actual and potential conflicts of interest between the Company and its
affiliates and the Purchaser, and its executive officers, directors and
affiliates are set forth below.
INTERESTS OF CERTAIN PERSONS IN THE OFFER
Stephan W. Cole, President and a Director of the Company, Richard F. Bern,
Executive Vice President and a Director of the Company and Jeffrey A. Cole, a
Director of the Company and Stephan W. Cole's brother, beneficially own in the
aggregate 1,325,796 Shares (50.60% on a fully diluted basis). In addition, as
discussed below under the headings "Employment Agreements" and "Real Estate
Purchase Agreements", and "Indemnification Letter Agreement", the foregoing
persons or certain of their affiliates are parties to certain contracts and
agreements with the Purchaser or the Company which have been entered into in
connection with the Offer.
The Company and the Purchaser have also entered into an indemnification
letter agreement whereby the current directors and officers of the Company will
be entitled to indemnification by the Company in respect of their positions as
directors or officers of the Company for matters occurring prior to the
consummation of the Offer. See the discussion below under the heading
"Indemnification Letter Agreement".
As of September 1, 1995, directors and officers of the Company, as a group,
beneficially owned 1,356,576 Shares (51.77% on a fully diluted basis).
CONFIDENTIALITY AGREEMENT
On August 2, 1995, the Purchaser and the Company entered into a
confidentiality agreement (the "Confidentiality Agreement"). The following
description of the Confidentiality Agreement does not purport to be complete and
is qualified in its entirety by reference to the Confidentiality Agreement
attached hereto as an exhibit.
Pursuant to the Confidentiality Agreement, the Purchaser agreed to maintain
the confidentiality of evaluation material regarding the business, assets and
operations of the Company provided by the Company to the Purchaser. Among other
things, the Confidentiality Agreement prevented the Purchaser from participating
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in any transaction involving an investment in or an acquisition of the stock or
assets of the Company. The Company waived compliance with this provision as it
relates to the Offer on August 29, 1995. In the event the Offer is not
consummated, the Purchaser will be restricted for three years from (i) employing
or soliciting for employment any person currently employed by the Company and
(ii) soliciting business from any customer or supplier of the Company not
previously contacted by the Purchaser.
ESCROW AGREEMENT
The Purchaser and the Company have entered into an Escrow Agreement (the
"Escrow Agreement") dated as of August 29, 1995. The following description of
the Escrow Agreement does not purport to be complete and is qualified in its
entirety by reference to the Escrow Agreement attached hereto as an exhibit.
Pursuant to the Escrow Agreement, the Purchaser has deposited $500,000 (the
"Escrowed Funds") into escrow. The Escrowed Funds, together with interest
thereon, will be distributed to the Company in the event that the Purchaser is
unable to purchase shares tendered by stockholders pursuant to the Offer solely
due to the Purchaser's having insufficient cash funds on hand for such purchase.
In addition, up to $200,000 of such funds may be disbursed to the Company in the
event the Offer is not consummated for any reason, other than less than 51% of
the Shares (on a fully diluted basis) being tendered or the Purchaser
determining not to proceed with the Offer due to a written statement or
disclosure by the Company of a material fact which may have an adverse effect on
the Company, as reimbursement of outside legal, accounting and other consulting
expenses actually incurred by the Company in connection with the Offer.
The Escrow Agreement also provides that during the 45-day period following
the date of the Escrow Agreement, the Company and its officers, directors,
employees, agents and representatives shall not initiate or solicit any
inquiries or proposals or offers with respect to a merger, acquisition,
consolidation, business combination, or similar transaction involving the
Company, or any purchase of all or any significant portion of the assets or
equity of the Company. The Escrow Agreement does not prevent the Company or its
officers, directors, employees, agents or representatives from furnishing
information to or entering into discussions or negotiations with any person that
makes an unsolicited proposal (or expresses an unsolicited indication of
interest in making a proposal) to acquire the Company pursuant to a merger,
consolidation, share exchange, purchase of a substantial portion of the assets,
business combination or other similar transaction.
EMPLOYMENT AGREEMENTS
The Company and each of Stephan W. Cole and Richard F. Bern (collectively,
the "Executives") have entered into employment agreements (the "Employment
Agreements") each dated as of August 29, 1995 and becoming effective upon the
purchase and sale of the Shares which are the subject of the Offer pursuant to
the Offer by the Purchaser. In the event the Offer is not completed, the
Employment Agreements will terminate and be of no force and effect. The
following description of the Employment Agreements does not purport to be
complete and is qualified in its entirety by reference to the Employment
Agreements attached hereto as exhibits.
Under the Employment Agreements, the Executives shall be employed for a
period of three years as Chief Executive Officer (Mr. Cole) and President (Mr.
Bern). Each Executive will be paid minimum annual compensation equal to
$275,000, comprised of a base salary of $150,000 and additional compensation and
bonus compensation not less than $125,000 in the aggregate. The Executive's
minimum annual compensation will be paid to the Executive in bi-monthly
installments equal to $11,458. To the extent that additional compensation (which
is based on the Executive's percentage participation, as determined by the Board
of Directors, in an annual bonus pool for executives of the Company equal to 10%
of annual pre-tax profits) and bonus compensation (which is based on a
discretionary bonus to the Executive determined annually at the discretion of
the Board of Directors or the Compensation Committee of the Company) is less
than the additional compensation and bonus compensation advanced during the year
to the Executive, the Executive shall retain the excess. To the extent that such
amounts are more than amounts previously advanced to the Executive for the year
for additional compensation and bonus compensation, the Company shall pay the
difference to the Executive.
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The Executives are also eligible to participate in an incentive stock
option plan maintained for the benefit of the Purchaser's employees generally.
Pursuant to their respective Employment Agreements, each of Messrs. Cole and
Bern will receive options under the Purchaser's incentive stock option plan
entitling him to purchase 100,000 shares of common stock of the Purchaser at an
exercise price equal to $5.58 per share. The options may be exercised with
respect to 20,000 shares upon grant, with respect to 40,000 shares in eight
equal installments of 5,000 shares each on the last day of each of the eight
calendar quarters after the date of grant, commencing with the quarter beginning
on October 1, 1995, and with respect to another 40,000 shares upon achievement
of specified performance goals.
The Executives are also entitled to other benefits, including life and
disability insurance, health and medical and vacation, which are generally
comparable to those provided to executive officers of the Company currently.
The Executives' employment under their respective agreements may be
terminated for death, total disability or for "Cause". The Company shall have
"Cause" to terminate the Executives' employment (i) due to fraud,
misappropriation or embezzlement by the Executive, (ii) gross misconduct or
willful gross neglect of the Executive's duties, (iii) conviction for a felony
or a crime involving moral turpitude, or (iv) willful and unauthorized
disclosure of trade secrets. The Executive may terminate the Employment
Agreement for Good Reason (as defined below). Additionally, either the Company
or the Executive may terminate the agreement for any other reason at any time on
ninety days written notice ("Notice Termination").
In the event that the Executive's employment is terminated upon the death
of the Executive, the Company shall continue to pay to the Executive's estate
all compensation payable under the Agreement through the remainder of the year
in which he died. In the event an Executive's employment is terminated for
disability or upon Notice Termination by the Company, or if the Executive
terminates employment for Good Reason, the Executive shall be entitled to
receive all compensation and benefits provided for under the Employment
Agreement as if his employment had not terminated prior to the expiration of the
three year term. "Good Reason" means (i) assignment to the Executive of duties
inconsistent in any material respect (other than in the nature of a promotion)
with the Executive's position immediately prior to such change, (ii) any failure
by the Company to pay the compensation or provide the benefits provided for
under the Employment Agreement, (iii) any failure by the Company to comply with
any material provision of the Employment Agreement, or (iv) the relocation of
the Executive's office outside of a 75 mile radius of Cleveland, Ohio (for Mr.
Cole) or Phoenix, Arizona (for Mr. Bern).
In the event an Executive's employment is terminated for Cause or by the
Executive other than for Good Reason, the Executive shall be paid (i) salary
accrued, but unpaid as of the date of termination, (ii) vacation or sick leave
benefits accrued, but unpaid or unused as of the date of termination, (iii)
additional compensation earned (based on pre-tax profits for the quarter(s)
during which the Executive is employed in the year of termination), but unpaid
as of the date of termination, and (iv) bonus compensation with respect to
announced, but unpaid bonuses as of the date of termination.
All compensation and benefits provided to the Executives under the
Employment Agreements are guaranteed by the Purchaser should the Company ever
default on its obligations under the Employment Agreements.
Pursuant to the Employment Agreements each of the Executives have agreed
that (i) during the term of the Employment Agreements and thereafter he will not
use, disclose, disseminate or distribute certain trade secrets of the Company
and (ii) during the one-year period following the termination of the Executive's
employment, he will not engage or participate in any business involving the sale
or distribution of home, business or personal security or safety products
marketed by the Company on the effective date of the Employment Agreement,
including the sale or distribution of locks and keys.
REAL ESTATE PURCHASE AGREEMENTS
The Purchaser and each of 31100 Solon Road, Inc. ("31100") and CRS Limited
Partnership ("CRS") have entered into real estate purchase agreements (the "Real
Estate Purchase Agreements") pursuant to
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which the Purchaser shall, subject to the completion of the Offer, (i) purchase
from 31100 the parcel of real property located at 31100 Solon Road, Solon, Ohio,
together with all buildings, fixtures, and other improvements thereon (the
"Solon Road Property"), and (ii) purchase from CRS the parcel of real property
located in Springfield, Illinois, together with all buildings, fixtures, and
other improvements thereon (the "CRS Property").
31100 is wholly-owned by Stephan W. Cole, Richard F. Bern and Stephan W.
Cole as custodian for Joseph E. Cole II, the son of Jeffrey A. Cole, under the
Ohio Transfers to Minors Act. 31100 is a limited partner in CRS, having a 65%
interest in the partnership's profits and losses. See the discussion below in
Annex A under the heading "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION; CERTAIN OTHER RELATIONSHIPS" regarding the terms of the leases
between the Company, as lessee, and 31100 (for the Company's corporate
headquarters and certain of its manufacturing and distribution facilities) and
between Boss Manufacturing Company, a wholly-owned subsidiary of the Company, as
lessee, and CRS (for Boss' warehouse and distribution facility).
The following description of the Real Estate Purchase Agreements does not
purport to be complete and is qualified in its entirety by reference to the Real
Estate Purchase Agreements attached hereto as exhibits.
Under the Real Estate Purchase Agreements, the Purchaser has agreed to
purchase for cash the Solon Road Property and the CRS Property within 45 days
after the completion of the Offer. The purchase price for the Solon Road
Property will be the lesser of $5,000,000 or the fair market value of the
property as determined by the average of two real estate appraisals of the
property performed by qualified independent appraisers; provided that if such
appraised amount is less than $4,750,000, 31100 may elect to terminate the
agreement and not sell the property. The purchase price for the CRS Property
will be the fair market value of the property as determined by the average of
two appraisals of the property performed by qualified independent appraisers;
provided that if such amount is less than $1,700,000, CRS may elect to terminate
the agreement and not sell the property.
INDEMNIFICATION LETTER AGREEMENT
The Purchaser and the Company entered into an indemnification letter
agreement (the "Indemnification Agreement") dated August 29, 1995 which provides
that for a period of six years after the Purchaser purchases and accepts the
Shares tendered in the Offer, the Purchaser shall use its best efforts to cause
the Company to indemnify, defend and hold harmless the present and former
directors and officers of the Company and any of its subsidiaries and their
respective heirs, executors, administrators and legal representatives,
including, without limitation, each member of the Special Committee of the Board
of Directors of the Company appointed in respect of the transactions
contemplated by the Offer, against all losses, expenses, claims, damages or
liabilities arising out of acts or omissions occurring on or prior to the
purchase and acceptance of the Shares by the Purchaser to the fullest extent
permitted or required under applicable law. The Purchaser has also agreed to use
its best efforts to cause the Company to maintain for the six-year period
following the purchase and acceptance of the Shares by the Purchaser (i) the
Company's current directors' and officers' liability insurance and fiduciary
liability insurance policies or (ii) other policies with scope of coverage,
policy limits, retention amounts, and other material terms that are no less
favorable than that currently provided.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation and Background.
In late June 1995, Richard Smyth, Chairman of the Board of Directors and
CEO of the Purchaser, met with Stephan W. Cole, President of the Company, and
Richard F. Bern, Executive Vice President of the Company, to disclose the
Purchaser's interest in a transaction for a business combination or other
joining of the businesses of the Purchaser and the Company. Several days later,
a brief follow-up meeting among Messrs. Smyth, Cole and Bern occurred to discuss
various possible structures and approaches to joining the businesses of the
Purchaser and the Company. On July 10, 1995, a follow-up meeting of Mr. Smyth
and Arnold Johns, President of the Purchaser, with Messrs. Cole and Bern,
occurred to further discuss potential
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methods for joining the businesses of the Purchaser and the Company. During this
meeting, these managers explored merger and tender offer approaches and
discussed joint distribution opportunities.
On August 2, 1995, the Company and the Purchaser entered into the
Confidentiality Agreement pursuant to which the Purchaser agreed to keep certain
information furnished to it by the Company confidential and to abide by certain
"standstill" provisions including provisions preventing commencement of the
Offer. On August 7, 1995, a meeting among Messrs. Smyth, Cole and Bern discussed
the possibility of an equity infusion by the Purchaser into the Company as well
as further exploration of joint distribution opportunities. During the next few
days, the Purchaser's representatives began conducting initial due diligence
regarding the Company and on August 9, 1995, Mr. Smyth was introduced to the
Company's Board of Directors, at which time he noted the possible synergies of
the two businesses and discussed the possible range of approaches to joining the
two businesses. On August 17, 1995, Mr. Smyth met with Mr. Cole and various
staff members of the Company. At these meetings, representatives of the Company
reviewed proposed employment agreements for Messrs. Cole and Bern, proposed real
estate purchase agreements for certain facilities used by the Company, and a
proposed escrow agreement. All of the foregoing agreements were drafted by the
Purchaser and presented to the Company's representatives for their
consideration. See the discussions above in Item 3 regarding these agreements
under the headings "Escrow Agreement", "Employment Agreements", and "Real Estate
Purchase Agreements". At these meetings there was also a discussion of the
impact of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and a review of certain accounting issues and the respective management
information systems of the Purchaser and the Company. Moreover, on this same
date, Messrs. Smyth and Cole met with a representative of McDonald & Company
Securities, Inc. ("McDonald & Company") to provide information for their use
should it be engaged to provide a fairness opinion to the Company regarding a
transaction with the Purchaser.
Subsequently, following discussions during the weeks of August 21 and
August 28 regarding the Offer, the Escrow Agreement, the Real Estate Purchase
Agreements, the Employment Agreements and the Indemnification Agreement were
executed by the respective parties thereto on August 29, 1995. The Company also
waived on August 29 the provisions of the Confidentiality Agreement restricting
the Purchaser from commencing the Offer and, on August 30, 1995, the Purchaser
commenced the Offer. On August 30, the Board of Directors appointed a Special
Committee of the Board of Directors (the "Special Committee"), comprised of
Malvin E. Bank and Frank W. Hulse, to consider the Offer. On September 1, 1995,
McDonald & Company was retained by the Company. See Item 5 below regarding the
engagement of McDonald & Company.
THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED
THE OFFER AND HAS DETERMINED THAT THE TERMS OF THE OFFER ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN THE OFFER.
(b) Reasons for the Recommendation.
In reaching its conclusions and the recommendation described above, the
Special Committee considered a number of factors including, without limitation,
the following:
(i) The terms and conditions of the Offer including the price of the
Offer, Purchaser's intention to pay at least $5.30 per share (subject to
dissenters' rights) to each stockholder who does not tender pursuant to the
Offer in a cash out merger (the "Merger") following Purchaser's purchase
and acceptance of the shares, and the fact that the Offer is not subject to
a financing condition.
(ii) The Company's business, assets, financial condition and future
prospects, the strategic direction of the Company's business, current
conditions in its industry and in the financial markets.
(iii) The oral opinion (later confirmed in writing) of McDonald &
Company, the Company's financial advisor, that the proposed consideration
to be received by the Company's stockholders pursuant to the Offer is fair
to such stockholders from a financial point of view. A copy of the written
opinion of McDonald & Company dated September 13, 1995, which sets forth
the procedures followed, the matters considered, the assumptions made and
the limitations of the review undertaken, is attached as an exhibit hereto.
McDonald & Company's opinion is directed only to the consideration to be
received by the
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Company's stockholders pursuant to the Offer and does not constitute a
recommendation to any stockholder to tender Shares in the Offer.
STOCKHOLDERS ARE URGED TO READ CAREFULLY SUCH OPINION IN ITS ENTIRETY.
(iv) The purchase prices to be paid for the Solon Road Property and
the CRS Property under the Real Estate Purchase Agreements will not be
greater than the respective fair market values of such properties, as
determined by independent real estate appraisers.
(v) The compensation and benefits to be provided to Stephan W. Cole
and Richard F. Bern is reasonable in comparison to, and not in excess of,
those generally available to them currently as executive officers of the
Company.
(vi) The $5.30 per share offering price represented a 41% premium over
the closing price ($3.75) reported on the NASDAQ National Market System on
August 23, 1995, which was the last trading day on which a reported sale of
any of the Shares occurred prior to the commencement of the Offer.
(vii) A review of strategic alternatives available to the Company to
enhance stockholder value, including the interest of possible third party
acquirors in acquiring all or portions of the Company.
(viii) The Company and the Special Committee may consider unsolicited
third party offers to acquire the Company and to provide information
regarding the Company to, and to negotiate with, such third parties
regarding possible Other Proposals (as defined below in Item 5).
In reaching its recommendation, no specific weightings were given by the
Special Committee to any of the foregoing factors, although the offer price was
a significant factor in reaching its conclusions. Such a determination of
specific weightings would, in the Board of Directors' view, be impracticable.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
On September 1, 1995, the Company engaged McDonald & Company to analyze,
make a recommendation and render a written fairness opinion to the Special
Committee with respect to the Offer. With respect to this engagement, McDonald &
Company is to receive a fee of $50,000 for its services rendered in connection
with its opinion. This fee is payable upon delivery of the opinion. In addition,
McDonald & Company was engaged to assist the Company in analyzing and evaluating
any other expressions of interest which may be made for substantially all of the
stock or assets of the Company ("Other Proposals") and to assist the Company in
negotiating the terms and conditions of any such Other Proposals. With respect
to any such Other Proposals which may be consummated, McDonald & Company will be
paid a transaction fee equal to $50,000 plus 6% of the portion of the value
thereof which is over $13,771,675 ($5.30 times 2,598,429 shares). The Company
has also agreed to reimburse McDonald & Company for its reasonable out-of-pocket
expenses and to indemnify McDonald & Company and its affiliates.
Neither the Company nor, to the best of the Company's knowledge, any person
acting on its behalf, intends to employ, retain, or compensate any other person
to make solicitations or recommendations to the stockholders of the Company in
connection with the transactions contemplated by the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of the Company's knowledge, no transactions in the Shares
have been effected during the past 60 days by the Company or by any executive
officer, director, affiliate or subsidiary of the Company, except acquisitions
of Shares issuable upon the exercise of options previously awarded.
(b) To the best of the Company's knowledge, Stephan W. Cole, Richard F.
Bern and Jeffrey A. Cole, who beneficially own in the aggregate 1,325,796 shares
(50.60% on a fully diluted basis), and the Company's other executive officers,
directors and affiliates currently intend to tender all Shares held of record or
beneficially owned by them.
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ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Other than as described above in Item 3 (b) and Item 4, and in the
following paragraph, there are no negotiations being undertaken or underway by
the Company in response to the Offer which relate to or would result in (i) an
extraordinary transaction such as a merger or reorganization, involving the
Company or any subsidiary of the Company, (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the Company; (iii)
a tender offer for or other acquisition of securities by or of the Company or
(iv) any material change in the present capitalization or dividend policy of the
Company.
The Company has provided and may continue to provide, information to
persons who have indicated an interest in making an Other Proposal ("Other
Persons") (subject to execution of confidentiality agreements) for the purpose
of evaluating the Company with respect to possible Other Proposals. By
resolution adopted by the Special Committee, the Company is authorized to enter
into or continue discussions or negotiations with such Other Persons regarding
possible Other Proposals. Although certain discussions with Other Persons have
occurred, there are presently no proposals to acquire the Company other than the
Offer and neither the Company nor the Special Committee are aware of any Other
Person who presently intends to make a definitive proposal to acquire all or any
portion of the Company.
(b) Except as set forth in the preceding paragraph and in Items 3(b), 4 and
8, there are no transactions, Board resolutions, agreements in principle or
signed contracts in response to the Offer which relate to or would result in one
or more of the events referred to in the first paragraph of Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Company is incorporated under the laws of the State of Delaware and is
subject to the provisions of Section 203 ("Section 203) of the Delaware General
Corporation Law (the "DGCL"). Generally, Section 203 prevents an "interested
stockholder" (including a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock) from engaging in a "business
combination" (defined to include mergers and certain other transactions) with a
Delaware corporation for a period of three years following the date such person
became an interested stockholder unless, among other things, the business
combination or the transaction by which the interested stockholder became an
interested stockholder is approved by the Board of Directors of the corporation
prior to the date on which such person became an interested stockholder. The
limitations of Section 203 will not apply to the Offer or the Merger because,
for purposes of that Section, the Special Committee acting for and on behalf of
the Board of Directors has approved the Offer. See discussion above in Item 4
"The Solicitation or Recommendation".
Under the Company's Amended and Restated Credit Agreement dated as of
February 12, 1993, as amended by the Amendment to Credit Agreement dated as of
March 23, 1995 (the "Credit Agreement"), an event of default thereunder will
occur in the event that any person or group acquires beneficial ownership (as
used in the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder) of more than 50% of the outstanding voting stock of the
Company, unless such acquisition was approved by the Company's Board of
Directors. The acquisition of shares of the Company pursuant to the Offer has
been approved by the Special Committee acting for and on behalf of the Board of
Directors.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
(a)(1) Letter to stockholders of the Company dated September 14, 1995*.
(a)(2) Opinion of McDonald & Company Securities, Inc. dated September 13, 1995*.
(a)(3) Press release issued by the Company on August 29, 1995.
(a)(4) Press release issued by the Purchaser on August 29, 1995.
(b) None.
(c)(1) Employment Agreement dated August 29, 1995 between the Company and Stephan W. Cole.
(c)(2) Employment Agreement dated August 29, 1995 between the Company and Richard F. Bern.
(c)(3) Real Estate Purchase Agreement dated August 29, 1995 between the Purchaser and
31100.
(c)(4) Real Estate Purchase Agreement dated August 29, 1995 between the Purchaser and CRS.
(c)(5) Confidentiality Agreement dated August 2, 1995 between the Purchaser and the
Company.
(c)(6) Escrow Agreement dated August 29, 1995 among the Company, the Purchaser and Grier
Newlin, as escrow agent.
(c)(7) Indemnification Agreement between the Purchaser and the Company dated August 29,
1995.
(c)(8) Sublease between 31100 and the Company dated February 28, 1988.
(c)(9) Agreement of Lease between CRS and Boss Manufacturing Company dated June 27, 1989.
(c)(10) Key Blank and Machine Supply Agreement between the Company and Things Remembered,
Inc., dated March 30, 1995.
</TABLE>
* Included in copies mailed to Stockholders.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 14, 1995
AMERICAN CONSUMER PRODUCTS, INC.
By: /s/ STEPHAN W. COLE
Stephan W. Cole, President
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ANNEX A
AMERICAN CONSUMER PRODUCTS, INC.
31100 SOLON ROAD
SOLON, OHIO 44139
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This information Statement is being mailed on September 14, 1995, as part
of American Consumer Products, Inc.'s (the "Company")
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
to the holders of record of the Company's common stock, par value $0.10 per
share ("Common Stock"). Capitalized terms used and not otherwise defined herein
shall have the meaning set forth in the Schedule 14D-9. You are receiving this
Information Statement in connection with the possible selection of persons
designated by Purchaser to seats on the Company's Board of Directors. You are
urged to read this Information Statement carefully. You are not, however,
required to take any action.
This Information Statement is required by Section 14(f) of the Exchange Act
and Rule 14f-1 of the General Rules and Regulations thereunder. Upon acquiring
51% or more of the Common Stock pursuant to the Offer, the Purchaser intends to
have its representatives or its nominees ("Purchaser's Designees") elected or
designated to fill a majority of the seats on the Board of Directors of the
Company.
Information contained herein regarding the Purchaser and Purchaser's
Designees has been provided to the Company by such persons or included in the
Purchaser's Offer to Purchase dated August 30, 1995 and the Company assumes no
responsibility for, nor has it attempted to independently verify, the accuracy
or completeness of such information.
COMPANY COMMON STOCK
The outstanding voting securities of the Company as of September 1, 1995
consisted of 2,620,429 shares of Common Stock (on a fully diluted basis). Each
Share that is outstanding as of the close of business on any applicable record
date for any matter to be acted upon by stockholders is entitled to one vote on
such matter.
The following information is based on the Company's Proxy Statement dated
April 4, 1995 and mailed to the Company's stockholders in connection with the
Company's 1995 Annual Meeting of Stockholders held on May 4, 1995 and except as
otherwise indicated, such information is given as of such date.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth information at March 24, 1995 with respect
to the beneficial ownership of the Company's Common Stock by all persons known
by the Company to own, individually or as a group, more than 5% of the Company's
outstanding Common Stock, by the executive officers named in the Summary
Compensation Table and by all executive officers and directors as a group.
A-1
<PAGE> 12
<TABLE>
<CAPTION>
NAME AND ADDRESS BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED OF CLASS
--------------------------------- ------------ --------
<S> <C> <C>
Stephan W. Cole 613,046(1)(3) 24.81%
31100 Solon Road
Solon, Ohio 44139
Jeffrey A. Cole 420,250(2)(3) 17.01%
5915 Landerbrook Drive
Lyndhurst, Ohio 44124
Richard F. Bern 282,500(3)(4) 11.33%
31100 Solon Road
Solon, Ohio 44139
Willen Management Corp. 230,900(5) 9.34%
2360 West Joppa Road, Suite 226
Lutherville, Maryland 21093
FMR Corp. 206,000(6) 8.34%
82 Devonshire Street
Boston, Massachusetts 02109
Irving B. Harris 191,850(7) 7.76%
c/o William Harris Investors,
Inc.
Two North LaSalle Street
Suite 505
Chicago, Illinois 60602
Dimensional Fund Advisors 134,700(8) 5.45%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
All Officers and Directors 1,329,246(1) 53.18%
as a Group (six) (2)(3)(4)(9)
</TABLE>
---------------
(1) Includes 83,343 shares of Common Stock held in trust for the benefit of
Stephan W. Cole's children. Mr. Cole disclaims beneficial ownership of such
shares.
(2) Includes 8,000 shares owned by Jeffrey A. Cole's son Joseph E. Cole II. Mr.
Cole disclaims beneficial ownership of such shares.
(3) Under the Securities and Exchange Commission rules regarding the reporting
of beneficial ownership of shares, the amounts and percentages reported for
each of Stephan W. Cole, Richard F. Bern and Jeffrey A. Cole include 47,500
shares owned by 31100 Solon Road, Inc. a corporation owned equally by
Stephan W. Cole, Richard F. Bern and Stephan W. Cole as custodian for Joseph
E. Cole II, the son of Jeffrey A. Cole, under the Ohio Transfers to Minors
Act. After eliminating the effects of triple counting those shares, the
number and percentage of the Company's Common Stock owned by Stephan W.
Cole, Richard F. Bern, Jeffrey A. Cole and all officers and directors as a
group would be 581,380 (23.53%), 250,833 (10.06%), 388,583 (15.72%) and
1,234,246 (49.38%), respectively. If the 47,500 shares owned by 31100 Solon
Road, Inc. were allocated in proportion to the ownership of that
corporation, each of Stephan W. Cole, Richard F. Bern and Stephan W. Cole as
custodian for Joseph E. Cole II would beneficially own one-third of the
47,500 shares or 15,833 1/3 each. Jeffrey A. Cole disclaims beneficial
ownership of the 47,500 shares owned by 31100 Solon Road, Inc.
(4) Includes 21,250 shares of Common Stock represented by options exercisable at
March 24, 1995, or within 60 days thereafter, held by Mr. Bern.
(5) As of January 19, 1995, based upon information contained in a Schedule 13G
filed with the Securities and Exchange Commission.
A-2
<PAGE> 13
(6) As of February 14, 1995, based upon information contained in a Schedule 13G
filed with the Securities and Exchange Commission. In its capacity as
investment advisor to Fidelity Low-Priced Stock Fund (the "Fund"), Fidelity
Management & Research Company ("Fidelity"), 82 Devonshire Street, Boston,
Massachusetts 02109, a wholly owned subsidiary of FMR Corp. FMR Corp.,
through its control of Fidelity, the Fund, and Edward C. Johnson 3d,
Chairman of FMR Corp., each have sole power to dispose of these shares.
(7) As of December 19, 1994, based upon information contained in a Schedule 13D
filing with the Securities and Exchange Commission. Mr. Harris, the Harris
Foundation, the Irving Harris Foundation and the William Harris & Co.
Employees Profit Sharing Trust, whose plan sponsor is William Harris & Co.,
report shared power to dispose of these shares.
(8) As of January 30, 1995, based upon information contained in a Schedule 13G
filed with the Securities and Exchange Commission. Dimensional Fund Advisors
Inc. ("Dimensional"), a registered investment advisor, is deemed to have
beneficial ownership of 134,700 shares of American Consumer Products, Inc.
Stock as of December 31, 1994, all of which shares are held in portfolios of
DFA Investment Dimensions Group Inc., a registered open-end investment
company, or in series of the DFA Investment Group Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, all of which
Dimensional Fund Advisors Inc. serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares.
(9) Includes 28,250 shares of Common Stock subject to options which are
exercisable at March 24, 1995, or within 60 days thereafter, including
27,250 shares of Common Stock subject to options held by Mr. Bank (3,000
shares), Mr. Hulse (3,000 shares) and Mr. Bern (21,250) shares.
DIRECTORS (OTHER THAN THOSE WHO ARE
PRINCIPAL STOCKHOLDERS)
The number of shares of Common Stock beneficially owned by each of the
directors (other than Stephan W. Cole, Richard F. Bern and Jeffrey A. Cole who
are each included in the foregoing table under the heading "Principal
Stockholders") on March 24, 1995 and the percentage of ownership represented by
such shares of Common Stock are set forth in the following table.
<TABLE>
<CAPTION>
BENEFICIALLY OWNED ON
MARCH 24, 1995
NUMBER PERCENT
NAME OF SHARES OF CLASS
--------------- --------- --------
<S> <C> <C>
Malvin E. Bank 5,950(1) (2)
Frank W. Hulse 5,500(1) (2)
</TABLE>
(1) Includes 3,000 and 3,000 shares of Common Stock subject to options
exercisable at March 24, 1995, or within 60 days thereafter, held by Messrs.
Bank and Hulse, respectively.
(2) Less than 1% of the shares of Common Stock outstanding.
A-3
<PAGE> 14
DIRECTORS AND EXECUTIVE OFFICERS
PURCHASER DESIGNEES
Purchaser may designate as directors of the Company following consummation
of the Offer persons from among the following list (each of whom is a citizen of
the United States of America).
<TABLE>
<CAPTION>
NAME, POSITION AND PRINCIPAL OCCUPATIONS AND OTHER
BUSINESS ADDRESS DIRECTORSHIPS DURING THE PAST 5 YEARS
--------------------- --------------------------------------------------------------------
<S> <C>
Richard Smyth (38) Chairman and CEO of the Purchaser, February 1995 to present;
President of the Purchaser, 1992-1995; President, The Technology and
Services Group, Inc., 1989-1992
Arnold Johns (52) President of the Purchaser, February 1995 to present; Senior
Managing Director, Buckhead Financial Corporation, June 1993 to
February 1995; Executive Vice President, Argent Securities, Inc.,
1992-1993; President, RTS, Inc., 1991-1992
Michael Becker (40) Vice President-Finance of the Purchaser, 1995 to present; Vice
President and Controller, Interstate Distributors, Inc., 1991-1995;
Regional Controller, Burger King, 1988-1991
</TABLE>
During the last five years, none of the persons identified above has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction or as a result of such proceeding
has been or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or any violation of such laws.
COMPANY DIRECTORS AND EXECUTIVE OFFICERS
The information below sets forth as of March 24, 1995 for each current
Director of the Company such Director's name, business experience during the
past five years, other directorships held, age and the year such Director first
became a director of the Company.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
DURING PAST FIVE YEARS FIRST BECAME
NAME AND AGE AND CURRENT PUBLIC DIRECTORSHIPS A DIRECTOR IN
----------------- --------------------------------------------------------- -------------
<S> <C> <C>
Stephan W. Cole President and Treasurer of the Company since 1982; 1982
Age 47 Stephan W. Cole is Jeffrey A. Cole's brother
Richard F. Bern Executive Vice President of the Company since 1982; 1982
Age 47 Secretary of the Company since July 1988
Jeffrey A. Cole Chairman and Chief Executive Officer of Cole National 1984
Age 53 Corporation, a leading national specialty service
retailer (since 1992); President and Chief Executive
Officer of Cole National Corporation (from 1984 to 1992);
Director of Cole National Corporation, Victoria Financial
Corporation and Hartmarx Corporation; Jeffrey A. Cole is
Stephan W. Cole's brother
Malvin E. Bank Partner in the law firm of Thompson, Hine and Flory, 1986
Age 64 Cleveland, Ohio (for more than five years); Director of
Oglebay Norton Company
Frank W. Hulse Founder and a Director (since 1983) of River Capital, an 1986
Age 47 Atlanta- based venture capital partnership; Chairman of
the Board and President of American Beechcraft, Inc., an
aircraft sales and service company (since December 1991)
</TABLE>
A-4
<PAGE> 15
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the fiscal year ended December 31, 1994, the Board of Directors met
six times and took various actions by unanimous written consent. Each Director
attended or participated by telephone in at least 75% of the meetings of the
Board of Directors and of any committee of the Board of Directors on which he
served during the last fiscal year.
The Board of Directors has assigned certain responsibilities to committees
of its members. The Compensation Committee, established by the Board of
Directors in 1986, is composed of Malvin E. Bank, Jeffrey A. Cole and Stephan W.
Cole. The Compensation Committee took various actions without a meeting but did
not meet during 1994. The Compensation Committee is responsible for setting
executive compensation and granting stock options and restricted stock awards
under the Company's option and restricted stock plans.
The Audit Committee, established by the Board of Directors in 1987, is
composed of Malvin E. Bank, Frank W. Hulse and Jeffrey A. Cole. The Audit
Committee is responsible for recommending the appointment of auditors and
reviewing the scope of external and internal auditing procedures. The Audit
Committee met two times during 1994.
DIRECTOR COMPENSATION
The Company pays Directors who do not otherwise receive compensation from
the Company at a rate of $5,000 per annum. At the 1990 Annual Meeting, the
stockholders approved a grant of options to acquire 3,000 shares of Common Stock
of the Company to each of Messrs. Bank and Hulse at an exercise price of $7.50
per share. The original exercise price per share of Common Stock for the options
granted to Messrs. Bank and Hulse was determined by calculating the mean between
the high and low sales price of a share of Common Stock of the Company as of the
date of the grant. On May 4, 1995, the stockholders of the Company approved a
grant of options to acquire the following number of Shares to each of Richard F.
Bern, 50,000 shares; Stephan W. Cole, 30,000 shares; Jeffrey A. Cole, 25,000
shares; Malvin E. Bank, 7,500 shares; and Frank W. Hulse, 7,500 shares. These
options are exercisable at any time within 5 years of the date of grant at an
exercise price of $2.4375 per share.
EXECUTIVE OFFICERS OF THE COMPANY
The Executive Officers of the Company and their respective positions and
ages are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
------------------------------ ----- ---------------------------------
<S> <C> <C>
Stephan W. Cole 47 President and Treasurer;
Director
Richard F. Bern 47 Executive Vice President and
Secretary; Director
Joel M. Falck 37 Vice President - Finance
</TABLE>
Stephan W. Cole has been President, Treasurer and a Director of the Company
since its incorporation in 1982. Stephan W. Cole is the brother of Jeffrey A.
Cole, a Director of the Company. Richard F. Bern has been Executive Vice
President and a Director of the Company since its incorporation in 1982, and
Secretary since July 1988. Joel M. Falck has been Vice President - Finance since
February 1990. Prior to that time, he was a Manager with Arthur Andersen LLP.
A-5
<PAGE> 16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION;
CERTAIN OTHER RELATIONSHIPS
The Compensation Committee is composed of Stephan W. Cole, President and
Treasurer of the Company, Jeffrey A. Cole and Malvin E. Bank. The following is a
discussion of certain relationships among the members of the Compensation
Committee and the Company, as well as certain relationships between Richard F.
Bern and the Company.
The Company sells key blanks to Things Remembered, Inc. ("Things
Remembered"), a subsidiary of Cole National Corporation, a national specialty
service retailer under a contract expiring on January 31, 1998. Jeffrey A. Cole
is the Chairman and Chief Executive Officer of Cole National Corporation. In
fiscal 1994, total purchases by Things Remembered from ACPI were approximately
$1,267,000; this amount is not considered material to any of the entities,
representing less than 2% of the gross revenues of each entity.
The Company, since 1988, has leased the building located at 31100 Solon
Road, Solon, Ohio which houses the corporate headquarters and certain of the
Company's manufacturing and distribution facilities. The lessor of the property
is 31100 Solon Road, Inc., a corporation owned equally by Stephan W. Cole,
Richard F. Bern and Stephan W. Cole as custodian for Joseph E. Cole II, the son
of Jeffrey A. Cole, under the Ohio Transfers to Minors Act ("31100 Solon Road").
The lease, as currently in effect, provides for an initial term of eight years
and three renewal option periods of five years each. The fixed rental under the
lease was at a rate of $525,000 per annum, through February 1994, and thereafter
at a rate of $575,000 per annum, including the option periods. Real estate taxes
and various other charges are the responsibility of the Company. At the time of
its inception in 1988 and upon its amendment in 1989, the Board of Directors
unanimously determined that the terms of the lease, and in 1989, the terms of
the amendment, were fair and in the best interests of the Company and were at
least as favorable to the Company as those which could be negotiated with an
unaffiliated lessor.
Boss Manufacturing Company ("Boss"), a wholly owned subsidiary of the
Company, sold in 1989 a warehouse and distribution facility located in
Springfield, Illinois to CRS Limited Partnership ("CRS") for $1,100,000 and
entered into a lease with CRS for the use of that facility. 31100 Solon Road is
a limited partner in CRS, having a 65% interest in the partnership's profits and
losses. The lease has an initial term of 10 years, with three five-year renewal
options in favor of Boss. The fixed rental for the first five years of the
initial term was $152,000 per annum, and for the last five years of the initial
term is $159,500 per annum. The fixed rental during the first renewal period
will be $167,000 per annum in the event Boss elects to exercise its first
renewal option, with the fixed rent adjusting in subsequent renewal periods to
reflect increases in the debt service of the lessor. Real estate taxes and
various other charges are the responsibility of Boss. The Company has guaranteed
Boss' obligations under the lease with CRS. The Board of Directors unanimously
determined that the sale-leaseback arrangement is fair and in the best interest
of the Company and is at least as favorable to the Company as that which could
be negotiated with an unaffiliated party.
Malvin E. Bank is a partner of the law firm of Thompson, Hine and Flory,
Cleveland, Ohio, which provided legal services to the Company in 1994 and
continues to provide such services in 1995.
COMPLIANCE WITH SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the regulations thereunder require the Company's executive
officers and directors and beneficial owners of more than ten percent (10%) of
the Company's Common Stock to file initial reports of ownership and reports of
changes of ownership of the Company's Common Stock with the Securities and
Exchange Commission ("SEC"). Executive officers and directors and beneficial
owners of more than ten percent (10%) of the Company's Common Stock are required
to furnish the Company with copies of all Section 16(a) forms that they file.
Based solely upon a review of these filings and amendments thereto during and
with respect to the Company's most recent fiscal year and written
representations from certain of the Company's directors and executive officers
that no other reports were required, the Company believes that all filing
requirements applicable to the foregoing persons were met during and with
respect to 1994.
A-6
<PAGE> 17
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee's compensation policy is designed to attract and
retain those executive officers who are able to make significant contributions
to both the long-term and short-term success of the Company. An executive
officer's annual compensation package, including that of the chief executive
officer, is composed of an annual salary and, at the discretion of the
Compensation Committee, an annual bonus. If an executive officer, including the
chief executive officer, demonstrates an ability to enhance the profitability of
the Company and stockholder value, for instance by recognizing and capitalizing
on cost saving and market opportunities resulting in improved operating
efficiencies and increased revenues, contributing to the Company's technological
advancement, or developing improved customer, supplier and employee relations,
the Compensation Committee believes that officer should be rewarded for his or
her efforts.
In setting the executive officers' compensation levels, including that of
the chief executive officer, the Compensation Committee considers a variety of
factors, including the salaries of personnel performing similar functions for
comparable companies, the Company's financial performance during the past year
and its prospects for the coming years, the effect of economic conditions on the
Company's performance and the officer's individual contribution to the Company's
performance during the past year and its prospects for the coming years. In
considering the Company's financial performance during the past year, the
Compensation Committee compares the Company's actual financial results (monthly,
quarterly and annually) with expected results given general economic conditions
and events outside the ordinary course of business, i.e. a bankruptcy filing by
a customer, if any, that may have affected the historical results. In
considering prospects for the coming years, the Compensation Committee attempts
to assess the extent to which an officer's contributions may be expected to
improve future financial performance of the Company. The comparable companies
considered by the Compensation Committee in setting annual salaries are not
necessarily the same group of companies included in the CRSP Total Return Index
for The NASDAQ Stock Market (U.S. Companies) or the peer group index used in the
graph, appearing below under the heading "Comparison of Five-Year Cumulative
Return," showing the five-year cumulative total stockholder return. These
indices do not necessarily include companies competing in the same businesses as
does the Company, nor do they necessarily include companies that the
Compensation Committee believes would compete for the talent and executive
skills that the Company desires to retain. Consequently, for purposes of annual
salary determinations, the Compensation Committee focuses on companies that are
generally competing in the same businesses and for the same executive talent as
does the Company.
In addition to the salary increases reflected in the Summary Compensation
Table, the executives of the Company, including the chief executive officer,
were awarded bonuses for their efforts in the fiscal year ended December 31,
1994. In determining these bonuses, the Compensation Committee considered the
development of a new key machine and the efforts expended to continue the
Company's systems development. These projects are vital to the continued success
of the Company and the enhancement of stockholder value. Additionally, the
Compensation Committee considered the improved operating results over 1993. The
bonuses awarded to the chief executive officer and the other most highly paid
executive officer whose total annual salary and bonus for the fiscal year ended
December 31, 1994 exceeded $100,000 are included in the Summary Compensation
Table.
The Revenue Reconciliation Act of 1993 precludes a publicly held
corporation from taking a deduction for certain compensation in excess of $1
million paid or accrued with respect to the executive officers of the Company.
While these regulations would not have an impact on the deductibility of
compensation paid by the Company, based on the Company's historical compensation
levels, the Compensation Committee intends to adopt, as necessary, a policy with
respect to compensation paid to its executive officers for deductibility under
these Federal income tax regulations.
A-7
<PAGE> 18
THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Malvin E. Bank
Jeffrey A. Cole
Stephan W. Cole
The following table sets forth individual compensation information for the
fiscal year ended December 31, 1994, for Stephan W. Cole, President of the
Company, and the other most highly paid executive officer whose annual salary
and bonus for the fiscal year ended December 31, 1994, exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
NAME AND PRINCIPAL ------------------------------- UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) OPTIONS COMPENSATION
------------------------- ----- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Stephan W. Cole 1994 $267,692 $20,000 -0- $ 13,974(1)
President 1993 $256,000 -0- -0- $ 9,055
1992 $247,115 $25,000 -0- $ 8,749
Richard F. Bern 1994 $250,962 $18,000 -0- $ 49,378(2)
Executive Vice 1993 $240,000 -0- -0- $ 39,633
President 1992 $231,538 $22,000 21,250 $ 42,825
</TABLE>
---------------
(1) Includes the Company's contributions for the named executive under the
Company's 401(k) Profit Sharing Retirement plan ($6,692) and health and
medical expense benefits in excess of those provided to employees generally
($7,282).
(2) Includes the Company's contributions for the named executive under the
Company's 401(k) Profit Sharing Retirement plan ($6,274), health and medical
benefits in excess of those provided to employees generally ($9,728),
premiums paid by the Company in respect of a noncancelable guaranteed
long-term disability program provided to Mr. Bern, which is in addition to
the long-term disability benefits generally provided to employees ($5,840)
and reimbursement of interest expenses payable by the named executive to a
third party ($27,536).
There were no individual grants of stock options awarded under the
Company's Amended and Restated Stock Option Plan or awards of restricted stock
made under the Company's Amended and Restated Restricted Stock Plan during the
fiscal year ended December 31, 1993. On October 27, 1994, the Board of Directors
granted, subject to stockholder approval, options to purchase Company Common
Stock to each of the Directors of the Company, including Messrs. S. Cole and
Bern. See discussion above under the heading "Directors and Executive Officers
-- Director Compensation."
The following table sets forth information regarding options held by each
of the executive officers named in the Summary Compensation Table as of December
31, 1994. There were no stock options exercised by any of these executive
officers during the fiscal year ended December 31, 1994.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END ($)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Richard F. Bern.......... 21,250 -0- None(1) $ -0-
</TABLE>
---------------
(1) As of December 31, 1994, the exercise price of Mr. Bern's exercisable
options ($3.40) was higher than the market value of the Company's Common
Stock ($2.50) on that date.
A-8
<PAGE> 19
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
The following graph shows a five-year comparison of cumulative total
stockholder return, assuming dividend reinvestment, for the Company, the CRSP
Total Return Index for The NASDAQ Stock Market (U.S. Companies) and a peer group
index consisting of Waxman Industries, Inc., Selfix, Inc., Elco Industries,
Inc., Moore Handley, Inc. and Triangle Corp. The graph also assumes that the
value of a share of the Company's Common Stock and each index was $100 as of the
end of 1989 and that the returns of each member of the peer group have been
weighted according to their stock market capitalization as of the beginning of
each period for which a return is indicated.
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) NASDAQ PEER GROUP ACPI
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 84.92 54.29 42.86
1991 136.28 72.62 46.43
1992 158.58 61.55 71.43
1993 180.93 84.41 51.79
1994 176.92 69.68 35.72
</TABLE>
A-9
<PAGE> 1
Ex. (a)(1)
[ACPI Letterhead]
September 14, 1995
Dear Stockholder:
On behalf of the Special Committee of the Board of
Directors of American Consumer Products, Inc. the attached Schedule 14D-9 is
being provided to you in response to the offer (the "Offer") by Vista 2000,
Inc. to purchase all outstanding shares of common stock of ACPI other than
shares owned by Vista pursuant to the Offer to Purchase and Related Letter
of Transmittal dated August 30, 1995.
THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS HAS
UNANIMOUSLY APPROVED THE OFFER AND HAS DETERMINED THAT THE TERMS OF THE OFFER
ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND
RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN
THE OFFER.
In arriving at its recommendation, the Special
Committee, comprised of the Company's two independent directors,
carefully considered a number of factors more fully described in the attached
Schedule 14D-9, including the terms and conditions of the Offer and the opinion
of McDonald & Co., financial advisor to ACPI, that the consideration to be
received pursuant to the Offer is fair to ACPI stockholders from a financial
point of view. We urge you to read the attached material carefully in making
your decision with respect to tendering your shares.
On behalf of the Special Committee
of the Board of Directors,
Stephan W. Cole
President
<PAGE> 1
September 13, 1995
Special Committee of the Board of Directors
American Consumer Products, Inc.
31100 Solon Road
Solon, OH 44139
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the outstanding shares of Common Stock, $.10 par value
(the "Common Stock"), of American Consumer Products, Inc., a Delaware
corporation (the "Company"), of the cash consideration to be received by such
holders pursuant to the tender offer dated August 30, 1995 (the "Tender Offer")
made by Vista 2000, Inc., a Delaware corporation ("Vista"), to purchase all of
the Common Stock not owned by Vista at a price of $5.30 per share (the "Offer
Price") net to the seller in cash.
McDonald & Company Securities, Inc., as part of its investment banking business,
is customarily engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, tender offers, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes.
In connection with rendering this opinion, we have reviewed and analyzed, among
other things, the following: (i) the documents relating to the Tender Offer,
including the Notice of Offer to Purchase for Cash and the Offer to Purchase for
Cash, each dated August 30, 1995, and related annexes, exhibits and schedules;
(ii) Annual Reports to stockholders and Annual Reports on Form 10-K of the
Company for each of the five fiscal years ended December 31, 1994, Quarterly
Reports on Form 10-Q of the Company for the periods ending April 1, 1995 and
July 1, 1995, and Current Report on Form 8-K of the Company dated July 10, 1995;
(iii) the September 12, 1995 draft of the Company's Schedule 14D-9 to be
delivered by the Company in response to the Tender Offer, and related annexes,
exhibits and schedules (the "Schedule 14D-9"); (iv) certain other internal
information, primarily financial in nature, including projections, concerning
the business and operations of the Company furnished to us by the Company for
purposes of our analysis; (v) certain publicly available information concerning
the trading of, and the trading market for, the Common Stock; and (vi) certain
publicly available information with respect to certain other companies that we
believe to be comparable to the Company and the trading markets for certain of
such other companies' securities. We have also met or had telephonic or written
communication with various persons in connection with rendering this opinion,
including (a) certain officers and employees of the Company and Vista to discuss
the past and current business operations, financial condition and future
prospects of the Company and Vista, as well as other matters we believe relevant
to our inquiry; (b) officers of certain banks and other financial institutions
having a current or possible future relationship with the Company or Vista to
discuss certain financial aspects of the transaction; and (c) officers of
certain entities other than Vista that have expressed an interest in a possible
transaction involving the Company. We were not requested to solicit and did not
solicit interest from other parties in a potential business combination with the
Company.
Our opinion does not address, and we express no opinion with respect to, any
consideration or other value that may be exchanged, paid or transferred to the
Company or certain of its stockholders by Vista in connection with the Tender
Offer other than the $5.30 cash per share. Our opinion also does not address the
relative merits of the transaction described in the Tender Offer as compared to
any other alternative business transaction that might become available to the
Company. Our opinion should not be deemed to constitute a recommendation to any
holder of Common Stock as to whether or not such holder should tender his or her
shares pursuant to the Tender Offer.
In our review and analysis and in arriving at our opinion, we have assumed and
relied upon the accuracy and completeness of all of the financial and other
information provided us or publicly available and have assumed
<PAGE> 2
Special Committee of Board of Directors
September 13, 1995
Page Two
and relied upon the statements of Vista in the documents relating to the Tender
Offer and of the Company in the Schedule 14D-9, and were not engaged to, nor
have we independently attempted to verify, any of such information. We have also
relied upon the management of the Company as to the reasonableness and
achievability of the financial and operating projections (and the assumptions
and bases therefor) provided to us and, with your consent, we have assumed that
such projections reflect the best currently available estimates and judgments of
such management of the Company. We express no view as to such projections or the
assumptions on which they are based. In addition, we were not engaged to, nor
have we conducted, a physical inspection or appraisal of any of the assets,
properties or facilities of the Company nor have we been furnished with any such
evaluation or appraisal. It should be noted that this opinion is based on
economic and market conditions and other circumstances existing on, and
information made available as of, the date hereof and does not address any
matters subsequent to such date.
This opinion has been prepared solely for the use of the Special Committee of
the Board of Directors of the Company and shall not be reproduced, summarized,
described or referred to or given to any other person or otherwise made public
without the prior written consent of McDonald & Company Securities, Inc.;
provided, however, that this letter may be reproduced in full in the Schedule
14D-9.
We have been engaged to provide financial advisory services to the Special
Committee in connection with this transaction and will receive a fee for our
services, which is contingent upon consummation of the transaction. We will also
receive a separate fee for rendering this opinion.
In the ordinary course of our business, we may actively trade securities of both
the Company and Vista for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Based upon and subject to the foregoing and such other matters as we consider
relevant, it is our opinion that as of the date hereof, the cash consideration
to be received by the holders of the Common Stock pursuant to the Tender Offer
is fair, from a financial point of view, to such holders.
Very truly yours,
MCDONALD & COMPANY SECURITIES, INC.
<PAGE> 1
ACPI News Update Exhibit (a)(3)
AUGUST 29, 1995 PAGE 1 of 1
AMERICAN CONSUMER PRODUCTS, INC.
ANNOUNCES TENDER OFFER
BY VISTA 2000, INC.
Vista 2000, Inc. (NASDAQ: VIST, VISTW) has announced a tender offer
today for all of the outstanding common stock, $.10 par value per share, of
American Consumer Products, Inc. (NASDAQ: ACPI), other than the shares owned by
Vista, for $5.30 per share. Vista's Offer to Purchase and the related Letter
of Transmittal, which contain additional information regarding the offer, will
be provided to ACPI's stockholders by Vista.
The Board of Directors and management of ACPI are considering the offer
and will advise stockholders within ten business days of their position on the
offer.
Vista 2000, Inc. is a manufacturer and distributor of a wide range of
consumer products, including appliances for personal safety, home security and
family health, as well as housewares and convenience items for general
consumer use and in advertising promotion activities. Its products are sold
through retailers nationwide and direct to consumers on television and in
magazines. Vista beneficially owns approximately 22,000 shares, less than 1%,
of ACPI.
American Consumer Products manufactures and distributes consumer
hardware products, including key blanks, key related accessories, knives,
letters, numbers and signs, driveway markers, snow shovels and pet products,
which are sold by the Company's national field sales force to hardware, mass
merchandise and DIY retailers across the United States. In addition, the
Company's national field sales organization represents Pawtucket Fasteners for
the sale of Sharon Fastener products (nuts, bolts and screws).
ACPI's Boss Manufacturing subsidiary manufactures and distributes
work, sport and garden gloves and sells boots, rainwear and safety products to
retailers and to industry. Its Boss Balloon subsidiary sells balloons to mass
merchants, discount stores and supermarkets.
For information, contact: Stephan W. Cole, President
American Consumer Products, Inc.
31100 Solon Road
Solon, Ohio 44139
(216) 248-7000
AMERICAN CONSUMER PRODUCTS, INC. * 31100 SOLON ROAD * SOLON, OHIO 44139 *
216-248-7000 * FAX: 216-248-8051
<PAGE> 1
Exhibit (a)(4)
[LETTERHEAD OF L.G. ZANGANI, INC. APPEARS HERE]
PRESS RELEASE
-------------
VISTA 2000, INC. ANNOUNCES CASH TENDER OFFER FOR
AMERICAN CONSUMER PRODUCTS, INC.
ATLANTA, GEORGIA, AUGUST 29, 1995... VISTA 2000, INC. (NASDAQ:
VIST, VISTA) announced today a friendly cash tender offer for all outstanding
shares of American Consumer Products, Inc. (NASDAQ: ACPI) at $5.30 per share,
not already owned by VISTA 2000, INC. American Consumer Products, Inc. has
approximately 2.5 million shares outstanding, resulting in a total potential
value for the transaction of about $13.5 million. VISTA 2000, INC. has on hand
cash funds needed to complete the transaction as a result of a recently
completed preferred convertible stock offering.
The offer is conditional on a tender of at least 51% of outstanding
shares on a fully diluted basis, as well as certain other conditions. The offer
will be filed with the Securities and Exchange Commission not later than
Wednesday, August 30, 1995, and is expected to be completed within 30 days.
Shareholders may contact the information agent: Kissel Blake, Inc., 110 Wall
Street, New York, New York; 212-344-6733 or 800-554-7733.
AMERICAN CONSUMER PRODUCTS, INC. manufactures and distributes
consumer hardware products, including key blanks, key related accessories,
knives, letters, numbers and signs, driveway markers, snow shovels and pet
products, as well as gloves and other items through its Boss Manufacturing
subsidiary, which are sold by the Company's national field sales force to
hardware, mass merchandise and DIY retailers across the United States. In
addition, the Company's national field sales organization represents Pawtucket
Fasteners for the sale of Sharon Fastener products (nuts, bolts and screws).
VISTA 2000, INC.'s product line includes a wide range of consumer products
including appliances for personal safety, home security and family health, as
well as housewares and convenience items for general consumer use and in
advertising promotion activities. The products are sold through retailers
nationwide and direct to consumers on television and in magazines.
<PAGE> 1
Exhibit (c)(1)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between AMERICAN
CONSUMER PRODUCTS, INC., a Delaware corporation (the "Company"), and STEPHAN W.
COLE (the "Executive") is made and entered into in Cleveland, Ohio on the 29th
day of August, 1995 and shall become effective only upon the purchase by Vista
2000, Inc. ("Vista") of the common stock of the Company pursuant to the tender
offer to be commenced by Vista within twenty (20) days form the date hereof
(the "Effective Date").
SECTION 1
TERMS OF EMPLOYMENT
1.1 Employment. The Company hereby employs the Executive as the Chief
Executive Officer of the Company for and during the term hereof, subject to the
direction of the Board of Directors of the Company and the terms and conditions
hereof. The Executive hereby accepts employment under the terms and conditions
set forth in this Agreement.
1.2 Duties of Executive. The Executive shall perform in the capacity
described in Section 1.1 hereof and shall have such duties, responsibilities,
and authorities as are designated for such offices pursuant to the Bylaws, as
amended and restated, of the Company, and as may be reasonably assigned to him
from time to time by the Board of Directors of the Company; provided, however,
the Executive shall, during the term hereof, continuously have and retain such
duties, responsibilities, and authorities at least as significant in scope and
substance as the duties, responsibilities, and authorities required of the
Executive's offices and position with the Company as of the Effective Date.
The Executive agrees to devote his full time during normal business hours, best
efforts, abilities, knowledge and experience to the faithful performance of the
duties, responsibilities, and authorities which may be reasonably assigned to
him and which are consistent with his executive offices under Section 1.1 of
this Agreement. Notwithstanding the preceding, the Executive may, without
being in violation of his obligations hereunder, serve on corporate, civic or
charitable boards or committees and manage personal investments as of the date
hereof, provided the Executive shall use his best efforts to pursue such
activities in such a manner so that such activities shall not prevent the
Executive from fulfilling his obligations to the Company hereunder.
1.3 Term. This Agreement shall become effective as of the Effective Date
and shall continue in force and effect for three (3) years from the effective
date of this Agreement, unless sooner terminated as provided in Section 1.6
hereof or renewed or extended by written agreement between the Company and the
Executive pursuant to terms and conditions mutually acceptable to each.
1.4 Compensation. The Company shall pay the Executive compensation for
services rendered by the Executive under the Agreement as follows:
(a) Minimum Compensation. On a bi-monthly basis, the Executive will
receive from the Company at least $11,458.34 less local, state and federal
taxes and other applicable
EMPLOYMENT AGREEMENT Page 1 of 10
<PAGE> 2
withholdings. This minimum compensation shall be made up of Base Salary,
advances on Additional Compensation and advances on Bonus Compensation as
defined below.
(b) Base Salary. The Executive's salary ("Base Salary") shall be
$150,000.00 and it will be adjusted annually to take into account increases in
the cost of living.
(c) Additional Compensation. The Executive shall receive additional
compensation ("Additional Compensation") by participating in an annual bonus
pool for executives of the Company in an amount equal to ten percent (10%) of
pre-tax profits of the Company for each fiscal year during the term of this
Agreement. The Executive's percentage shall be determined by the Board of
Directors or the Compensation Committee, if there is one.
(d) Bonus Compensation. The Company may also provide to the Executive a
bonus ("Bonus Compensation") in an amount determined by the Board of Directors
of the Company or its Compensation Committee, if one exists.
(e) Annual Adjustment. Should the advances made to the Executive, during
the course of the fiscal year, on Additional Compensation and Bonus
Compensation be less than that which he is entitled to under the Additional
Compensation program and/or the Bonus Compensation program, the Company shall,
within fifteen (15) days after the completion of the audit of the Company's
financial statements for said fiscal year, remit the difference to the
Executive. Should the advances exceed that to which the Executive is entitled,
the Executive shall keep the excess and no set-off by the Company will be made.
(f) Stock Options. The Executive shall be eligible to participate in the
Company's 1993 Incentive Stock Option Plan, a copy of which is attached hereto
as Exhibit "A" and by this reference made a part hereof. Furthermore,
-----------
concurrently with execution of this Agreement by both parties, the Executive
will be delivered a stock option in the form attached hereto as Exhibit "B" and
-----------
by this reference made a part hereof.
1.5 Employment Benefits. In addition to the Salary and any Bonus
Compensation payable to the Executive hereunder, the Executive shall be
entitled to the following benefits upon satisfaction by the Executive of the
eligibility requirements therefor, subject to the following limitations:
(a) Sick Leave Benefits and Disability Insurance. Unless this Agreement is
terminated pursuant to the provisions of Section 1.6(b) hereof, the Executive
shall be paid sick leave benefits at his then prevailing salary rate during his
absence due to illness or other incapacity, reduced by the amount, if any, of
worker's compensation, social security entitlement, or disability benefits, if
any, under the Company's group disability insurance plan, if any.
(b) Life Insurance. The Company, at its expense, shall provide the
Executive, life insurance benefits under and consistent with any group term
life insurance plan, as provided by the Company prior to June 30, 1995, or
improved coverages which the Company, at its election, may adopt.
Notwithstanding the preceding sentence, it is understood and agreed that the
Company will obtain and maintain during the term of this Agreement, at its
expense, a life
EMPLOYMENT AGREEMENT Page 2 of 10
<PAGE> 3
insurance policy, in the face amount of $1,000,000 (the Company and the
Executive or a designee of the Executive to be equal co-beneficiaries
thereunder).
(c) Hospitalization, Accident, Major Medical and Dental Insurance. The
Company, at its own expense, shall provide the Executive and all dependents of
the Executive with group hospitalization, group accident, major medical, group
disability, and dental insurance in amounts of coverage comparable to the
coverage provided to the Executive on June 30, 1995. The Executive shall be
responsible for any health insurance premium with respect to himself over $600
per month. The Company agrees to provide a Medical and Dental Reimbursement
Plan substantially in the form attached hereto as Exhibit "C" and by this
reference made a part hereof. -----------
(d) Vacations. The Executive shall be entitled to a reasonable paid
vacation equal to that provided to other Executives, according to Company
policy, as determined by the Board of Directors of the Company, exclusive of
holidays and weekends, which vacation shall be taken by the Executive in
accordance with the business requirements of the Company at the time and its
personnel policies then in effect relative to this subject. The Executive
shall also be entitled to all paid holidays given by the Company to its
executive employees.
(e) Disability. The Company shall continue paying disability premiums (up
to $6,000 per year) during the term hereof for any disability policy covering
the Executive in force on June 30, 1995.
(f) Working Facilities. During the term of this Agreement, the Company
shall provide, at its expense, adequate office space, furniture, equipment,
supplies and personnel (including professional, clerical, support and other
personnel) consistent with the past practices of the Company as shall be
suitable in the opinion of the Board of Directors of the Company to the
Executive's position and adequate for the Executive's use in performing his
duties and responsibilities under this Agreement.
(g) Personal Vehicle. The Company shall pay to the Employee a monthly
vehicle allowance of Six Hundred and No/100 Dollars ($600.00), plus all
expenses incurred by the Employee in connection with the operation of the
automobile for the conduct of the affairs of the Company, including the cost of
a cellular telephone.
(h) Directors' and Officers' Liability Insurance. The Executive shall be
entitled to the protection of any directors' and officers' liability insurance
policies the Company may elect to maintain generally for the benefit of its
directors and officers (to the extent the Executive is eligible for such
coverage) in an amount and with such coverage as provided to directors and
executives of VISTA 2000, Inc., a Delaware corporation ("VISTA")
(i) Other Employment Benefits. As an employee of the Company, the
Executive shall participate in and receive such other fringe benefits as may be
in effect from time to time for employees of the Company, whether or not
specifically enumerated herein and whether or
EMPLOYMENT AGREEMENT Page 3 of 10
<PAGE> 4
not through any written plan or arrangement, upon satisfaction by the Executive
of the eligibility requirements therefor.
1.6 Termination. This Agreement and the Executive's employment hereunder
may be terminated without any breach of this Agreement at any time during the
term hereof only by reason of and in accordance with the following provisions:
(a) Death. If the Executive dies during the term of this Agreement and
while in the employ of the Company, this Agreement shall automatically
terminate as of the date of the Executive's death, and the Company shall have
no further liability hereunder to the Executive or his estate except to the
extent set forth in Section 1.7 hereof.
(b) Disability. If, during the term of this Agreement, the Executive
shall be prevented from performing his duties hereunder by reason of becoming
totally disabled as hereinafter defined, then the Company may terminate this
Agreement immediately upon written notice to the Executive without any further
liability hereunder to the Executive except as set forth in Section 1.7(b)
hereof. For purposes of this Agreement, the Executive shall be deemed to have
become totally disabled upon the earlier of: (i) he either receives "total
disability benefits" under (a) Social Security, or (b) the Company's disability
plan, if any (whether funded with insurance or self-funded by the Company), or
(ii) the Board of Directors of the Company, upon the written report of a
qualified physician (after complete examination of the Executive) designated by
the Board of Directors of the Company or its insurers, shall have determined
that the Executive has become physically and/or mentally incapable of
performing his duties under this Agreement for a period of one hundred eighty
(180) days or more and it is unlikely that the Executive will recover within
the remaining term of employment hereunder.
(c) Termination by the Company for Cause. Prior to the expiration of the
term of this Agreement, the Company may discharge the Executive for cause and
terminate this Agreement immediately upon written notice to the Executive
without any further liability hereunder to the Executive or his estate, except
to the extent set forth in Section 1.7(c) hereof. For purposes of this
Agreement, a "discharge for cause" shall mean termination of the Executive upon
written notice to the Executive limited, however, to one or more of the
following reasons:
(1) Fraud, misappropriation or embezzlement by the Executive in connection
with the Company as determined by the affirmative vote of at least a majority
of the Board of Directors of the Company (provided, however, should the
Executive dispute such determination by the Board, then the Company and the
Executive shall enter immediately into binding arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration Association, each
party to be responsible for its own costs and expenses, including attorneys'
fees;
(2) Gross misconduct or willful gross neglect of the Executive's duties as
determined by the affirmative vote of at least a majority of the Board of
Directors of the Company after notice to the Executive of the particular
details thereof and a period of thirty (30) days thereafter within which to
cure such act or acts of gross misconduct or willful gross neglect, and the
failure of the Executive to cure such act or acts within such thirty (30) day
period. For purposes of this paragraph, no act or failure to act on the part
of Executive shall be deemed "willful"
EMPLOYMENT AGREEMENT Page 4 of 10
<PAGE> 5
unless done, or omitted to be done, by Executive not in good faith and without
reasonable belief that the act or omission of Executive was in the best
interests of the Company;
(3) Conviction for a felony or a crime involving moral turpitude;
(4) Willful and unauthorized disclosure of Trade Secrets (as defined in
Section 1.9 hereof) of the Company;
(d) Termination by the Company with Notice. The Company may terminate this
Agreement for a reason other than as set forth in Subparagraphs (a), (b) or (c)
of this Section 1.6 at any time upon ninety (90) days written notice to the
Executive in which event the Company shall have no further obligations to the
Executive except as set forth in Section 1.7(b) hereof.
(e) Termination by the Executive for Good Reason. The Executive may
terminate this Agreement at any time for Good Reason (as hereinafter defined)
in which event the Company shall have no further liability hereunder to the
Executive except to the extent set forth in Section 1.7(b) hereof. For
purposes of this Agreement, the term "Good Reason" shall mean, without the
Executive's express written consent, the occurrence of any of the following
circumstances (which changes shall constitute a "Change"):
(1) The assignment to the Executive of any duties inconsistent in any
material respect (unless in the nature of a promotion) with the Executive's
position in the Company immediately prior to such Change (including, but not
limited to, the Executive's status, offices and titles), or a significant
adverse alteration or diminution in the nature or status of the Executive's
authority, duties or responsibilities from those in effect immediately prior to
such Change, other than an isolated, insubstantial and inadvertent action that
is fully corrected within five (5) days after receipt of written notice from
the Executive;
(2) Any failure by the Company to comply with any of the provisions of
Sections 1.4 or 1.5 of this Agreement, other than an isolated, insubstantial
and inadvertent action that is fully corrected within five (5) days after
receipt of written notice from the Executive;
(3) Any failure by the Company to comply with any material provision of
this Agreement that has not been cured within ten (10) days after notice of
such noncompliance has been given by the Executive to the Company;
(4) The relocation of the Executive's office outside of a 75-mile radius
of Cleveland, Ohio.
(f) Termination by the Executive with Notice. The Executive may terminate
this Agreement at any time upon ninety (90) days written notice to the Company.
EMPLOYMENT AGREEMENT Page 5 of 10
<PAGE> 6
1.7 Compensation upon Termination.
(a) Death. In the event the Executive's employment hereunder is
terminated pursuant to the provisions of Section 1.6(a) hereof due to the death
of the Executive, the Company will continue to pay the Executive's estate all
compensation as set forth in Section 1.4 of this Agreement through the
remainder of the calendar year in which the Executive dies. In other words, the
Executive will be treated as if he worked up to and including December 31,
following the date of the Executive's death. In addition, the Company will
continue to provide health insurance, dental insurance, and major medical
insurance to the Executive's family, under the same terms and conditions as it
had just prior to the Executive's death through December 31 of the year in
which the Executive dies after which time the Executive will be entitled to
such insurance benefits as required by law (for example, COBRA benefits).
(b) Disability, Termination by the Company with Notice, and Termination by
the Executive for Good Reason. In the event the Executive's employment
hereunder is terminated pursuant to the provisions of Section 1.6(b), (d) or
(e), the Executive shall be entitled to receive all compensation and benefits
under this Agreement as if his employment had not terminated prior to the
completion of the Agreement's original thirty-six (36) month term.
(c) Cause and Termination by Executive with Notice. In the event that this
Agreement is terminated by the Company pursuant to the provisions of Section
1.6(c) or by the Executive pursuant to the provisions of Section 1.6(f), the
Executive shall be entitled to receive (i) any salary accrued as of the date of
termination of employment, but unpaid pursuant to section 1.4(a) hereof, (ii)
any vacation or sick leave benefits which have accrued as of the date of
termination of employment, but were then unpaid or unused, (iii) any Additional
Compensation earned as of the date of termination of employment, but unpaid,
and (iv) any Bonus Compensation pursuant to a Bonus declared as of the date of
termination, but unpaid. For purposes hereof, the amount of Additional
Compensation considered "earned" shall be determined based upon the reported
pre-tax profits of the Company for the quarter(s) during which the Executive
was actually employed during the year in which termination of employment occurs.
1.8 Protective Covenants. The Executive recognizes that his employment by
the Company is one of the highest trust and confidence because (i) the
Executive will become fully familiar with all aspects of the Company's business
and that of its subsidiaries during the period of his employment with the
Company, (ii) certain information of which the Executive will gain knowledge
during his employment is proprietary and confidential information which is of
special and peculiar value to the Company or its subsidiaries, and (iii) if any
such proprietary and confidential information were imparted to or became known
by any person, including the Executive, engaging in a business in competition
with that of the Company or its subsidiaries, hardship, loss and irreparable
injury and damage could result to the Company or its subsidiaries, the
measurement of which would be difficult if not impossible to ascertain. The
Executive further acknowledges that the Company or its subsidiaries has
developed and will continue to develop unique consumer products and attendant
component parts (collectively, along with any trade secret information of the
Company, the "Trade Secrets"). Therefore, the Executive agrees that it is
necessary for the Company to protect its business and that of its subsidiaries
from such
EMPLOYMENT AGREEMENT Page 6 of 10
<PAGE> 7
damage, and the Executive further agrees that the following covenants
constitute a reasonable and appropriate means, consistent with the best
interest of both the Executive and the Company, to protect the Company or its
subsidiaries against such damage and shall apply to and be binding upon the
Executive as provided herein:
(a) Trade Secrets. The Executive recognizes that his position with the
Company is one of the highest trust and confidence by reason of the Executive's
access to and contact with the Trade Secrets of the Company and its
subsidiaries. The Executive agrees and covenants to use his best efforts and
exercise utmost diligence to protect and safeguard the Trade Secrets of the
Company and its subsidiaries. The Executive further agrees and covenants that,
except as may be required by the Company in connection with this Agreement, or
with the prior written consent of the Company, the Executive shall not, either
during the term of this Agreement or thereafter, directly or indirectly, use
for the Executive's own benefit or for the benefit of another, or disclose,
disseminate, or distribute to another, the Trade Secrets (whether or not
acquired, learned, obtained, or developed by the Executive alone or in
conjunction with others) of the Company or its subsidiaries or of others with
whom the Company or its subsidiaries has a business relationship. All
memoranda, notes, records, documents, or other writings whatsoever made,
compiled, acquired, or received by the Executive during the term of this
Agreement, arising out of, in connection with, or related to the production of
the Company's products and component parts attendant thereto or those of its
subsidiaries are, and shall continue to be, the sole and exclusive property of
the Company or its subsidiaries, as applicable, and shall, together with all
copies thereof and all advertising literature, be returned and delivered to the
Company by the Executive immediately, without demand, upon the termination of
this Agreement, or at any time upon the Company's demand. It is understood and
agreed that the term "Trade Secrets" shall not be deemed to include information
which (i) is public knowledge or become generally available to the public other
than as a result of a disclosure by you; (ii) becomes available to the
Executive, on a non-confidential basis, from a source (other than from the
Company or its agents) who is not bound by a confidentiality agreement with the
Company; or (iii) is in the Executive's possession prior to disclosure to the
Executive by the Company.
(b) Covenant Not to Compete. In the event this Agreement is terminated
pursuant to the provisions of Section 1.6 hereof, or as the result of the
voluntary resignation of the Executive, the Executive hereby covenants and
agrees that for a period of one (1) year following the termination of his
employment hereunder, he will not directly or indirectly, either as an
employee, employer, consultant, agent, principal, partner, stockholder (other
than through ownership of publicly-traded capital stock of a corporation which
represents less than one percent (1%) of the outstanding capital stock of such
corporation), corporate officer, director, investor, financier or in any other
individual or representative capacity, engage or participate in any business
involving the sale or distribution of home, business or personal security or
safety products marketed by the Company on the date this Agreement becomes
effective, including, but not limited to, the sale or distribution of locks and
keys.
(c) Survival of Covenants. Each covenant of the Executive set forth in
this Section 1.8 shall survive the termination of this Agreement and shall be
construed as an agreement
EMPLOYMENT AGREEMENT Page 7 of 10
<PAGE> 8
independent of any other provision of this Agreement, and the existence of any
claim or cause of action of the Executive against the Company whether
predicated on this Agreement or otherwise shall not constitute a defense to the
enforcement by the Company of said covenant.
(d) Remedies. In the event of breach or threatened breach by the
Executive of any provision of this Section 1.8, the Company shall be entitled
to relief by temporary restraining order, temporary injunction, or permanent
injunction or otherwise, in addition to other legal and equitable relief to
which it may be entitled, including any and all monetary damages which the
Company may incur as a result of said breach, violation or threatened breach or
violation. The Company may pursue any remedy available to it concurrently or
consecutively in any order as to any breach, violation, or threatened breach or
violation, and the pursuit of one of such remedies at any time will not be
deemed an election of remedies or waiver of the right to pursue any other of
such remedies as to such breach, violation, or threatened breach or violation,
or as to any other breach, violation, or threatened breach or violation.
The Executive hereby acknowledges that the Executive's agreement to be
bound by the protective covenants set forth in this Section 1.8 was a material
inducement for the Company entering into this Agreement and agreeing to pay the
Executive the compensation and benefits set forth herein.
SECTION 2. GENERAL PROVISIONS
2.1 Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date personally delivered or on the date deposited in a
receptacle maintained by the United States Postal Service for such purpose,
postage prepaid, by certified mail, return receipt requested, addressed to the
respective parties as follows:
If to the Executive:
_____________________________
_____________________________
_____________________________
If to the Company:
Vista 2000, Inc.
11660 Alpharetta Highway, Suite 330
Roswell, Georgia 30076
Attention: Chief Executive Officer
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.
EMPLOYMENT AGREEMENT Page 8 of 10
<PAGE> 9
2.2 Severability. If any provision contained in this Agreement is
determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain in full force and effect as if
the provision which was determined to be void, illegal, or unenforceable had
not been contained herein.
2.3 Waiver, Modification, and Integration. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party. This instrument
contains the entire agreement of the parties concerning employment and
supersedes all prior and contemporaneous representations, understandings and
agreements, either oral or in writing, between the parties hereto with respect
to the employment of the Executive by the Company and all such prior or
contemporaneous representations, understandings and agreements, both oral and
written, are hereby terminated. This Agreement may not be modified, altered or
amended except by written agreement of the Executive and the Company, subject
to the prior approval of the Board of Directors of the Company.
2.4 Binding Effect. This Agreement shall be binding and effective upon
the Company and its successors and permitted assigns, and upon the Executive,
his heirs and representatives; provided, however, that the Company shall not
assign this Agreement without the written consent of the Executive.
2.5 Choice of Law and Venue. The parties agree that this Agreement is
made and entered into in Cleveland, Ohio and shall be governed by and construed
in accordance with the laws of the State of Ohio, and that any litigation,
special proceeding or other proceeding as between the parties that may be
brought, or arise out of, in connection with or by reason of this Agreement
shall be brought in the applicable state court in and for Cleveland, Ohio which
Court shall be the exclusive courts of jurisdiction and venue.
2.6 Representation of Executive. The Executive hereby represents and
warrants to the Company that he has not previously assumed any obligations
inconsistent with those contained in this Agreement. The Executive further
represents and warrants to the Company that the Executive has entered into this
Agreement pursuant to his own initiative and that the Company did not induce
the Executive to execute this Agreement in contravention of any existing
commitments. The Executive acknowledges that the Company has entered into this
Agreement in reliance upon the foregoing representations of the Executive.
2.7 Counterpart Execution. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
2.8 Board of Directors. The Company and VISTA agree that, during the term
of this Agreement, VISTA will nominate either the Executive or Richard Bern for
election as a director of VISTA and will use its best efforts to have such
nominee elected as a director of VISTA.
EMPLOYMENT AGREEMENT Page 9 of 10
<PAGE> 10
2.9 VISTA hereby guarantees all compensation and benefits provided to the
Executive under this Agreement, should the Company ever default on its
obligations under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
AMERICAN CONSUMER PRODUCTS, INC.
By: /s/ Richard Bern
----------------------------
Title: President
--------------------------
EXECUTIVE:
/s/ Stephan W. Cole
--------------------------------
STEPHAN W. COLE
Chief Executive Officer
VISTA 2000, INC.
(solely for purposes of Sections 2.8 and 2.9 hereof)
By: /s/ Richard P. Smith
--------------------------------
Title: Chairman & CEO
EMPLOYMENT AGREEMENT Page 10 of 10
<PAGE> 11
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE SECURITIES COMMISSIONER OF THE STATE OF GEORGIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER"S RULES.
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
NONSTATUTORY STOCK OPTION AGREEMENT
Vista 2000, Inc., a Delaware corporation (the "Company"), hereby grants to
Stephan W. Cole (the "Optionee") an Option to purchase a total of 100,000
shares of Common Stock (the "Shares"), at the price determined as provided
herein, and in all respects subject to the terms, definitions and provisions of
the 1993 Incentive Stock Option Plan, as amended (the "Plan") adopted by the
Company, which is incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings
herein.
1. Nature of the Option. This Option is intended by the Company and the
---------------------
Optionee to be a Nonstatutory Stock Option, and does not qualify for any
special tax benefits to the Optionee. This Option is not an Incentive Stock
Option and is not subject to Section 5(b) of the Plan.
2. Exercise Price. The exercise price is $5.57 for each share of
---------------
Common Stock.
3. Exercise of Option. This Option shall be exercisable during its term
-------------------
in accordance with the provisions of Section 8 of the Plan as follows:
(i) Right to Exercise; Vesting
--------------------------
(a) Subject to Subsections 3(i)(b), (c) and (d) below, this Option
shall vest and become exercisable in accordance with the vesting schedule and
vesting terms and conditions attached hereto as Exhibit "A" and incorporated
herein by this reference. -----------
(b) This Option may not be exercised for a fraction of a Share.
(c) In the event of Optionee's death, disability or other termination
of employment, the exercisability of the Option shall be governed by Sections
7, 8 and 9 below, subject to the specific rights set forth in Exhibit "A" hereto
and the limitations contained in subsection 3(i)(d). -----------
<PAGE> 12
(d) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in Section 11 below.
(ii) Method of Exercise. This Option shall be exercisable by written
-------------------
notice, in the form attached as Exhibit "B", which shall state the election to
-----------
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as may
be required by the Company pursuant to the provisions of the Plan. Such written
notice shall be signed by Optionee and shall be person or by certified mail to
the President, Secretary or Chief Financial Officer of the Company. The
written notice shall be accompanied by payment of the exercise price. This
Option shall be deemed to be exercised upon receipt by the Company of notice
accompanied by the exercise price. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such stock certificate promptly
upon exercise of the Option.
No shares will be issued pursuant to the exercise of an option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be
listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the option is
exercised with respect to such Shares.
4. Investment Representations; Restrictions on Transfer.
-----------------------------------------------------
(i) By receipt of this Option, by its execution and by its exercise
in whole or in part, Optionee represents to the Company the following:
(a) Optionee understands that this Option and any Shares purchased
upon its exercise are securities, the issuance of which requires compliance
with federal and state securities laws.
(b) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the securities. Optionee is
acquiring these securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution"
thereof within the meaning of the Securities Act of 1933, as amended (the
"Securities Act").
(c) Optionee acknowledges and understands that the securities are or
will be registered pursuant to Form S-8 under the Securities Act.
2
<PAGE> 13
5. Method of Payment. Payment of the purchase price shall be made by
------------------
cash or check.
6. Restrictions on Exercise. This Option may not be exercised if the
-------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule
under Part 207 of Title 12 of the Code of Federal Regulations (Regulation G) as
promulgated by the Federal Reserve Board. As a condition to the exercise of
this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
7. Termination of Status as an Employee or Consultant. In the event of
---------------------------------------------------
termination of Optionee's Continuous Status as an Employee for "cause" as
defined in Employee's Employment Agreement with the Company, this Option shall
immediately terminate, and Optionee shall not be entitled to purchase any
Shares pursuant to this Option. in the event of termination of Optionee's
Continuous Status as an Employee, which termination is not for "cause" as
defined in Employee's Employment Agreement with the Company , this Option shall
continue in full force and effect, subject to the other terms and conditions of
this Option, and this Option shall continue to vest and become exercisable as
set forth in Section 3 of this Agreement.
8. Disability of Optionee. Notwithstanding the provisions of Section 7
-----------------------
above, in the event of termination of Optionee's Continuous Status as an
Employee or Consultant as a result of Optionee's permanent and total disability
(as defined in Section 22(e)(3) of the Code), the Option shall continue in full
force and effect, subject to the other terms and conditions of this Option, and
shall continue to vest and become exercisable as set forth in Section 3 of this
Agreement, and Optionee may (but in no event later than the date of expiration
of the term of this Option as set forth in Section 11 below), exercise this
Option. If Optionee does not exercise such Option (which Optionee was entitled
to exercise) within the time specified herein, this Option shall terminate.
9. Death of Optionee. In the event of the death of Optionee:
------------------
(i) during the term of this Option while an Employee or Consultant of
the Company and having been in continuous Status as an Employee or Consultant
since the date of grant of this Option, this Option may be exercised, at any
time following the date of death (but in no event later than the date of
expiration of the term of this Option as set forth in Section 11 below), by
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise
that had accrued as of the date of death; or
3
<PAGE> 14
(ii) within thirty (30) days after the termination of Optionee's
Continuous Status as an Employee or Consultant, this Option may be exercised,
at any time within thirty-six (36) months following the date of death (but in no
event later than the date of expiration of the term of this Option as set forth
in Section 11 below), by Optionee's estate or by a person who acquired the
right to exercise this Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of termination.
10. Non-Transferability of Option. This Option may not be transferred in
------------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Optionee.
11. Term of Option. Notwithstanding Section 9, this Option may not be
---------------
exercised more than ten (10) years from the date of grant of this Option, and
may be exercised during such term only in accordance with the Plan and the
terms of this Option.
12. Taxation Upon Exercise of Option. Optionee understands that, upon
---------------------------------
exercise of this option, Optionee will recognize income for tax purposes in an
amount equal to the excess of the then fair market value of the shares over the
exercise price. The Company will be required to withhold tax from Optionee's
current compensation with respect to such income; to the extent that Optionee's
current compensation is insufficient to satisfy the withholding tax liability,
the Company may require the Optionee to make a cash payment to cover such
liability as a condition of exercise of this Option. Upon a resale of such
shares by the Optionee, any dif ference between the sale price and the fair
market value of the shares on the date of exercise of the Option will be
treated as capital gain or loss.
13. Tax Consequences. The Optionee understands that any of the foregoing
-----------------
references to taxation are based on federal income tax laws and regulations now
in effect. The Optionee has reviewed with the Optionee's own tax advisors the
federal, state, local and foreign tax consequences of the transactions
contemplated by this Agreement. The Optionee is relying solely on such
advisors and not on any statements or representations of the Company or any of
its agents. The Optionee understands that the Optionee (and not the Company)
shall be responsible for the Optionee's own tax liability that may arise as a
result of the transactions contemplated by this Agreement.
DATE OF GRANT: August 29, 1995
VISTA 2000, INC.
By: /s/ Richard P. Smyth
---------------------------
Title: Chairman & CEO
4
<PAGE> 15
OPTIONEE ACKNOWLEDGES RECEIPT OF A COPY OF THE PLAN, A COPY OF WHICH IS
ANNEXED HERETO, REPRESENTS THAT OPTIONEE IS FAMILIAR WITH THE TERMS AND
PROVISIONS THEREOF, AND HEREBY ACCEPTS THIS OPTION SUBJECT TO ALL OF THE TERMS
AND PROVISIONS THEREOF. OPTIONEE HAS REVIEWED THE PLAN AND THIS OPTION IN
THEIR ENTIRETY, HAS HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO
EXECUTING THIS OPTION AND FULLY UNDERSTANDS ALL PROVISIONS OF THE OPTION.
OPTIONEE HEREBY AGREES TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS
OR INTERPRETATIONS OF THE BOARD OR OF THE COMMITTEE UPON ANY QUESTIONS ARISING
UNDER THE PLAN. OPTIONEE FURTHER AGREES TO NOTIFY THE COMPANY UPON ANY CHANGE
IN THE RESIDENCE ADDRESS INDICATED BELOW.
Dated:________________________
___________________________________________
Optionee
___________________________________________
Print or type name
Residence Address:
____________________________________________
____________________________________________
5
<PAGE> 16
EXHIBIT "A"
-----------
VESTING SCHEDULE AND VESTING TERMS AND CONDITIONS
-------------------------------------------------
The shares of stock subject to this Option shall vest and this Option shall
become exercisable with respect to such shares only upon satisfaction of and
only in accordance with the following terms and conditions:
(a) This Option shall vest and become immediately exercisable with respect
to 20,000 shares upon the date of execution of Optionee's employment agreement
with the Company.
(b) This Option shall vest and become exercisable with respect to 40,000
shares in eight (8) Five Thousand (5,000) share increments as follows: 5,000
shares on each of the last days of each of the eight calendar quarters
immediately subsequent hereto, commencing with the quarter beginning October 1,
1995 and ending December 31, 1995, and ending with the quarter beginning June
1, 1997 and ending September 30, 1997.
(c) This Option shall vest and become exercisable with respect to 40,000
shares at such times as the performance goals set forth on Appendix 1 hereto
are achieved. ----------
(d) This Option shall vest and become immediately exercisable with respect
to all shares not theretofore vested upon the acquisition by any person (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended), other than by any person which includes the Executive, of
more than 50% of the voting power of the Company's outstanding securities
entitled to vote in elections of directors of the Company.
<PAGE> 17
EXHIBIT "B"
-----------
NOTICE OF EXERCISE OF
---------------------
STOCK OPTION
------------
TO:
FROM:
DATE:
RE: Exercise of Stock Option
I hereby exercise my option to purchase ____________ shares of Common
Stock at $_____ per share (total exercise price of $_______), effective today's
date. This notice is given in accordance with the terms of my Stock Option
Agreement dated _______________, 19___. The option price and vested amount is
in accordance with Sections 2 and 3 of the Stock Option Agreement.
Attached is a check payable to _____________________________
for the total exercise price of the shares being purchased. The undersigned
confirms the representations made in Section 4 of the Stock Option Agreement.
Please prepare the stock certificate in the following name(s):
__________________________________________________________
__________________________________________________________
If the stock is to be registered in a name other than your name, please so
advise the Company. The Stock Option Agreement requires the Company's approval
for registration in a name other than your name and requires certain agreements
from any joint owner.
Sincerely,
__________________________________________________________
(Signature)
__________________________________________________________
(Print or Type Name)
Letter and consideration
received on ____________, 19__.
By:___________________________
7
<PAGE> 18
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE SECURITIES COMMISSIONER OF THE STATE OF GEORGIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER"S RULES.
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
NONSTATUTORY STOCK OPTION AGREEMENT
Vista 2000, Inc., a Delaware corporation (the "Company"), hereby grants to
Richard Bern (the "Optionee") an Option to purchase a total of 100,000 shares
of Common Stock (the "Shares"), at the price determined as provided herein, and
in all respects subject to the terms, definitions and provisions of the 1993
Incentive Stock Option Plan, as amended (the "Plan") adopted by the Company,
which is incorporated herein by reference. Unless otherwise defined herein,
the terms defined in the Plan shall have the same defined meanings herein.
1. Nature of the Option. This Option is intended by the Company and the
---------------------
Optionee to be a Nonstatutory Stock Option, and does not qualify for any
special tax benefits to the Optionee. This Option is not an Incentive Stock
Option and is not subject to Section 5(b) of the Plan.
2. Exercise Price. The exercise price is $5.57 for each share of
---------------
Common Stock.
3. Exercise of Option. This Option shall be exercisable during its term
-------------------
in accordance with the provisions of Section 8 of the Plan as follows:
(i) Right to Exercise; Vesting
--------------------------
(a) Subject to Subsections 3(i)(b), (c) and (d) below, this Option
shall vest and become exercisable in accordance with the vesting schedule and
vesting terms and conditions attached hereto as Exhibit "A" and incorporated
herein by this reference. -----------
(b) This Option may not be exercised for a fraction of a Share.
(c) In the event of Optionee's death, disability or other
termination of employment, the exercisability of the Option shall be governed
by Sections 7, 8 and 9 below, subject to the specific rights set forth in
Exhibit "A" hereto and the limitations contained in subsection 3(i)(d).
-----------
<PAGE> 19
(d) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in Section 11 below.
(ii) Method of Exercise. This Option shall be exercisable by written
-------------------
notice, in the form attached as Exhibit "B", which shall state the election to
-----------
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as may
be required by the Company pursuant to the provisions of the Plan. Such written
notice shall be signed by Optionee and shall be person or by certified mail to
the President, Secretary or Chief Financial Officer of the Company. The
written notice shall be accompanied by payment of the exercise price. This
Option shall be deemed to be exercised upon receipt by the Company of notice
accompanied by the exercise price. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such stock certificate promptly
upon exercise of the Option.
No shares will be issued pursuant to the exercise of an option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be
listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the option is
exercised with respect to such Shares.
4. Investment Representations; Restrictions on Transfer.
-----------------------------------------------------
(i) By receipt of this Option, by its execution and by its exercise
in whole or in part, Optionee represents to the Company the following:
(a) Optionee understands that this Option and any Shares purchased
upon its exercise are securities, the issuance of which requires compliance
with federal and state securities laws.
(b) Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the securities.
Optionee is acquiring these securities for investment for Optionee's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(c) Optionee acknowledges and understands that the securities are
or will be registered pursuant to Form S-8 under the Securities Act.
2
<PAGE> 20
5. Method of Payment. Payment of the purchase price shall be made by
------------------
cash or check.
6. Restrictions on Exercise. This Option may not be exercised if the
-------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule
under Part 207 of Title 12 of the Code of Federal Regulations (Regulation G) as
promulgated by the Federal Reserve Board. As a condition to the exercise of
this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
7. Termination of Status as an Employee or Consultant. In the event of
---------------------------------------------------
termination of Optionee's Continuous Status as an Employee for "cause" as
defined in Employee's Employment Agreement with the Company, this Option shall
immediately terminate, and Optionee shall not be entitled to purchase any
Shares pursuant to this Option. in the event of termination of Optionee's
Continuous Status as an Employee, which termination is not for "cause" as
defined in Employee's Employment Agreement with the Company , this Option shall
continue in full force and effect, subject to the other terms and conditions of
this Option, and this Option shall continue to vest and become exercisable as
set forth in Section 3 of this Agreement.
8. Disability of Optionee. Notwithstanding the provisions of Section 7
-----------------------
above, in the event of termination of Optionee's Continuous Status as an
Employee or Consultant as a result
3
<PAGE> 21
of Optionee's permanent and total disability (as defined in Section 22(e)(3) of
the Code), the Option shall continue in full force and effect, subject to the
other terms and conditions of this Option, and shall continue to vest and
become exercisable as set forth in Section 3 of this Agreement, and Optionee
may (but in no event later than the date of expiration of the term of this
Option as set forth in Section 11 below), exercise this Option. If Optionee
does not exercise such Option (which Optionee was entitled to exercise) within
the time specified herein, this Option shall terminate.
9. Death of Optionee. In the event of the death of Optionee:
------------------
(i) during the term of this Option while an Employee or Consultant of
the Company and having been in continuous Status as an Employee or Consultant
since the date of grant of this Option, this Option may be exercised, at any
time following the date of death (but in no event later than the date of
expiration of the term of this Option as set forth in Section 11 below), by
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued as of the date of death; or
(ii) within thirty (30) days after the termination of Optionee's
Continuous Status as an Employee or Consultant, this Option may be exercised,
at any time within thirty-six (36) months following the date of death (but in no
event later than the date of expiration of the term of this Option as set forth
in Section 11 below), by Optionee's estate or by a person who acquired the
right to exercise this Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of termination.
10. Non-Transferability of Option. This Option may not be transferred in
------------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Optionee.
11. Term of Option. Notwithstanding Section 9, this Option may not be
---------------
exercised more than ten (10) years from the date of grant of this Option, and
may be exercised during such term only in accordance with the Plan and the
terms of this Option.
12. Taxation Upon Exercise of Option. Optionee understands that, upon
---------------------------------
exercise of this option, Optionee will recognize income for tax purposes in an
amount equal to the excess of the then fair market value of the shares over the
exercise price. The Company will be required to withhold tax from Optionee's
current compensation with respect to such income; to the extent that Optionee's
current compensation is insufficient to satisfy the withholding tax liability,
the Company may require the Optionee to make a cash payment to cover such
liability as a condition of exercise of this Option. Upon a resale of such
shares by the Optionee, any difference between the sale price and the fair
market value of the shares on the date of exercise of the Option will be
treated as capital gain or loss.
4
<PAGE> 22
13. Tax Consequences. The Optionee understands that any of the foregoing
-----------------
references to taxation are based on federal income tax laws and regulations now
in effect. The Optionee has reviewed with the Optionee's own tax advisors the
federal, state, local and foreign tax consequences of the transactions
contemplated by this Agreement. The Optionee is relying solely on such
advisors and not on any statements or representations of the Company or any of
its agents. The Optionee understands that the Optionee (and not the Company)
shall be responsible for the Optionee's own tax liability that may arise as a
result of the transactions contemplated by this Agreement.
DATE OF GRANT: August 29, 1995
VISTA 2000, INC.
By: /s/ RICHARD P. SMYTH
-------------------------
Title: CEO
-----------------------
5
<PAGE> 23
OPTIONEE ACKNOWLEDGES RECEIPT OF A COPY OF THE PLAN, A COPY OF WHICH IS
ANNEXED HERETO, REPRESENTS THAT OPTIONEE IS FAMILIAR WITH THE TERMS AND
PROVISIONS THEREOF, AND HEREBY ACCEPTS THIS OPTION SUBJECT TO ALL OF THE TERMS
AND PROVISIONS THEREOF. OPTIONEE HAS REVIEWED THE PLAN AND THIS OPTION IN
THEIR ENTIRETY, HAS HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO
EXECUTING THIS OPTION AND FULLY UNDERSTANDS ALL PROVISIONS OF THE OPTION.
OPTIONEE HEREBY AGREES TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS
OR INTERPRETATIONS OF THE BOARD OR OF THE COMMITTEE UPON ANY QUESTIONS ARISING
UNDER THE PLAN. OPTIONEE FURTHER AGREES TO NOTIFY THE COMPANY UPON ANY CHANGE
IN THE RESIDENCE ADDRESS INDICATED BELOW.
Dated:________________________
________________________________________________
Optionee
________________________________________________
Print or type name
Residence Address:
________________________________________________
________________________________________________
6
<PAGE> 24
EXHIBIT "A"
-----------
VESTING SCHEDULE AND VESTING TERMS AND CONDITIONS
-------------------------------------------------
The shares of stock subject to this Option shall vest and this Option
shall become exercisable with respect to such shares only upon satisfaction of
and only in accordance with the following terms and conditions:
(a) This Option shall vest and become immediately exercisable with
respect to 20,000 shares upon the date of execution of Optionee's employment
agreement with the Company.
(b) This Option shall vest and become exercisable with respect to
40,000 shares in eight (8) Five Thousand (5,000) share increments as follows:
5,000 shares on each of the last days of each of the eight calendar quarters
immediately subsequent hereto, commencing with the quarter beginning October 1,
1995 and ending December 31, 1995, and ending with the quarter beginning June
1, 1997 and ending September 30, 1997.
(c) This Option shall vest and become exercisable with respect to
40,000 shares at such times as the performance goals set forth on Appendix 1
hereto are achieved. ----------
(d) This Option shall vest and become immediately exercisable with
respect to all shares not theretofore vested upon the acquisition by any person
(as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended), other than by any person which includes the
Executive, of more than 50% of the voting power of the Company's outstanding
securities entitled to vote in elections of directors of the Company.
<PAGE> 25
EXHIBIT "B"
-----------
NOTICE OF EXERCISE OF
---------------------
STOCK OPTION
------------
TO:
FROM:
DATE:
RE: Exercise of Stock Option
I hereby exercise my option to purchase ____________ shares of Common Stock
at $_____ per share (total exercise price of $_______), effective today's date.
This notice is given in accordance with the terms of my Stock Option Agreement
dated _______________, 19___. The option price and vested amount is in
accordance with Sections 2 and 3 of the Stock Option Agreement.
Attached is a check payable to _____________________________
for the total exercise price of the shares being purchased. The undersigned
confirms the representations made in Section 4 of the Stock Option Agreement.
Please prepare the stock certificate in the following name(s):
_________________________________________
_________________________________________
If the stock is to be registered in a name other than your name, please so
advise the Company. The Stock Option Agreement requires the Company's approval
for registration in a name other than your name and requires certain agreements
from any joint owner.
Sincerely,
______________________________________________
(Signature)
______________________________________________
(Print or Type Name)
Letter and consideration
received on _________________, 19__.
By:________________________________
8
<PAGE> 1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between AMERICAN
CONSUMER PRODUCTS, INC., a Delaware corporation (the "Company"), and RICHARD
BERN (the "Executive") is made and entered into in Cleveland, Ohio on the 29th
day of August, 1995 and shall become effective only upon the purchase by Vista
2000, Inc. ("Vista") of the common stock of the Company pursuant to the tender
offer to be commenced by Vista within twenty (20) days form the date hereof
(the "Effective Date").
SECTION 1
TERMS OF EMPLOYMENT
1.1 Employment. The Company hereby employs the Executive as the President
of the Company for and during the term hereof, subject to the direction of the
Board of Directors of the Company and the terms and conditions hereof. The
Executive hereby accepts employment under the terms and conditions set forth in
this Agreement.
1.2 Duties of Executive. The Executive shall perform in the capacity
described in Section 1.1 hereof and shall have such duties, responsibilities,
and authorities as are designated for such offices pursuant to the Bylaws, as
amended and restated, of the Company, and as may be reasonably assigned to him
from time to time by the Board of Directors of the Company; provided, however,
the Executive shall, during the term hereof, continuously have and retain such
duties, responsibilities, and authorities at least as significant in scope and
substance as the duties, responsibilities, and authorities required of the
Executive's offices and position with the Company as of the Effective Date.
The Executive agrees to devote his full time during normal business hours, best
efforts, abilities, knowledge and experience to the faithful performance of the
duties, responsibilities, and authorities which may be reasonably assigned to
him and which are consistent with his executive offices under Section 1.1 of
this Agreement. Notwithstanding the preceding, the Executive may, without
being in violation of his obligations hereunder, serve on corporate, civic or
charitable boards or committees and manage personal investments as of the date
hereof, provided the Executive shall use his best efforts to pursue such
activities in such a manner so that such activities shall not prevent the
Executive from fulfilling his obligations to the Company hereunder.
1.3 Term. This Agreement shall become effective as of the Effective Date
and shall continue in force and effect for three (3) years from the effective
date of this Agreement, unless sooner terminated as provided in Section 1.6
hereof or renewed or extended by written agreement between the Company and the
Executive pursuant to terms and conditions mutually acceptable to each.
1.4 Compensation. The Company shall pay the Executive compensation for
services rendered by the Executive under the Agreement as follows:
(a) Minimum Compensation. On a bi-monthly basis, the Executive will
receive from the Company at least $11,458.34 less local, state and federal
taxes and other applicable
EMPLOYMENT AGREEMENT Page 1 of 10
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withholdings. This minimum compensation shall be made up of Base Salary,
advances on Additional Compensation and advances on Bonus Compensation as
defined below.
(b) Base Salary. The Executive's salary ("Base Salary") shall be
$150,000.00 and it will be adjusted annually to take into account increases in
the cost of living.
(c) Additional Compensation. The Executive shall receive additional
compensation ("Additional Compensation") by participating in an annual bonus
pool for executives of the Company in an amount equal to ten percent (10%) of
pre-tax profits of the Company for each fiscal year during the term of this
Agreement. The Executive's percentage shall be determined by the Board of
Directors or the Compensation Committee, if there is one.
(d) Bonus Compensation. The Company may also provide to the Executive a
bonus ("Bonus Compensation") in an amount determined by the Board of Directors
of the Company or its Compensation Committee, if one exists.
(e) Annual Adjustment. Should the advances made to the Executive, during
the course of the fiscal year, on Additional Compensation and Bonus
Compensation be less than that which he is entitled to under the Additional
Compensation program and/or the Bonus Compensation program, the Company shall,
within fifteen (15) days after the completion of the audit of the Company's
financial statements for said fiscal year, remit the difference to the
Executive. Should the advances exceed that to which the Executive is entitled,
the Executive shall keep the excess and no set-off by the Company will be made.
(f) Stock Options. The Executive shall be eligible to participate in the
Company's 1993 Incentive Stock Option Plan, a copy of which is attached hereto
as Exhibit "A" and by this reference made a part hereof. Furthermore,
-----------
concurrently with execution of this Agreement by both parties, the Executive
will be delivered a stock option in the form attached hereto as Exhibit "B" and
by this reference made a part hereof. -----------
1.5 Employment Benefits. In addition to the Salary and any Bonus
Compensation payable to the Executive hereunder, the Executive shall be
entitled to the following benefits upon satisfaction by the Executive of the
eligibility requirements therefor, subject to the following limitations:
(a) Sick Leave Benefits and Disability Insurance. Unless this Agreement is
terminated pursuant to the provisions of Section 1.6(b) hereof, the Executive
shall be paid sick leave benefits at his then prevailing salary rate during his
absence due to illness or other incapacity, reduced by the amount, if any, of
worker's compensation, social security entitlement, or disability benefits, if
any, under the Company's group disability insurance plan, if any.
(b) Life Insurance. The Company, at its expense, shall provide the
Executive, life insurance benefits under and consistent with any group term
life insurance plan, as provided by the Company prior to June 30, 1995, or
improved coverages which the Company, at its election, may adopt.
Notwithstanding the preceding sentence, it is understood and agreed that the
Company will obtain and maintain during the term of this Agreement, at its
expense, a life
EMPLOYMENT AGREEMENT Page 2 of 10
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insurance policy, in the face amount of $1,000,000 (the Company and the
Executive or a designee of the Executive to be equal co-beneficiaries
thereunder).
(c) Hospitalization, Accident, Major Medical and Dental Insurance. The
Company, at its own expense, shall provide the Executive and all dependents of
the Executive with group hospitalization, group accident, major medical, group
disability, and dental insurance in amounts of coverage comparable to the
coverage provided to the Executive on June 30, 1995. The Executive shall be
responsible for any health insurance premium with respect to himself over $600
per month. The Company agrees to provide a Medical and Dental Reimbursement
Plan substantially in the form attached hereto as Exhibit "C" and by this
reference made a part hereof. -----------
(d) Vacations. The Executive shall be entitled to a reasonable paid
vacation equal to that provided to other Executives, according to Company
policy, as determined by the Board of Directors of the Company, exclusive of
holidays and weekends, which vacation shall be taken by the Executive in
accordance with the business requirements of the Company at the time and its
personnel policies then in effect relative to this subject. The Executive
shall also be entitled to all paid holidays given by the Company to its
executive employees.
(e) Disability. The Company shall continue paying disability premiums (up
to $6,000 per year) during the term hereof for any disability policy covering
the Executive in force on June 30, 1995.
(f) Working Facilities. During the term of this Agreement, the Company
shall provide, at its expense, adequate office space, furniture, equipment,
supplies and personnel (including professional, clerical, support and other
personnel) consistent with the past practices of the Company as shall be
suitable in the opinion of the Board of Directors of the Company to the
Executive's position and adequate for the Executive's use in performing his
duties and responsibilities under this Agreement.
(g) Personal Vehicle. The Company shall pay to the Employee a monthly
vehicle allowance of Six Hundred and No/100 Dollars ($600.00), plus all
expenses incurred by the Employee in connection with the operation of the
automobile for the conduct of the affairs of the Company, including the cost of
a cellular telephone.
(h) Directors' and Officers' Liability Insurance. The Executive shall be
entitled to the protection of any directors' and officers' liability insurance
policies the Company may elect to maintain generally for the benefit of its
directors and officers (to the extent the Executive is eligible for such
coverage) in an amount and with such coverage as provided to directors and
executives of VISTA 2000, Inc., a Delaware corporation ("VISTA")
(i) Other Employment Benefits. As an employee of the Company, the
Executive shall participate in and receive such other fringe benefits as may be
in effect from time to time for employees of the Company, whether or not
specifically enumerated herein and whether or
EMPLOYMENT AGREEMENT Page 3 of 10
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not through any written plan or arrangement, upon satisfaction by the Executive
of the eligibility requirements therefor.
1.6 Termination. This Agreement and the Executive's employment hereunder
may be terminated without any breach of this Agreement at any time during the
term hereof only by reason of and in accordance with the following provisions:
(a) Death. If the Executive dies during the term of this Agreement and
while in the employ of the Company, this Agreement shall automatically
terminate as of the date of the Executive's death, and the Company shall have
no further liability hereunder to the Executive or his estate except to the
extent set forth in Section 1.7 hereof.
(b) Disability. If, during the term of this Agreement, the Executive shall
be prevented from performing his duties hereunder by reason of becoming totally
disabled as hereinafter defined, then the Company may terminate this Agreement
immediately upon written notice to the Executive without any further liability
hereunder to the Executive except as set forth in Section 1.7(b) hereof. For
purposes of this Agreement, the Executive shall be deemed to have become
totally disabled upon the earlier of: (i) he either receives "total disability
benefits" under (a) Social Security, or (b) the Company's disability plan, if
any (whether funded with insurance or self-funded by the Company), or (ii) the
Board of Directors of the Company, upon the written report of a qualified
physician (after complete examination of the Executive) designated by the Board
of Directors of the Company or its insurers, shall have determined that the
Executive has become physically and/or mentally incapable of performing his
duties under this Agreement for a period of one hundred eighty (180) days or
more and it is unlikely that the Executive will recover within the remaining
term of employment hereunder.
(c) Termination by the Company for Cause. Prior to the expiration of the
term of this Agreement, the Company may discharge the Executive for cause and
terminate this Agreement immediately upon written notice to the Executive
without any further liability hereunder to the Executive or his estate, except
to the extent set forth in Section 1.7(c) hereof. For purposes of this
Agreement, a "discharge for cause" shall mean termination of the Executive upon
written notice to the Executive limited, however, to one or more of the
following reasons:
(1) Fraud, misappropriation or embezzlement by the Executive in connection
with the Company as determined by the affirmative vote of at least a majority
of the Board of Directors of the Company (provided, however, should the
Executive dispute such determination by the Board, then the Company and the
Executive shall enter immediately into binding arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration Association, each
party to be responsible for its own costs and expenses, including attorneys'
fees;
(2) Gross misconduct or willful gross neglect of the Executive's duties as
determined by the affirmative vote of at least a majority of the Board of
Directors of the Company after notice to the Executive of the particular
details thereof and a period of thirty (30) days thereafter within which to
cure such act or acts of gross misconduct or willful gross neglect, and the
failure of the Executive to cure such act or acts within such thirty (30) day
period. For purposes of this paragraph, no act or failure to act on the part
of Executive shall be deemed "willful"
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unless done, or omitted to be done, by Executive not in good faith and without
reasonable belief that the act or omission of Executive was in the best
interests of the Company;
(3) Conviction for a felony or a crime involving moral turpitude;
(4) Willful and unauthorized disclosure of Trade Secrets (as defined in
Section 1.9 hereof) of the Company;
(d) Termination by the Company with Notice. The Company may terminate this
Agreement for a reason other than as set forth in Subparagraphs (a), (b) or (c)
of this Section 1.6 at any time upon ninety (90) days written notice to the
Executive in which event the Company shall have no further obligations to the
Executive except as set forth in Section 1.7(b) hereof.
(e) Termination by the Executive for Good Reason. The Executive may
terminate this Agreement at any time for Good Reason (as hereinafter defined)
in which event the Company shall have no further liability hereunder to the
Executive except to the extent set forth in Section 1.7(b) hereof. For
purposes of this Agreement, the term "Good Reason" shall mean, without the
Executive's express written consent, the occurrence of any of the following
circumstances (which changes shall constitute a "Change"):
(1) The assignment to the Executive of any duties inconsistent in any
material respect (unless in the nature of a promotion) with the Executive's
position in the Company immediately prior to such Change (including, but not
limited to, the Executive's status, offices and titles), or a significant
adverse alteration or diminution in the nature or status of the Executive's
authority, duties or responsibilities from those in effect immediately prior to
such Change, other than an isolated, insubstantial and inadvertent action that
is fully corrected within five (5) days after receipt of written notice from
the Executive;
(2) Any failure by the Company to comply with any of the provisions of
Sections 1.4 or 1.5 of this Agreement, other than an isolated, insubstantial
and inadvertent action that is fully corrected within five (5) days after
receipt of written notice from the Executive;
(3) Any failure by the Company to comply with any material provision of
this Agreement that has not been cured within ten (10) days after notice of
such noncompliance has been given by the Executive to the Company;
(4) The relocation of the Executive's office outside of a 75-mile radius
of Cleveland, Ohio.
(f) Termination by the Executive with Notice. The Executive may terminate
this Agreement at any time upon ninety (90) days written notice to the Company.
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1.7 Compensation upon Termination.
(a) Death. In the event the Executive's employment hereunder is
terminated pursuant to the provisions of Section 1.6(a) hereof due to the death
of the Executive, the Company will continue to pay the Executive's estate all
compensation as set forth in Section 1.4 of this Agreement through the
remainder of the calendar year in which the Executive dies. In other words, the
Executive will be treated as if he worked up to and including December 31,
following the date of the Executive's death. In addition, the Company will
continue to provide health insurance, dental insurance, and major medical
insurance to the Executive's family, under the same terms and conditions as it
had just prior to the Executive's death through December 31 of the year in
which the Executive dies after which time the Executive will be entitled to
such insurance benefits as required by law (for example, COBRA benefits).
(b) Disability, Termination by the Company with Notice, and Termination by
the Executive for Good Reason. In the event the Executive's employment
hereunder is terminated pursuant to the provisions of Section 1.6(b), (d) or
(e), the Executive shall be entitled to receive all compensation and benefits
under this Agreement as if his employment had not terminated prior to the
completion of the Agreement's original thirty-six (36) month term.
(c) Cause and Termination by Executive with Notice. In the event that this
Agreement is terminated by the Company pursuant to the provisions of Section
1.6(c) or by the Executive pursuant to the provisions of Section 1.6(f), the
Executive shall be entitled to receive (i) any salary accrued as of the date of
termination of employment, but unpaid pursuant to section 1.4(a) hereof, (ii)
any vacation or sick leave benefits which have accrued as of the date of
termination of employment, but were then unpaid or unused, (iii) any Additional
Compensation earned as of the date of termination of employment, but unpaid,
and (iv) any Bonus Compensation pursuant to a Bonus declared as of the date of
termination, but unpaid. For purposes hereof, the amount of Additional
Compensation considered "earned" shall be determined based upon the reported
pre-tax profits of the Company for the quarter(s) during which the Executive
was actually employed during the year in which termination of employment occurs.
1.8 Protective Covenants. The Executive recognizes that his employment by
the Company is one of the highest trust and confidence because (i) the
Executive will become fully familiar with all aspects of the Company's business
and that of its subsidiaries during the period of his employment with the
Company, (ii) certain information of which the Executive will gain knowledge
during his employment is proprietary and confidential information which is of
special and peculiar value to the Company or its subsidiaries, and (iii) if any
such proprietary and confidential information were imparted to or became known
by any person, including the Executive, engaging in a business in competition
with that of the Company or its subsidiaries, hardship, loss and irreparable
injury and damage could result to the Company or its subsidiaries, the
measurement of which would be difficult if not impossible to ascertain. The
Executive further acknowledges that the Company or its subsidiaries has
developed and will continue to develop unique consumer products and attendant
component parts (collectively, along with any trade secret information of the
Company, the "Trade Secrets"). Therefore, the Executive agrees that it is
necessary for the Company to protect its business and that of its subsidiaries
from such
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damage, and the Executive further agrees that the following covenants
constitute a reasonable and appropriate means, consistent with the best
interest of both the Executive and the Company, to protect the Company or its
subsidiaries against such damage and shall apply to and be binding upon the
Executive as provided herein:
(a) Trade Secrets. The Executive recognizes that his position with the
Company is one of the highest trust and confidence by reason of the Executive's
access to and contact with the Trade Secrets of the Company and its
subsidiaries. The Executive agrees and covenants to use his best efforts and
exercise utmost diligence to protect and safeguard the Trade Secrets of the
Company and its subsidiaries. The Executive further agrees and covenants that,
except as may be required by the Company in connection with this Agreement, or
with the prior written consent of the Company, the Executive shall not, either
during the term of this Agreement or thereafter, directly or indirectly, use
for the Executive's own benefit or for the benefit of another, or disclose,
disseminate, or distribute to another, the Trade Secrets (whether or not
acquired, learned, obtained, or developed by the Executive alone or in
conjunction with others) of the Company or its subsidiaries or of others with
whom the Company or its subsidiaries has a business relationship. All
memoranda, notes, records, documents, or other writings whatsoever made,
compiled, acquired, or received by the Executive during the term of this
Agreement, arising out of, in connection with, or related to the production of
the Company's products and component parts attendant thereto or those of its
subsidiaries are, and shall continue to be, the sole and exclusive property of
the Company or its subsidiaries, as applicable, and shall, together with all
copies thereof and all advertising literature, be returned and delivered to the
Company by the Executive immediately, without demand, upon the termination of
this Agreement, or at any time upon the Company's demand. It is understood and
agreed that the term "Trade Secrets" shall not be deemed to include information
which (i) is public knowledge or become generally available to the public other
than as a result of a disclosure by you; (ii) becomes available to the
Executive, on a non-confidential basis, from a source (other than from the
Company or its agents) who is not bound by a confidentiality agreement with the
Company; or (iii) is in the Executive's possession prior to disclosure to the
Executive by the Company.
(b) Covenant Not to Compete. In the event this Agreement is terminated
pursuant to the provisions of Section 1.6 hereof, or as the result of the
voluntary resignation of the Executive, the Executive hereby covenants and
agrees that for a period of one (1) year following the termination of his
employment hereunder, he will not directly or indirectly, either as an
employee, employer, consultant, agent, principal, partner, stockholder (other
than through ownership of publicly-traded capital stock of a corporation which
represents less than one percent (1%) of the outstanding capital stock of such
corporation), corporate officer, director, investor, financier or in any other
individual or representative capacity, engage or participate in any business
involving the sale or distribution of home, business or personal security or
safety products marketed by the Company on the date this Agreement becomes
effective, including, but not limited to, the sale or distribution of locks and
keys.
(c) Survival of Covenants. Each covenant of the Executive set forth in
this Section 1.8 shall survive the termination of this Agreement and shall be
construed as an agreement
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independent of any other provision of this Agreement, and the existence of any
claim or cause of action of the Executive against the Company whether
predicated on this Agreement or otherwise shall not constitute a defense to the
enforcement by the Company of said covenant.
(d) Remedies. In the event of breach or threatened breach by the
Executive of any provision of this Section 1.8, the Company shall be entitled
to relief by temporary restraining order, temporary injunction, or permanent
injunction or otherwise, in addition to other legal and equitable relief to
which it may be entitled, including any and all monetary damages which the
Company may incur as a result of said breach, violation or threatened breach or
violation. The Company may pursue any remedy available to it concurrently or
consecutively in any order as to any breach, violation, or threatened breach or
violation, and the pursuit of one of such remedies at any time will not be
deemed an election of remedies or waiver of the right to pursue any other of
such remedies as to such breach, violation, or threatened breach or violation,
or as to any other breach, violation, or threatened breach or violation.
The Executive hereby acknowledges that the Executive's agreement to be
bound by the protective covenants set forth in this Section 1.8 was a material
inducement for the Company entering into this Agreement and agreeing to pay the
Executive the compensation and benefits set forth herein.
SECTION 2. GENERAL PROVISIONS
2.1 Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date personally delivered or on the date deposited in a
receptacle maintained by the United States Postal Service for such purpose,
postage prepaid, by certified mail, return receipt requested, addressed to the
respective parties as follows:
If to the Executive:
_____________________________
_____________________________
_____________________________
If to the Company:
Vista 2000, Inc.
11660 Alpharetta Highway, Suite 330
Roswell, Georgia 30076
Attention: President
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.
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2.2 Severability. If any provision contained in this Agreement is
determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain in full force and effect as if
the provision which was determined to be void, illegal, or unenforceable had
not been contained herein.
2.3 Waiver, Modification, and Integration. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party. This instrument
contains the entire agreement of the parties concerning employment and
supersedes all prior and contemporaneous representations, understandings and
agreements, either oral or in writing, between the parties hereto with respect
to the employment of the Executive by the Company and all such prior or
contemporaneous representations, understandings and agreements, both oral and
written, are hereby terminated. This Agreement may not be modified, altered or
amended except by written agreement of the Executive and the Company, subject
to the prior approval of the Board of Directors of the Company.
2.4 Binding Effect. This Agreement shall be binding and effective upon
the Company and its successors and permitted assigns, and upon the Executive,
his heirs and representatives; provided, however, that the Company shall not
assign this Agreement without the written consent of the Executive.
2.5 Choice of Law and Venue. The parties agree that this Agreement is
made and entered into in Cleveland, Ohio and shall be governed by and construed
in accordance with the laws of the State of Ohio, and that any litigation,
special proceeding or other proceeding as between the parties that may be
brought, or arise out of, in connection with or by reason of this Agreement
shall be brought in the applicable state court in and for Cleveland, Ohio which
Court shall be the exclusive courts of jurisdiction and venue.
2.6 Representation of Executive. The Executive hereby represents and
warrants to the Company that he has not previously assumed any obligations
inconsistent with those contained in this Agreement. The Executive further
represents and warrants to the Company that the Executive has entered into this
Agreement pursuant to his own initiative and that the Company did not induce
the Executive to execute this Agreement in contravention of any existing
commitments. The Executive acknowledges that the Company has entered into this
Agreement in reliance upon the foregoing representations of the Executive.
2.7 Counterpart Execution. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
2.8 Board of Directors. The Company and VISTA agree that, during the term
of this Agreement, VISTA will nominate either the Executive or Stephan Cole for
election as a director of VISTA and will use its best efforts to have such
nominee elected as a director of VISTA.
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2.9 VISTA hereby guarantees all compensation and benefits provided to the
Executive under this Agreement, should the Company ever default on its
obligations under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
AMERICAN CONSUMER PRODUCTS, INC.
By: /s/ Stephan W. Cole
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Title: Chief Executive Officer
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EXECUTIVE:
/s/ Richard Bern
-------------------------------
RICHARD BERN
President
VISTA 2000, INC.
(solely for purposes of Sections 2.8 and 2.9 hereof)
By: /s/ Richard P. Smyth
----------------------------
Title: Chairman & CEO
EMPLOYMENT AGREEMENT Page 10 of 10
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Exhibit (c)(3)
AGREEMENT FOR THE SALE
AND PURCHASE OF REAL ESTATE
---------------------------
THIS AGREEMENT, entered into this 29th day of August, 1995, by and among
31100 Solon Road, Inc. an Ohio Corporation (hereinafter referred to as
"Seller"); and Vista 2000, Inc., a Delaware Corporation (hereinafter referred
to as "Purchaser").
W I T N E S S E T H:
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FOR AND IN CONSIDERATION of the sum of TEN AND NO/100 DOLLARS ($10.00),
the mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound, agree as follows:
1. PURCHASE AND SALE
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Upon the terms and conditions hereinafter set forth, Seller agrees to
sell and Purchaser agrees to purchase all that tract or parcel of land located
in the City of Solon, County of Cuyahoga and State of Ohio, and being more
particularly described in Exhibit "A" attached hereto and by this reference
made a part hereof together with the buildings and improvements thereon
(hereinafter referred to as the "Property").
2. SELLER'S COOPERATION
--------------------
Seller agrees to provide copies of any surveys, appraisals, studies,
title documents or other information reasonably requested by Purchaser or any
of Purchaser's Lenders, within ten days of the date of a written request for
such information from Purchaser.
3. PURCHASE PRICE
--------------
3.1 The Purchase Price for the Property to be paid by Purchaser to
Seller at the Closing and consummation of the purchase and sale of the Property
as contemplated herein (hereinafter referred to as the "Closing" and the date
of such Closing hereinafter referred to as the "Closing Date") shall be the
lesser of $5,000,000.00 or the fair market value of the Property as determined
by the average of two appraisals of the Property performed by qualified
independent appraisers; provided, however, that if the average of two (2)
appraisals is less than $4,750,000.00, then Seller shall have the right to
terminate this Agreement, which rights shall be exercised by written notice to
Purchaser within ten (10) days after receipt of such appraisals. Purchaser
shall choose three appraisers licensed in the State of Ohio with designations
of ASA or MAI.
3.2 The Purchase Price shall be payable in cash at Closing.
4. SURVEY
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Purchaser shall cause to be prepared, at Purchaser's expense, an
accurate survey of the Property by a surveyor registered under the laws of the
State of Ohio reasonably acceptable to Seller (hereinafter referred to as the
"Survey"). The Survey shall contain a computation of the acreage of the
Property to the nearest one-hundredth (1/100th) of an acre, less any portion of
the Property within (i) the right-of-way of any road way, and (ii) any
transmission easements (the number of acres contained in the Property is
hereinafter referred to as the "Surveyed Acres"). Purchaser shall deliver one
(1) print of the Survey, together with a legally sufficient description of the
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metes and bounds of the Property based on the Survey, to Seller no later than
one (1) day prior to the Closing, where-upon said description shall become a
part of this Agreement without the necessity of any further action by any of
the parties hereto, and said description shall replace and supersede the
description of the property attached hereto as Exhibit "A." Notwithstanding
the foregoing, however, to the extent that the revised legal description
differs from that contained in Exhibit "A", Seller shall only be required to
deliver a Limited Warranty Deed containing the legal description contained in
Exhibit "A", and Seller shall deliver a Quitclaim Deed containing the revised
legal description.
5. CLOSING
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The Closing shall be held on or before fourty five (45) days after the
Date of the Completion of the Tender Offer, as hereinafter defined.The exact
time, the place of Closing and the Closing Date shall be selected by Purchaser
by notice to Seller not less than five (5) days prior to the Closing Date. If
no such selection is timely made, the Closing shall be held at 10:00 A.M. on
the last possible business date for closing under this Agreement at the offices
of Seller's counsel, or at such other place as Purchaser and Seller may agree
upon in writing.
6. CONVEYANCE OF TITLE
-------------------
6.1 At the Closing, Seller shall convey to Purchaser "good and
marketable fee simple title" to the Property by Limited Warranty Deed. "Good
and marketable, fee simple title" shall be such title as is acceptable to a
reasonable purchaser using Ohio title standards, as the criteria to
marketability of the title required hereby, and is insurable by a title
insurance company acceptable to Purchaser at standard rates and without
exception other than the Permitted Exceptions as defined herein.
6.2 Title to the Property shall be conveyed by Seller to Purchaser
free of all liens, leases and encumbrances with the following exceptions (which
exceptions are hereinafter referred to as the "Permitted Exceptions"):
(i) current city, state and county ad valorem property and
sanitary sewer taxes not yet due and payable;
(ii) general utility, sewerage and drainage easements affecting
the Property which do not materially interfere with Purchaser's intended
use of the Property; and that certain Sublease, dated February 24, 1988, by
and between Seller and American Consumer Products, Inc. ("ACPI"), a
memorandum of which was recorded in Volume 88-0763, at Page 35, et seq. of
Cuyahoga County Records, as amended by that certain First Amendment to
Sublease, dated August 31, 1989, by and between Seller and ACPI, a
memorandum of which was recorded in Volume 89-4812 at Page 45, et seq. of
Cuyahoga County Records (as so amended, the "ACPI Lease").
6.3 At the Closing, Seller shall execute and deliver to Purchaser a
certificate with respect to Seller's non-foreign status sufficient to comply
with the requirements of Section 1445 of the Internal Revenue Code, commonly
known as the Foreign Investment in Real Property Tax Act of 1980, and all
regulations applicable thereto (collectively referred to as "FIRPTA").
6.4 At the Closing, Seller shall execute and deliver such other
documents as Purchaser may reasonably require to effect or complete the
transaction contemplated by this Agreement and to obtain an owner's policy of
title insurance insuring Purchaser's
-2-
<PAGE> 3
title through the date of the indexing of the recording of Purchaser's deed.
At the Closing, Seller and Purchaser shall execute and deliver an Assignment and
Assumption of Lease Agreement, in form and substance reasonably satisfactory to
Seller and Purchaser, whereby Seller shall assign, and Purchaser shall assume,
all of Seller's rights and obligations under the ACPI Lease
7. TITLE EXAMINATION
-----------------
Purchaser shall have until Closing in which to search title to the
property and in which to furnish Seller with a written statement of any title
objections affecting the marketability of said title other than the Permitted
Exceptions. Seller shall have until Closing to satisfy all valid title
objections, and if Seller fails to satisfy such valid objections, then, at the
option of Purchaser, evidenced by written notice to Seller, Purchaser (i) may
choose to terminate this Agreement, or (ii) may elect to close and shall
receive the deed required herein from Seller irrespective of such title
objections without reduction of the Purchase Price, except that judgments of
record, existing mortgages and outstanding taxes may be paid by Purchaser at
Closing out of the Purchase Price. Purchaser shall also have the right to
examine title to the Property at any time up to Closing and object to any
title matters affecting the Property and arising or first discovered after the
date of the examination set forth above.
8. PRORATIONS
----------
At the Closing, all ad valorem property taxes, water and sewer charges
and assessments of any kind on the Property for the year of the Closing shall
be prorated between Purchaser and Seller as of midnight of the day prior to the
Closing; provided, however, there shall be no proration of any of the foregoing
items to the extent that ACPI is obligated to pay such items under the ACPI
Lease. Such proration shall be based upon the latest ad valorem property tax,
water, sewer charge and assessment bills available; and if such bills cover
other property than the Property, then such proration shall also be based on
the fraction obtained when the number of acres of the Property is divided by the
number of acres of property so covered by such bills. If, upon receipt of the
actual ad valorem property tax, water, sewer and assessment bills for the
Property, such proration is incorrect, then either Purchaser or Seller shall be
entitled, upon demand, to receive such amounts from the other as may be
necessary to correct such malapportionment; provided, however, there shall be
no proration of any of the foregoing items to the extent that ACPI is obligated
to pay such items under the ACPI Lease. This obligation so to correct such
malapportionment shall survive the Closing and not be merged into any documents
delivered pursuant to the Closing. The parties shall prorate all rents under
the ACPI Lease at the Closing.
9. INSPECTION
----------
9.1 Purchaser shall have the privilege at all reasonable times and
upon reasonable prior notice to seller, during the term of this Agreement to go
upon the Property with Purchaser's agents, representatives or designees to
inspect, examine and survey the Property. Purchaser indemnifies and holds
Seller harmless from and against loss or damage Seller may incur and any and
all liens that may arise as a result of Purchaser's activities or the
activities of Purchaser's agents, representatives or designees on the Property
and against any and all claims for death or injury to persons or properties
arising out of or connected with Purchaser's (or its agents, representatives or
designees) going upon the Property pursuant to the provisions of this
Paragraph 9 or
-3-
<PAGE> 4
otherwise, and against all costs, expenses and liability occurring in or in
connection with any such claim or proceeding brought thereon, including,
without limitation, court costs and reasonable attorney's fees. This indemnity
shall survive the Closing or any termination of this Agreement.
9.2 Except as set forth in Section 17 hereof, Purchaser acknowledges
and agrees that neither Seller nor any officer, employee or agent of Seller has
made any representation or warranty, express or implied, as to the condition,
quantity, design, merchantability, fitness or quality of the Property or any
portion thereof. Purchaser agrees to accept the Property and all portions
thereof on the Closing Date "AS IS, WHERE IS", subject to ordinary wear and
tear and to Purchaser's right to terminate this Agreement as otherwise
expressly set forth herein. Purchaser further acknowledges that Seller has
not been in occupancy of the Property and that the Property has been
exclusively occupied by ACPI pursuant to the ACPI Lease. In the event of loss
by fire or other casualty, the provisions of Section 11 shall apply.
10. NOTICES
-------
All notices, demands, deliveries of surveys, and any and all other
communications that may be or are required to be given to or made by either
party to the other in connection with this Agreement shall be in writing and
shall be deemed to have been properly given if delivered in person or sent by
registered or certified mail, return receipt requested, to the addresses set
out below or at such other addresses as specified by written notice and
delivered in accordance herewith:
TO SELLER: 31100 Solon Road, Inc.
--------- 31100 Solon Road
Solon, Ohio 44139
ATTN: Stephan W. Cole, President
With a Copy to: Thompson, Hine & Flory
110 National City Bank Building
Cleveland, Ohio 44114
ATTN: Patrick S. Sweeney, Esq.
TO PURCHASER: Vista 2000, Inc.
------------ 11660 Alpharetta Highway
Suite 330
Roswell, Georgia 30076
With a Copy to: J. Brian O'Neil
Moore & Rogers, LLC
Attorneys at Law
192 Anderson Street
Marietta, Georgia 30060
For purposes of this Agreement, the time of actual delivery, as evidenced
by a signed receipt therefor, if made in person, or three (3) days after the
date of postmark, if by mail, shall be deemed the date of any notice, demand or
delivery.
11. CONDEMNATION/CASUALTY
---------------------
If prior to the Closing of the sale contemplated herein any material
portion of the Property is (i) damaged by fire, or other casualty, and such
damaged portion of the Property is not repaired or replaced prior to the
Closing, or (ii) subject to a bona fide threat of condemnation by a body having
the power of eminent domain or condemnation, or sale in lieu thereof, Purchaser
may elect to terminate this Agreement by giving the Seller notice to such
effect within ten (10) days after receipt of notice of such occurrence [with the
Closing Date to be postponed, if necessary, to give both parties the benefit of
the full ten (10)
-4-
<PAGE> 5
day period], and both parties shall be relieved and released of and from any
and all further liability hereunder (other than any liability or indemnity that
by the express terms hereof survives any termination of this Agreement), and the
Title Company shall forthwith return to Purchaser all amounts deposited by
Purchaser, whereupon this Agreement shall be terminated. If Purchaser elects
not to terminate, this Agreement shall remain in full force and effect and the
purchase contemplated herein, less any property taken by eminent domain or
condemnation or under threat of being so taken, shall be effected without
reduction in the Purchase Price, and Seller shall, at the Closing, assign,
transfer and set over unto Purchaser all of Seller's right, title and interest
in and to any insurance proceeds or any awards paid or payable for such taking.
12. NO BROKER
---------
Seller and Purchaser each warrant to the other than no real estate
broker or agent is entitled to a commission as a result of the transaction
contemplated herein. Each party hereby indemnifies and agrees to hold harmless
the other from any claim by any real estate agent or broker for any commission
as a result of this transaction, which claim is caused or produced by such
party.
13. ASSIGNMENT
----------
Purchaser shall have no right to assign this Agreement without the
written consent of Seller, which consent shall not be unreasonably withheld or
delayed; provided, however, that Purchaser shall have the right to assign this
Agreement to any person(s), partnership or corporation, controlling, controlled
by or under common control with Purchaser without the consent of Seller, and
the transaction contemplated by this Agreement shall be consummated in the name
of such assignee. In the event of such assignment, the assignee shall assume
the obligations of Purchaser under this Agreement, and Purchaser shall have no
further obligation or liability under this Agreement.
14. DEFAULT
-------
In the event the transaction contemplated hereby is not closed because
of default by either party hereto, the non-defaulting party shall have all
rights and remedies available at law or in equity for the other party's breach.
15. PURCHASER'S CONTINGENCIES
-------------------------
This Agreement shall be contingent upon Purchaser's completion of the
purchase of the stock of American Consumer Products, Inc. pursuant to the
tender offer to be commenced by Purchaser on or about August 29, 1995, as the
same may be amended from time to time (herein referred to as the "Completion of
the Tender Offer").
16. ZONING OF THE PROPERTY
----------------------
Seller warrants and represents that the Property is zoned for its
current use and will remain so zoned as of the date of the Closing.
17. SELLER'S AGREEMENTS
-------------------
17.1 From and after the date of this Agreement to the date and time
of Closing, Seller shall not, without the prior
-5-
<PAGE> 6
written consent of Purchaser, convey any portion of the Property or any rights
therein, nor enter into any conveyance, lease, security document, easement or
other agreement or amendment to agreement granting to any person or entity any
rights with respect to the Property or any part thereof, or any interest
whatsoever therein, or any option thereto, and any such conveyance or other
agreement entered into in violation of this shall be null and void and of no
force or effect.
17.2 Seller warrants, represents and agrees that:
(i) Seller is the owner of the Property as of the date of this
Agreement.
(ii) To Seller's knowledge, no condemnation proceeding is
pending or threatened with respect to any part of the Property.
(iii) To Seller's knowledge, the Property is not now used, and
has never been used, as a garbage or refuse dump site, a landfill, a waste
disposal facility, a transfer station, or any other type of facility for
the storage, processing, treatment or temporary or permanent disposal of
waste materials, including, without limitation, solid, industrial, toxic,
hazardous, radioactive, nuclear or putrescible waste, or sewage; and there
are no underground storage tanks of any kind or nature located on the
Property as defined in the Comprehensive Environmental Response
Compensation and Liability Act, as amended (42 U.S.C. (S)9601, et seq.).
Seller shall affirm these warranties, representations and agreements
at (and as of the date of) Closing.
18. SURVIVAL AND TERMINATION
------------------------
The provisions of this Agreement concerning Purchaser's entering upon
the Property and any other provisions expressly so indicated shall survive
termination of this Agreement.
19. POSSESSION
----------
Seller shall deliver possession of the Property to Purchaser at
Closing subject to the ACPI Lease.
20. MISCELLANEOUS
-------------
20.1 This Agreement shall be construed and interpreted under the Laws
of the State of Ohio.
20.2 Purchaser shall pay all closing costs incident to the
transaction contemplated herein; provided, however, that Seller shall pay
any transfer tax, documentary stamp tax or other such tax required by
governments in Ohio on the limited warranty deed and Seller's attorneys'
fees.
20.3 To the extent any rights, powers or privileges are expressly
stipulated herein, such rights, powers and privileges shall be restrictive
of those given by law.
20.4 No failure of Purchaser or Seller to exercise any power given
either party hereunder or to insist upon strict compliance by either party
or its obligations hereunder, and no custom or practice of the parties at
variance with the terms hereof shall constitute a waiver of either party's
right to demand exact compliance with the terms hereof. Any condition or
right of termination or rescission granted by
-6-
<PAGE> 7
this Agreement to either Purchaser or Seller may be waived in writing by
the party for whose benefit such condition or right was granted.
20.5 Time is of the essence in complying with the terms, conditions
and agreements of this Agreement.
20.6 This Agreement contains the entire agreement of the parties
hereto with respect to the subject matter hereof and no representations,
inducements, promises or agreements, oral or otherwise, between the parties
and not expressly stated herein, shall be of any force or effect.
20.7 This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their respec-tive heirs, legal
representatives, successors and permitted assigns.
20.8 Except as expressly provided in Section 4 hereof, any amendment
to this Agreement shall not be binding upon Purchaser and Seller unless
such amendment is in writing duly executed by both Purchaser and Seller.
Escrow Agent need not be a party to amendments to this Agreement, provided
such amendments do not materially affect or impair its rights or duties
hereunder.
20.9 This Agreement may be executed in separate counterparts. It
shall be fully executed when each party whose signature is required has
signed at least one counterpart even though no one counterpart contains the
signatures of all the parties.
20.10 Upon Purchaser's execution and delivery of this Agreement to
Seller, this Agreement shall be deemed an offer by Purchaser to Seller open
for acceptance until 5:00 P.M. on the 5th day of September, 1995, by which
time a fully executed copy of this Agreement must be delivered by Seller to
Purchaser. Otherwise, this offer shall be terminated and of no further
force or effect.
IN WITNESS WHEREOF, Seller and Purchaser and have caused this instrument to
be executed under seal as of the day and year first above written.
Signed, Sealed and Delivered SELLER: 31100 SOLON ROAD, INC.
in the presence of: ------
/s/ CYNTHIA L. BURMEISTER
______________________________ /s/ STEPHAN W. COLE
________________________________
Witness By:
/s/ CAROL ANN NOBLE Date executed by Seller: August 29, 1995
_______________________________ ----------------------------------------
Notary Public
[Notary Seal]
Signed, Sealed and Delivered
in the presence of: PURCHASER: VISTA 2000, INC.
/s/ KATHLEEN M. KAMOS ---------
______________________________
/s/ RICHARD P. SMYTH
________________________________
Witness By:
/s/ CAROL ANN NOBLE
______________________________ Date executed by Purchaser: August 29, 1995
Notary Public -------------------------------------------
[Notary Seal]
-7-
<PAGE> 8
EXHIBIT A
---------
PARCEL NO. 1:
Situated in the City of Solon, County of Cuyahoga and State of Ohio and known
as being part of Original Solon Township Lots Nos. thirteen (13) and fourteen
(14), Tract No. 2 and being more particularly bounded and described as follows:
Commencing at the intersection of the centerline of Solon Road (sixty (60) feet
wide) with the centerline of Cochran Road (sixty (60) feet wide), thence due
east two thousand two hundred thirty (2,230) feet along said centerline of
Solon Road to the northeasterly corner of parcel of land conveyed to Hoover
Ball and Bearing Company by deed recorded in Volume 121/4, Page 323, of
Cuyahoga County deed records, and being the point of beginning;
Thence along the easterly line of said Hoover Ball and Bearing Company land
south zero degrees, forty-five minutes, two seconds west (5 0\o\-45'-02"W) one
thousand two hundred ninety and ninety-five one-hundredths (1290.95) feet to an
iron pin;
Thence continuing along the easterly line of said Hoover Ball and Bearing
Company land south sixty degrees, eighteen minutes, thirty-two seconds east (S
60\o\-18'-32" E) two hundred ten and ninety-nine one-hundredths (210.99) feet
to an iron pin on the northerly line of a parcel of land conveyed to The
Wheeling and Lake Erie Railway Company by deed recorded in Volume 9037, Page 8
of Cuyahoga County deed records;
Thence south eighty-nine degrees, fifty-four minutes, fifty seconds east (S
89\o\-54'-50" E) along said northerly line of The Wheeling and Lake Erie
Railway Company land four hundred fifty and zero one-hundredths (450.00) feet
to a point;
Thence north sixty degrees, eighteen minutes, thirty-two seconds west
(N 60\o\-18'-32" W) two hundred ten and ninety-nine one-hundredths (210.99)
feet to a point;
Thence north zero degrees, forty-five minutes, two seconds east (N 0\o\-45'-02"
E) one thousand two hundred ninety-one and
<PAGE> 9
sixty-two one hundredths (1291.62) feet to a point in the centerline of said
Solon Road;
Thence due west four hundred fifty and zero one-hundredths (450.00) feet along
the centerline of said Solon Road to the point of beginning.
PARCEL NO. 2:
Situated in the City of Solon, County of Cuyahoga and State of Ohio, and known
as being part of Original Solon Township Lots No. thirteen (13) and fourteen
(14), Tract No. 2 and being more particularly bounded and described as follows:
Beginning at a point in the centerline of Solon Road, 60 feet wide, distant due
East, along the centerline of Solon Road, a distance of 2,680.00 feet from an
iron monument at its intersection with the centerline of Cochran Road, 60 feet
wide; thence due East along the centerline of Solon Road, 80.00 feet to a point
therein; thence South 0\o\ 45' 02" West and passing through an iron pin set in
the Southerly line of Solon Road, a distance of 1,336.90 feet to an iron pin
set; thence North 60\o\ 18' 32" West, a distance of 91.41 feet to an iron pin
found; thence North 00\o\ 45' 02" East and passing through an iron pin found
in the Southerly line of Solon Road, a distance of 1,291.62 feet to the place of
beginning.
<PAGE> 1
Exhibit (c)(4)
AGREEMENT FOR THE SALE
AND PURCHASE OF REAL ESTATE
---------------------------
THIS AGREEMENT, entered into this 29th day of August, 1995, by and among
CRS Limited Partnership, (hereinafter referred to as "Seller"); and Vista 2000,
Inc., a Delaware Corporation (hereinafter referred to as "Purchaser").
W I T N E S S E T H:
-------------------
FOR AND IN CONSIDERATION of the sum of TEN AND NO/100 DOLLARS ($10.00),
the mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound, agree as follows:
1. PURCHASE AND SALE
-----------------
Upon the terms and conditions hereinafter set forth, Seller agrees to
sell and Purchaser agrees to purchase all that tract or parcel of land located
in the Northeast Quarter of the Northwest Quarter of Section 19, Township 16
North, Range 4 West of the Third Principal Meridian, Sangamon County, Illinois,
and being more particularly described in Exhibit "A" attached hereto and by
this reference made a part hereof together with the buildings and improvements
thereon (hereinafter referred to as the "Property").
2. SELLER'S COOPERATION
--------------------
Seller agrees to provide copies of any surveys, appraisals, studies,
title documents or other information reasonably requested by Purchaser or any
of Purchaser's Lenders, within ten days of the date of a written request for
such information from Purchaser.
3. PURCHASE PRICE
--------------
3.1 The Purchase Price for the Property to be paid by Purchaser to
Seller at the Closing and consummation of the purchase and sale of the Property
as contemplated herein (hereinafter referred to as the "Closing" and the date
of such Closing hereinafter referred to as the "Closing Date") shall be the fair
market value of the Property as determined by the average of two appraisals of
the Property performed by qualified independent appraisers; provided, however,
that if the average of the two (2) appraisals is less than $1,700,000, then
Seller shall have the right to terminate this Agreement, which rights shall be
exercised by written notice to purchaser within 10 days after receipt of such
appraisals. Purchaser shall choose three appraisers licensed in the State of
Illinois with designations of ASA or MAI.
3.2 The Purchase Price shall be payable in cash at Closing.
4. SURVEY
------
Purchaser shall cause to be prepared, at Purchaser's expense, an
accurate survey of the Property by a surveyor registered under the laws of the
State of Illinois reasonably acceptable to Seller (hereinafter referred to as
the "Survey"). The Survey shall contain a computation of the acreage of the
Property to the nearest one-hundredth (1/100th) of an acre, less any portion of
the Property within (i) the right-of-way of any road way, and (ii) any
transmission easements (the number of acres contained in the Property is
hereinafter referred to as the
<PAGE> 2
"Surveyed Acres"). Purchaser shall deliver one (1) print of the Survey,
together with a legally sufficient description of the metes and bounds of the
Property based on the Survey, to Seller no later than one (1) day prior to the
Closing, where-upon said description shall become a part of this Agreement
without the necessity of any further action by any of the parties hereto, and
said description shall replace and supersede the description of the property
attached hereto as Exhibit "A". Notwithstanding the foregoing, however, to the
extent that the revised legal description differs from that contained in
Exhibit "A", Seller shall only be required to deliver a Limited Warranty Deed
containing the legal description contained in Exhibit "A", and Seller shall
deliver a Quitclaim Deed containing the revised legal description.
5. CLOSING
-------
The Closing shall be held on or before forty five (45) days after the
Date of the Completion of the Tender Offer, as hereinafter defined. The exact
time, the place of Closing and the Closing Date shall be selected by Purchaser
by notice to Seller not less than five (5) days prior to the Closing Date. If
no such selection is timely made, the Closing shall be held at 10:00 A.M. on
the last possible business date for closing under this Agreement at the Seller's
office, or at such other place as Purchaser and Seller may agree upon in
writing.
6. CONVEYANCE OF TITLE
-------------------
6.1 At the Closing, Seller shall convey to Purchaser "good and
marketable fee simple title" to the Property by Limited Warranty Deed. "Good
and marketable, fee simple title" shall be such title as is acceptable to a
reasonable purchaser using Illinois title standards, as the criteria to
marketability of the title required hereby, and is insurable by a title
insurance company acceptable to Purchaser at standard rates and without
exception other than the Permitted Exceptions as defined herein.
6.2 Title to the Property shall be conveyed by Seller to Purchaser
free of all liens, leases and encumbrances with the following exceptions (which
exceptions are hereinafter referred to as the "Permitted Exceptions"):
(i) current city, state and county ad valorem property and
sanitary sewer taxes not yet due and payable;
(ii) general utility, sewerage and drainage easements affecting
the Property which do not materially interfere with Purchaser's intended
use of the Property; and
(iii) that certain Agreement of Lease dated June 27, 1989, by and
between Seller and Boss Manufacturing Company ("Boss"), a memorandum of
which was recorded in Volume _____ at Page ___, et seq. of _____________
------
County Records (the "Boss Lease").
6.3 At the Closing, Seller shall execute and deliver to Purchaser a
certificate with respect to Seller's non-foreign status sufficient to comply
with the requirements of Section 1445 of the Internal Revenue Code, commonly
known as the Foreign Investment in Real Property Tax Act of 1980, and all
regulations applicable thereto (collectively referred to as "FIRPTA").
6.4 At the Closing, Seller shall execute and deliver such other
documents as Purchaser may reasonably require to effect or complete the
transaction contemplated by this Agreement and to obtain an owner's policy of
title insurance insuring Purchaser's
-2-
<PAGE> 3
title through the date of the indexing of the recording of Purchaser's deed.
6.5 At the Closing, Seller and Purchaser shall execute and deliver an
Assignment and Assumption of Lease Agreement, in form and substance reasonably
satisfactory to Seller and Purchaser, whereby Seller shall assign, and
Purchaser shall assume, all of Seller's rights and obligations under the Boss
Lease.
7. TITLE EXAMINATION
-----------------
Purchaser shall have until Closing in which to search title to the
property and in which to furnish Seller with a written statement of any title
objections affecting the marketability of said title other than the Permitted
Exceptions. Seller shall have until Closing to satisfy all valid title
objections, and if Seller fails to satisfy such valid objections, then, at the
option of Purchaser, evidenced by written notice to Seller, Purchaser (i) may
choose to terminate this Agreement, or (ii) may elect to close and shall
receive the deed required herein from Seller irrespective of such title
objections without reduction of the Purchase Price, except that judgments of
record, existing mortgages and outstanding taxes may be paid by Purchaser at
Closing out of the Purchase Price. Purchaser shall also have the right to
examine title to the Property at any time up to Closing and object to any title
matters affecting the Property and arising or first discovered after the date
of the examination set forth above.
8. PRORATIONS
----------
At the Closing, all ad valorem property taxes, water and sewer charges
and assessments of any kind on the Property for the year of the Closing shall
be prorated between Purchaser and Seller as of midnight of the day prior to the
Closing; provided, however, there shall be no proration of any of the foregoing
items to the extent that Boss is obligated to pay such items under the Boss
Lease. Such proration shall be based upon the latest ad valorem property tax,
water, sewer charge and assessment bills available; and if such bills cover
other property than the Property, then such proration shall also be based on
the fraction obtained when the number of acres of the Property is divided by the
number of acres of property so covered by such bills. If, upon receipt of the
actual ad valorem property tax, water, sewer and assessment bills for the
Property, such proration is incorrect, then either Purchaser or Seller shall be
entitled, upon demand, to receive such amounts from the other as may be
necessary to correct such malapportionment; provided, however, there shall be
no proration of any of the foregoing items to the extent that Boss is obligated
to pay such items under the Boss Lease. This obligation so to correct such
malapportionment shall survive the Closing and not be merged into any documents
delivered pursuant to the Closing. The parties shall prorate all rents under
the Boss Lease at the Closing.
9. INSPECTION
----------
9.1 Purchaser shall have the privilege at all reasonable times and
upon reasonable prior notice to Seller, any time during the term of this
Agreement to go upon the Property with Purchaser's agents, representatives or
designees to inspect, examine and survey the Property. Purchaser indemnifies
and holds Seller harmless from and against loss or damage Seller may incur and
any and all liens that may arise as a result of Purchaser's activities or the
activities of Purchaser's agents, representatives or designees on the Property
and against any and
-3-
<PAGE> 4
all claims for death or injury to persons or properties arising out of or
connected with Purchaser's (or its agents, representatives or designees) going
upon the Property pursuant to the provisions of this Paragraph 9 or otherwise,
and against all costs, expenses and liability occurring in or in connection
with any such claim or proceeding brought thereon, including, without
limitation, court costs and reasonable attorney's fees. This indemnity shall
survive the Closing or any termination of this Agreement.
9.2 Except as set forth in Section 17 hereof, Purchaser acknowledges
and agrees that neither Seller nor any officer, employee or agent of Seller has
made any representation or warranty, express or implied, as to the condition,
quantity, design, merchantability, fitness or quality of the Property or any
portion thereof. Purchaser agrees to accept the Property "AS IS, WHERE IS",
subject to ordinary wear and tear and to Purchaser's right to terminate this
Agreement as otherwise expressly set forth herein. Purchaser further
acknowledges that Seller has not been in occupancy of the Property and that the
Property has been exclusively occupied by Boss pursuant to the Boss Lease. In
the event of loss by fire or other casualty, the provisions of Section 11 shall
apply.
10. NOTICES
-------
All notices, demands, deliveries of surveys, and any and all other
communications that may be or are required to be given to or made by either
party to the other in connection with this Agreement shall be in writing and
shall be deemed to have been properly given if delivered in person or sent by
registered or certified mail, return receipt requested, to the addresses set
out below or at such other addresses as specified by written notice and
delivered in accordance herewith:
TO SELLER: CRS Limited Partnership
--------- 29001 Cedar Road
Cleveland, Ohio 44124
ATTN: Dan K. Silverberg
With a Copy to: Thompson, Hine & Flory
1100 National City Bank Building
Cleveland, Ohio 44114
ATTN: Patrick J. Sweeney, Esq.
TO PURCHASER: Vista 2000, Inc.
------------ 11660 Alpharetta Highway
Suite 330
Roswell, Georgia 30076
With a Copy to: J. Brian O'Neil
Moore & Rogers, LLC
Attorneys at Law
192 Anderson Street
Marietta, Georgia 30060
For purposes of this Agreement, the time of actual delivery, as evidenced
by a signed receipt therefor, if made in person, or three (3) days after the
date of postmark, if by mail, shall be deemed the date of any notice, demand or
delivery.
-4-
<PAGE> 5
11. CONDEMNATION/CASUALTY
---------------------
If prior to the Closing of the sale contemplated herein any material
portion of the Property is (i) damaged by fire, or other casualty and such
damaged portion of the Property is not repaired or replaced prior to the
Closing, or (ii) subject to a bona fide threat of condemnation by a body having
the power of eminent domain or condemnation, or sale in lieu thereof, Purchaser
may elect to terminate this Agreement by giving the Seller notice to such
effect within ten (10) days after receipt of notice of such occurrence [with the
Closing Date to be postponed, if necessary, to give both parties the benefit of
the full ten (10) day period], and both parties shall be relieved and released
of and from any and all further liability hereunder (other than any liability
or indemnity that by the express terms hereof survives any termination of this
Agreement), and the title company shall forthwith return to Purchaser all
amounts deposited by Purchaser whereupon this Agreement shall be terminated.
If Purchaser elects not to terminate, this Agreement shall remain in full force
and effect and the purchase contemplated herein, less any property taken by
eminent domain or condemnation or under threat of being so taken, shall be
effected without reduction in the Purchase Price, and Seller shall, at the
Closing, assign, transfer and set over unto Purchaser all of Seller's right,
title and interest in and to any insurance proceeds or any awards paid or
payable for such taking.
12. NO BROKER
---------
Seller and Purchaser each warrant to the other than no real estate
broker or agent is entitled to a commission as a result of the transaction
contemplated herein. Each party hereby indemnifies and agrees to hold harmless
the other from any claim by any real estate agent or broker for any commission
as a result of this transaction, which claim is caused or produced by such
party.
13. ASSIGNMENT
----------
Purchaser shall have no right to assign this Agreement without the
written consent of Seller, which consent shall not be unreasonably withheld or
delayed; provided, however, that Purchaser shall have the right to assign this
Agreement to any person(s), partnership or corporation, controlling, controlled
by or under common control with Purchaser without the consent of Seller, and
the transaction contemplated by this Agreement shall be consummated in the name
of such assignee. In the event of such assignment, the assignee shall assume
the obligations of Purchaser under this Agreement, and Purchaser shall have no
further obligation or liability under this Agreement.
14. DEFAULT
-------
In the event the transaction contemplated hereby is not closed because
of default by either party hereto the non-defaulting party shall have all
rights and remedies available at law or in equity for the other party's breach.
15. PURCHASER'S CONTINGENCIES
-------------------------
This Agreement shall be contingent upon Purchaser's completion of the
purchase of the stock of American Consumer Products, Inc. pursuant to the
tender offer to be commenced by Purchaser on or about August 29, 1995 (herein
referred to as the "Completion of the Tender Offer"), as the same may be
amended from time to time.
-5-
<PAGE> 6
16. ZONING OF THE PROPERTY
----------------------
Seller warrants and represents that the Property is zoned for its
current use and will remain so zoned as of the date of the Closing.
17. SELLER'S AGREEMENTS
-------------------
17.1 From and after the date of this Agreement to the date and time
of Closing, Seller shall not, without the prior written consent of Purchaser,
convey any portion of the Property or any rights therein, nor enter into any
conveyance, lease, security document, easement or other agreement or amendment
to agreement granting to any person or entity any rights with respect to the
Property or any part thereof, or any interest whatsoever therein, or any option
thereto, and any such conveyance or other agreement entered into in violation
of this shall be null and void and of no force or effect.
17.2 Seller warrants, represents and agrees that:
(i) Seller is the owner of the Property as of the date of this
Agreement.
(ii) To Seller's knowledge, no condemnation proceeding is
pending or threatened with respect to any part of the Property.
(iii) To Seller's knowledge, the Property is not now used, and
has never been used, as a garbage or refuse dump site, a landfill, a waste
disposal facility, a transfer station, or any other type of facility for
the storage, processing, treatment or temporary or permanent disposal of
waste materials, including, without limitation, solid, industrial, toxic,
hazardous, radioactive, nuclear or putrescible waste, or sewage; and there
are no underground storage tanks of any kind or nature located on the
Property as defined in the Comprehensive Environmental Response
Compensation and Liability Act, as amended (42 U.S.C. (S)9601, et seq.).
Seller shall affirm these warranties, representations and agreements
at (and as of the date of) Closing.
18. SURVIVAL AND TERMINATION
------------------------
18.1 The provisions of this Agreement concerning Purchaser's entering
upon the Property and any other provisions expressly so indicated shall survive
termination of this Agreement.
19. POSSESSION
----------
Seller shall deliver possession of the Property to Purchaser at
Closing subject to the Boss Lease.
20. MISCELLANEOUS
-------------
20.1 This Agreement shall be construed and interpreted under the Laws
of the State of Illinois.
20.2 Purchaser shall pay all closing costs incident to the
transaction contemplated herein; provided, however, that Seller shall pay any
transfer tax, documentary stamp tax or other such tax required by governments
in Illinois on the limited warranty deed and Seller's attorneys' fees.
-6-
<PAGE> 7
20.3 To the extent any rights, powers or privileges are expressly
stipulated herein, such rights, powers and privileges shall be restrictive of
those given by law.
20.4 No failure of Purchaser or Seller to exercise any power given
either party hereunder or to insist upon strict compliance by either party or
its obligations hereunder, and no custom or practice of the parties at variance
with the terms hereof shall constitute a waiver of either party's right to
demand exact compliance with the terms hereof. Any condition or right of
termination or rescission granted by this Agreement to either Purchaser or
Seller may be waived in writing by the party for whose benefit such condition
or right was granted.
20.5 Time is of the essence in complying with the terms, conditions
and agreements of this Agreement.
20.6 This Agreement contains the entire agreement of the parties
hereto with respect to the subject matter hereof and no representations,
inducements, promises or agreements, oral or otherwise, between the parties and
not expressly stated herein, shall be of any force or effect.
20.7 This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their respective heirs, legal representatives,
successors and permitted assigns.
20.8 Except as expressly provided in Section 4 hereof, any amendment
to this Agreement shall not be binding upon Purchaser and Seller unless such
amendment is in writing duly executed by both Purchaser and Seller. Escrow
Agent need not be a party to amendments to this Agreement, provided such
amendments do not materially affect or impair its rights or duties hereunder.
20.9 This Agreement may be executed in separate counterparts. It
shall be fully executed when each party whose signature is required has signed
at least one counterpart even though no one counterpart contains the signatures
of all the parties.
20.10 Upon Purchaser's execution and delivery of this Agreement to
Seller, this Agreement shall be deemed an offer by Purchaser to Seller open for
acceptance until 5:00 P.M. on the 5th day of September, 1995, by which time a
fully executed copy of this Agreement must be delivered by Seller to Purchaser.
Otherwise, this offer shall be terminated and of no further force or effect.
[Balance of page left intentionally blank]
-7-
<PAGE> 8
IN WITNESS WHEREOF, Seller and Purchaser and have caused this instrument
to be executed under seal as of the day and year first above written.
<TABLE>
<S> <C>
Signed, Sealed and Delivered SELLER: CRS LIMITED PARTNERSHIP
in the presence of: ------
_______________________________ __________________________________
By:
Witness
_______________________________ Date executed by Seller:
Notary Public ----------------------------------
[Notary Seal]
Signed, Sealed and Delivered PURCHASER: VISTA 2000, INC.
in the presence of: ---------
/s/ CYNTHIA L. BURMEISTER /s/ RICHARD P. SMYTH
_______________________________ __________________________________
By:
Witness
/s/ CAROL ANN NOBLE Date executed by Purchaser: August 29, 1995
________________________________ -------------------------------------------
Notary Public
[Notary Seal]
</TABLE>
-8-
<PAGE> 9
EXHIBIT A
Legal Description
Part of the Northeast Quarter of the Northwest Quarter of Section 19,
Township 16 North, Range 4 West of the Third Principal Meridian, Sangamon
County, Illinois, described as follows:
From the intersection of the Quarter Section line and South right of
way line of Illinois S.A. Route 3, West of the aforesaid right of way line
212.39 feet; thence deflecting to the right 00/o/39'20" on aforesaid right of
way line 87.61 feet to the point of beginning, thence deflecting to the left
90/o/52'00", 794.26 feet; thence deflecting to the right 71/o/49'50", 109.56
feet to the point of curve of a curve to the right of radius of 60.00 feet;
thence Northwesterly on said curve for a chord distance of 58.53 feet; thence
deflecting to the right from the chord of the curve 29/o/11'31" 288.68 feet to
the point of curve of a curve to the right of radius of 20.00 feet; thence
Northwestly on said curve a chord distance of 17.32 feet to the point of curve
of a curve to the left of radius of 60.00 feet; thence Northwesterly on
aforesaid curve a chord distance of 37.70 feet; thence North parallel to the
first line described 585.00 feet to the aforesaid right of way line; thence
East on the right of way line 400.00 feet to the point of beginning.
Except the coal and other minerals underlying the surface of said
land and all rights and easements in favor of the estate of said coal and
minerals.
<PAGE> 1
Exhibit (c)(5)
ACPI AMERICAN CONSUMER PRODUCTS, INC.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
August 2, 1995
Mr. Richard P. Smyth, Chairman & CEO
VISTA 2000 Inc.
11660 Alpharetta Highway, #340
Roswell, GA 30076
Dear Mr. Smyth:
In connection with your consideration of the possible merger or
purchase transaction (the "Acquisition Transaction") involving
American Consumer Products, Inc. and its subsidiaries (the
"Company"), you have requested access to certain information. In
consideration for and as a condition to our furnishing such
information to you, you acknowledge the confidential and
proprietary nature of the Evaluation Material (as defined below)
and agree to hold and keep the same as provided in this letter
agreement. As used herein, the term "Evaluation Material" shall
mean any and all financial, technical, commercial or other
information concerning the business operations, assets of, or
relating to, the Company that has been or may hereafter be
provided or shown to you or your officers, directors, employees,
attorneys, accountants, auditors, advisors or agents
(collectively, "your Representatives"), irrespective of the form
of the communication, by the Company or its representatives or
agents (including attorneys and financial advisors), and also
includes all notes, analyses, abstracts, compilations, studies or
other material prepared by you or your Representatives containing
or based, in whole or in part, on any information provided or
shown by the Company or by its representatives or agents, and all
nonpublic information obtained by visiting the facilities of the
Company or discussing the Acquisition Transaction with the
Company.
The term "Evaluation Material" does not include information which
(i) was or becomes generally available to the public other than as
a result of a disclosure by you or your Representatives, (ii) was
available to you on a non-confidential basis prior to its
disclosure to you by the Company or its representatives or agents,
provided that the source of such information is not bound by a
confidentiality agreement with the Company or its representatives
or agents or otherwise prohibited from transmitting the
information to you or your Representatives by a contractual, legal
or fiduciary obligation, or (iii) becomes available to you on a
non-confidential basis from a source other than the Company or its
representatives or agents, provided that the source is not bound
by a confidentiality agreement with the Company or its
representatives or agents or otherwise prohibited from
transmitting the information to you or your Representatives by a
contractual, legal or fiduciary obligation.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2
Mr. Richard P. Smyth
Page Two
August 2, 1995
As a condition to your being furnished with the Evaluation
Material, you agree that you will use the Evaluation Material
solely for evaluating the Acquisition Transaction and that you
will keep the Evaluation Material confidential. It is understood
that you may disclose any of the Evaluation Material to those of
your Representatives who require such material for the purposes of
evaluating the Acquisition Transaction (provided that you shall
maintain records of the persons to whom the Evaluation Material is
distributed, that such Representatives shall be informed by you of
the confidential nature of the Evaluation Material, shall be
provided with a copy of this letter agreement and be bound by the
terms and conditions hereof as if they were a party hereto, and
you shall be responsible for any violation thereof by any of
them.) You agree that the Evaluation Material shall not be used by
you or your Representatives in any way detrimental to the Company,
as solely determined by the management of the Company.
Without the prior written consent of the Company or as otherwise
provided herein, neither you nor your Representatives shall
disclose to any person (i) the fact that the Evaluation Material
has been made available to you or that you have inspected any
portion of the Evaluation Material, (ii) the fact that any
discussions or negotiations are taking place concerning a possible
Acquisition Transaction, (ii) that you have or have not made a
proposal, bid or offer to acquire the Company or (iv) any of the
terms, conditions or other facts with respect to any of the
foregoing. The term "person" as used in this letter
agreement shall be broadly interpreted to include, without
limitation, any corporation, company, partnership or other entity
or any individual.
In the event that you or any of your Representatives are requested
or become legally compelled (by oral questions, interrogatories,
requests for information or documents, subpoena, civil
investigative demand or similar process) to make any disclosure
which is prohibited or otherwise constrained by this letter
agreement, you agree that you or such Representative, as the case
may be, will provide the Company with prompt oral and written
notice of such request(s) so that it may seek an appropriate
protective order or other appropriate remedy. You agree to
cooperate with the Company, at its expense, in any efforts to
obtain such remedies, but this provision shall not be construed to
require you to undertake litigation or other legal proceedings on
your own behalf. In the event that such protective order or other
remedy is not obtained, or that the Company grants a waiver
hereunder, you or such Representative may furnish that portion
(and only that portion) of the Evaluation Material which, in the
written opinion of counsel addressed to the Company and reasonably
acceptable to the Company, you are legally compelled to disclose;
provided, however, that you may disclose only that portion of
-----------------
such information or matter that is legally required to be disclosed
and you shall use your best effort to obtain reliable assurance that
confidential treatment will be accorded any Evaluation Material so
disclosed.
<PAGE> 3
Mr. Richard P. Smyth
Page Three
August 2, 1995
Without the prior written consent of the Company (i) neither you
nor those of your Representatives who are aware of the Evaluation
Material and/or the possibility of an Acquisition Transaction will
initiate or cause to be initiated (other than through the Company)
any communications with any customer, supplier, employee,
director, officer, agent or shareholder of the Company concerning
the Evaluation Material or any possible transaction, and (ii) you
will not, for a period of three (3) years from the date of this
letter agreement, (A) solicit, or cause to be solicited, the
employment of or employ any person who is now employed by the
Company, (B) solicit business from any customer or supplier of the
Company that you had not contacted prior to obtaining Evaluation
Material, or (C) solicit, entertain discussions with respect to,
or participate in a transaction involving an investment in, or an
acquisition or, the stock or assets of the Company.
If you determine that you do not wish to proceed with an
Acquisition Transaction, you shall promptly notify the Company of
such decision. At such time, or at any time upon the written
request of the Company, you shall promptly deliver to the Company
all documents or other matter furnished by the Company or its
representatives or agents to you or your Representatives
constituting Evaluation Material, together with all copies thereof
in the possession of you or your Representatives without retaining
a copy of any such material. In the event of such request, all
other documents or other matter constituting Evaluation Material
in the possession of you or your Representatives shall be
destroyed, with any such destruction confirmed by you in writing
to the Company.
You understand that neither the Company nor its representatives or agents
makes any representation or warranty (express or implied) as to the accuracy
or completeness of the Evaluation Material. You agree that neither the
Company nor its representatives or agents shall have any liability to you or
any of your Representatives resulting from the use of the Evaluation
Material by you or such Representatives. Only these representations and
warranties that may be made to you in a definitive written agreement for an
Acquisition Transaction, when, as and if executed and subject to such
limitations and restrictions as may be specified herein, shall have any
legal effect, and you agree that, if you determine to engage in an
Acquisition Transaction, such determination will be based solely on the
terms of such written agreement and on your own investigation, analysis and
assessment of the business to be acquired. The agreements set forth herein
may be modified or waived only by a separate writing signed by the Company
and you expressly so modifying or waiving such agreements.
You hereby agree to indemnify and hold harmless the Company from
any damages, loss, cost or liability (including legal fees and the
cost of enforcing this indemnity) arising out of or resulting from
any unauthorized use or disclosure by you or your Representatives
of the Evaluation Material. You also acknowledge that money
damages would be an insufficient remedy for any breach of this
letter agreement by you or your Representatives and any
<PAGE> 4
Mr. Richard P. Smyth
Page Four
August 2, 1995
such breach would cause the Company irreparable harm. Accordingly,
you also agree that in the event of any breach of threatened
breach of this letter agreement, the Company shall be entitled,
without the requirement of posting a bond or other security, to
equitable relief, including injunctive relief and specific
performance. such remedy shall not be the exclusive remedy for any
breach of this letter agreement but shall be in addition to all
other remedies available at law or equity to the Company.
It is understood and agreed that no failure or delay by the
Company in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or
the exercise of any right, power or privilege hereunder.
The invalidity or unenforceability of any provision of this letter agreement
shall not affect the validity or enforceability of any other provisions of
this letter agreement, which shall remain in full force and effect. If any
of the covenants or provisions of this agreement shall be deemed to be
unenforceable by reason of its extent, duration, scope or otherwise, then
the parties contemplate that the court making such determination shall
reduce such extent, duration, scope or other provision, and enforce them in
their reduced form for all purposes contemplated by this Agreement. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
This Agreement embodies the entire understanding and agreement
between the parties with respect to the Evaluation Material and
the Acquisition Transaction and supersedes any prior
understandings and agreements relating thereto. No other contract
or agreement among the parties hereto relating to the Acquisition
Transaction exists. No contract or agreement providing for the
Acquisition Transaction, and no legal obligation of any kind
whatsoever relating to the Acquisition Transaction, except as to
the matters specifically agreed to herein, will be deemed to exist
and either you or the Company may terminate discussions or
negotiations regarding a possible Acquisition Transaction at any
time without any liability except as agreed to herein, unless and
until a binding commitment agreement or an Acquisition Transaction
Agreement has been executed and delivered.
The Company reserves the right to assign all rights under this
letter agreement, including, without limitation, their right to
enforce all of the terms contained herein. You agree and consent to
personal jurisdiction and service and value in any federal or
state court within the State of Ohio having subject matter
jurisdiction, for the purposes of any action, suit or proceeding
arising out of or relating to this letter agreement. This letter
agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.
<PAGE> 5
Mr. Richard P. Smyth
Page Five
August 2, 1995
If you are in agreement with the foregoing, please sign and return one
copy of this letter agreement, which thereupon will constitute our
agreement with respect to the subject matter hereof.
Very truly yours,
AMERICAN CONSUMER PRODUCTS, INC.
Stephan W. Cole
President
ACCEPTED and AGREED to as of the day and year first above written:
VISTA 2000 Inc.
Richard P. Smyth
Chairman & CEO
<PAGE> 6
[LETTERHEAD OF AMERICAN CONSUMER PRODUCTS, INC. APPEARS HERE]
ACPI hereby waives the provisions of the fourth and sixth paragraphs of that
certain confidentiality letter agreement dated August 2, 1995 by and between
American Consumer Products, Inc. and Vista 2000, Inc., so that Vista may
initiate a cash tender offer for the common stock of ACPI at $5.30 per share
and make all filings and announcements that may be necessary or desirable in
connection therewith.
The foregoing shall not, however, constitute approval by ACPI or its
board of directors of the purchase and acceptance by Vista of the shares which
are the subject of the tender offer.
AMERICAN CONSUMER PRODUCTS, INC.
By: /s/ S.W. Cole
----------------------------
Title: President
-------------------------
Date: August 29, 1995
--------------------------
<PAGE> 1
Exhibit (c)(6)
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into as of the
29th day of August, 1995 by and among VISTA 2000, INC., a Delaware corporation
("VISTA"), AMERICAN CONSUMER PRODUCTS, INC., a Delaware corporation ("ACPI"),
and the ESCROW AGENT named herein.
WHEREAS, VISTA and ACPI have engaged in preliminary discussions regarding a
possible acquisition of ACPI by VISTA through the vehicle of a cash tender
offer at $5.30 per share (the "Tender Offer"); and
WHEREAS, VISTA is willing to demonstrate to ACPI its ability to fund the
Tender Offer and its ability to undertake to file all necessary Tender Offer
documents with appropriate governmental agencies within a reasonable period of
time; and
WHEREAS, the parties have agreed that the Escrowed Funds (as hereinafter
defined) shall be held in escrow by the Escrow Agent (as hereinafter defined)
in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) paid in hand, the
promises and the mutual covenants, agreements, representations and warranties
contained herein, and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1
DEFINITIONS
-----------
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1 "ACPI Dispute Notice" shall have the meaning ascribed in Section 6.4
hereof.
1.2 "Notice of Claim for Disbursement" shall have the meaning ascribed in
Section 6.1 hereof.
1.3 "Escrow Agent" shall mean Grier Newlin, a resident of the State of
Georgia.
1.4 "Escrowed Funds" shall mean the sum of Five Hundred Thousand and
No/100 Dollars ($500,000.00), deposited by VISTA with Escrow Agent.
1.5 "VISTA Dispute Notice" shall have the meaning ascribed in Section 6.2
hereof.
<PAGE> 2
SECTION 2
ESCROW DEPOSIT AND FEE
----------------------
2.1 Contemporaneously herewith, Purchaser has delivered to the Escrow
Agent the Escrowed Funds.
2.2 The Escrow Agent hereby accepts the Escrowed Funds in escrow and
agrees to hold and keep same in accordance with the terms and conditions hereof
and for the uses and purposes stated herein, and to disburse the Escrowed Funds
subject to the terms of this Agreement.
2.3 The fee of the Escrow Agent of its services hereunder shall be One
Thousand and No/100 Dollars ($1,000.00), which amount is due and payable in
cash upon execution hereof and shall be paid by VISTA.
SECTION 3
CONDITIONS FOR DISBURSEMENT OF ESCROWED FUNDS
---------------------------------------------
3.1 The Escrowed Funds (together with all interest earned thereon) or, in
the event of clause (iii) below, a portion of the Escrowed Funds, shall be
disbursed to ACPI if (i) a Tender Offer Statement on Schedule 14D-1 for the
purchase of the shares of Common Stock of ACPI is not filed by VISTA with the
Securities and Exchange Commission (the "SEC") within forty-five (45) days from
the date hereof; (ii) VISTA is unable to purchase shares tendered by ACPI
shareholders pursuant to the Tender Offer solely due to VISTA's having
insufficient cash funds on hand for such purchases; or (iii) ACPI becomes
entitled to reimbursement of certain expenses pursuant to Section 8 hereof.
3.2 The Escrowed Funds (together with all interest earned thereon) shall
be disbursed to VISTA, if not earlier disbursed to ACPI pursuant to Section 3.1
hereof, in the event of a breach of Section 4 hereof by ACPI or upon
termination of this Agreement.
SECTION 4
"NO SHOP" COVENANT
------------------
4.1 During the forty-five (45) day period following the execution of this
Agreement (the "No Shop Period"), ACPI shall not, and shall use its best
efforts to ensure that its officers, directors, employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it) do not, initiate or solicit, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to ACPI's
stockholders) with respect to a merger, acquisition, consolidation, business
combination, or similar transaction involving ACPI, or any purchase of all or
any significant portion of the assets or equity of ACPI.
2
<PAGE> 3
4.2 During the No Shop Period, ACPI will promptly advise VISTA orally and
in writing of any Alternate Proposal (as hereinafter defined).
4.3 Nothing in this Section 4 shall be construed to prevent or hinder ACPI
from acting to fully and fairly evaluate and analyze the Tender Offer or in
making any recommendation concerning the Tender Offer to ACPI's shareholders or
prevent ACPI or its officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it) from furnishing information to or entering into discussions or
negotiations with any person or entity that makes an unsolicited proposal (or
expresses an unsolicited indication of interest in making a proposal) to
acquire the Company pursuant to a merger, consolidation, share exchange,
purchase of a substantial portion of the assets, business combination or other
similar transaction, so long as such proposal (an "Alternate Proposal") (or
unsolicited indication of interest in making a proposal) did not arise through
a breach of Section 4.1 of this Agreement.
SECTION 5
ESCROWED FUNDS
--------------
5.1 Upon execution hereof, VISTA will transfer and deliver to the Escrow
Agent for holding pursuant hereto the Escrowed Funds, in immediately available
funds.
5.2 Pending disbursement in accordance with the terms hereof, the Escrowed
Funds shall be held by the Escrow Agent and invested in an interest-bearing
trust account.
5.3 The Escrowed Funds shall be held by the Escrow Agent in his possession
until directed hereunder to disburse such Escrowed Funds in accordance with
Section 6 hereof or until termination of this Agreement.
5.4 All payments made from the Escrowed Funds pursuant to this Agreement
shall be made by wire transfer in immediately available funds to an account
designated by the party to whom such payments are to be made, and shall be paid
within two (2) business days following the date on which the rights to receive
such amounts shall be established pursuant to the terms of this Agreement.
SECTION 6
NOTICE TO DISBURSE
------------------
6.1 In the event one of the conditions set forth in Section 3.1 hereof
occurs, pursuant to which Escrow Agent is required to disburse the Escrowed
Funds to ACPI, ACPI may deliver a Notice of Claim for Disbursement to Escrow
Agent setting forth in reasonable detail the nature of the claim, together with
proof that it has mailed a copy of such Notice to VISTA no later than the date
such Notice was mailed to Escrow Agent. The copy of the Notice of Claim for
Disbursement to VISTA must be sent by registered mail or certified mail, return
receipt requested, with a copy sent by facsimile.
3
<PAGE> 4
6.2 If Escrow Agent has not received a written notice from VISTA (the
"VISTA Dispute Notice") stating that it disputes the validity of the claim set
forth in ACPI's Notice of Claim for Disbursement, within ten (10) days after
receipt by Escrow Agent of the Notice of Claim for Disbursement, Escrow Agent
shall disburse the Escrowed Funds to ACPI.
6.3 In the event there is a breach of Section 4 of this Agreement by
ACPI, pursuant to which Escrow Agent is required, pursuant to Section 3.2
hereof, to disburse the Escrowed Funds to VISTA, VISTA may deliver a Notice of
Claim for Disbursement to Escrow Agent setting forth in reasonable detail the
nature of the claim, together with proof that it has mailed a copy of such
Notice to VISTA no later than the date such Notice was mailed to Escrow Agent.
The copy of the Notice of Claim for Disbursement to VISTA must be sent by
registered mail or certified mail, return receipt requested, with a copy sent
by facsimile.
6.4 If Escrow Agent has not received a written notice from ACPI (the "ACPI
Dispute Notice") stating that it disputes the validity of VISTA's claim, within
ten (10) days after receipt by Escrow Agent of the Notice of Claim for
Disbursement, Escrow Agent shall disburse the Escrowed Funds to VISTA.
6.5 If Escrow Agent receives an ACPI Dispute Notice or VISTA Dispute
Notice, the Escrow Agent shall retain the Escrowed Funds (in the interest-
bearing account) pending final resolution of the dispute either by mutual
written agreement of ACPI and Vista or by a final unappealable court
determination or, upon receipt of joint written instructions from ACPI and
Vista or pursuant to a valid court order, be entitled to tender into the
registry or custody of any court of competent jurisdiction the Escrowed Funds.
SECTION 7
ESCROW AGENT MATTERS
--------------------
7.1 VISTA and ACPI, jointly and severally, agree to indemnify and hold
harmless the Escrow Agent against any and all costs, losses, claims, damages,
liabilities, expenses (including reasonable costs of investigation, court costs
and attorneys' fees and disbursements) which may be imposed upon the Escrow
Agent in connection with its acceptance of appointment as Escrow Agent
hereunder, including any litigation arising from this Agreement or involving
the subject matter hereof, unless such costs, losses, claims, damages,
liabilities or expenses are caused by the gross negligence or willful default
of the Escrow Agent, and all such costs, expenses and disbursements will be for
the account of and will be borne and paid by VISTA and ACPI as a condition to
the termination of this Agreement. As between themselves, VISTA and ACPI agree
that the cost of this indemnification shall be borne equally by them.
7.2 The Escrow Agent will be liable only to hold and disburse the Escrowed
Funds in accordance with the provisions of this Agreement; it being expressly
understood that by acceptance of this Agreement the Escrow Agent is acting in
the capacity of a depository only, and will not be liable or responsible to
anyone for any claims, damages, losses, liabilities or expenses unless such
damages, losses or expenses are caused by the gross negligence or willful
default of the Escrow Agent.
4
<PAGE> 5
7.3 The Escrow Agent will not incur any liability with respect to (i) any
action taken or omitted in good faith upon the advice of its counsel with
respect to any questions relating to the duties and responsibilities of the
Escrow Agent under this Agreement or (ii) any action taken or omitted in
reliance upon any instrument, including any written instructions provided for
herein, not only concerning the due execution of such instrument, or the
identity or authority of any person executing such instrument, or the validity
and effectiveness of such instrument, but also concerning the truth and
accuracy of any information contained therein; provided that the Escrow Agent
in good faith believes such instrument to be genuine, to have been signed by a
proper person or persons, and to conform to the provisions of this Agreement.
7.4 The Escrow Agent will make his books and records with respect to the
Escrowed Funds available for examination by VISTA and ACPI, or their duly
authorized employees, agents and representatives, during normal business hours,
and will deliver to VISTA and ACPI all information reasonably requested by
either of them concerning the Escrowed Funds.
SECTION 8
FEES AND EXPENSES
-----------------
If a Tender Offer Statement is filed with the SEC but the Tender Offer is
not consummated for any reason other than (i) less than fifty-one percent (51%)
of ACPI's shares, on a fully-diluted basis, being tendered pursuant to the
Tender Offer; or (ii) VISTA determining not to proceed with the Tender Offer
due to a written statement or disclosure of ACPI containing an untrue statement
of a material fact which material fact may have an adverse effect on the
Company, VISTA shall reimburse ACPI for up to Two Hundred Thousand Dollars
($200,000) of fees and expenses of ACPI's outside legal counsel, independent
certified public accountants and outside consultants to the extent such fees
and expenses are actually incurred by ACPI for services specifically
attributable to the Tender Offer. VISTA shall not be required to make any
reimbursement with respect to any employee of ACPI (whether in-house legal
counsel, in-house accountants, or otherwise). VISTA shall make payments with
respect to such reimbursement within thirty (30) days of its receipt from such
parties of invoices setting forth and describing in detail all fees, expenses
and other charges of such parties.
SECTION 9
MISCELLANEOUS
-------------
9.1 All notices and other communications under this Agreement must be in
writing and shall be deemed to have been duly given or delivered if delivered
personally or sent by telex, telegram, or telecopy (receipt confirmed) or one
day after being sent by overnight delivery service or three days after being
mailed by certified or registered mail, return receipt requested, with first
class postage prepaid, to the following addresses or to any other address that
a party to this Agreement shall have last designated by notice to the other
parties:
5
<PAGE> 6
(a) To ACPI:
31100 Solon Road
Solon, Ohio 44139
Attention: Stephan W. Cole, President
Telecopy: (216) 248-8051
with a copy to:
Thompson, Hine & Flory
1100 National City Bank Building
Cleveland, Ohio 44141
Attention: Gregory A. Smith, Esq.
Telecopy: (216) 566-5583
(b) To VISTA:
11660 Alpharetta Highway, Suite 330
Roswell, Georgia 30076
Attention: Mr. Arnold Johns, President
Telecopy: (404) 751-8808
with a copy to:
Nelson, Mullins, Riley & Scarborough, L.L.P.
400 Colony Square
Suite 2200
1201 Peachtree Street
Atlanta, Georgia 30361
Attention: Steven A. Cunningham, Esq.
Telecopy: (404) 817-6050
(c) To Escrow Agent:
Grier Newlin, Esq.
Tower Place - Suite 2000
3340 Peachtree Road, N.E.
Atlanta, Georgia 30326
Telecopy: (404) 233-9060
Any party may change its address for Notices by giving written Notice
setting forth such new address.
9.2 This Agreement may be amended only by an instrument in writing
executed by VISTA, ACPI and the Escrow Agent. Any officer of VISTA or ACPI may
by a signed writing
6
<PAGE> 7
give any consent, take any action, waive any inaccuracies in representations or
other compliance by any other party to any of the covenants or conditions
herein, modify the terms of this Agreement or take any other action deemed by
him to be necessary or appropriate to consummate the transactions contemplated
by this Agreement.
9.3 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute one and
the same instrument. The headings herein set out are for convenience of
reference only and shall not be deemed a part of this Agreement.
9.4 This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, successors and assigns.
9.5 The parties to this Agreement agree to execute and deliver any and all
additional documents requested by any party hereto to effectuate the purposes
of this Agreement.
9.6 This Agreement (other than Section 8, which shall continue in favor
until satisfaction of the parties' respective obligations therein contained)
shall terminate at such time as all of the Escrowed Funds are distributed by
the Escrow Agent, or November 30, 1995, whichever first occurs.
9.7 The validity and effect of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
(without regard to its rules of conflicts of laws).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
AMERICAN CONSUMER PRODUCTS, INC.
ATTEST: By: /s/ Stephan W. Cole
_____________________________
___________________________________________
[CORPORATE SEAL]
7
<PAGE> 1
Exhibit (c)(7)
[INDEMNIFICATION AGREEMENT]
August 29, 1995
American Consumer Products, Inc.
31100 Solon Road
Solon, Ohio 44131
Gentlemen:
This letter sets forth Vista 2000, Inc.'s ("Vista") agreements with
respect to the indemnification of the current directors and officers of American
Consumer Products, Inc. ("ACPI") following the purchase and acceptance by Vista
of the shares of common stock of ACPI (the "Shares") which Vista will seek to
acquire pursuant to an Offer to Purchaser (the "Tender Offer") that Vista
expects to commence on or about August 29, 1995.
INDEMNIFICATION. From and after the date Vista accepts and pays for the
Shares, (the "Effective Date"), Vista shall use its best efforts to cause ACPI
to indemnify, defend, and hold harmless to the fullest extent permitted or
required by applicable law the present and former directors and officers of ACPI
and any ACPI Subsidiaries and their respective heirs, executors, administrators
and legal representatives, including without limitation, each member of any
Special Committee of the Board of Directors of ACPI appointed in respect of the
transactions contemplated by the Tender Offer (the "Special committee")
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties") against all losses, expenses, claims, damages, or liabilities arising
out of actions or omissions occurring on or prior to the Effective Date,
(including, without limitation, acts or omissions relating to the transactions
contemplated by the Tender Offer (collectively, "Losses") to the fullest extent
permitted or required under applicable law). From and after the Effective Date,
Vista shall use its best efforts to cause ACPI to advance expenses incurred in
defending against any claim, action, suit, proceeding, or investigation arising
out of any alleged acts or omissions occurring on or prior to the Effective Date
(including, without limitation, acts or omissions relating to the transactions
contemplated by the Tender Offer, as incurred to the fullest extent permitted or
required under applicable law, provided that the person to whom expenses are
advanced provides an undertaking in form and to repay such advances if it is
ultimately determined that such person is not entitled to indemnification. All
rights to indemnification, including provisions relating to advances of
expenses, existing in favor of the Indemnified Parties as provided in ACPI's
Restated Certificate of Incorporation or Bylaws, as in effect as of the date of
this Letter Agreement, with respect to matters occurring through the Effective
Date, to the extent permitted by law, will survive the acceptance and purchase
by Vista of the Shares and will continue in full force and effect for a period
of not less than six years from the Effective Date. Vista shall use its best
efforts to cause ACPI to maintain in effect during the six-year period beginning
with the Effective Date (i) the current policy of directors' and officers'
liability insurance and fiduciary
<PAGE> 2
liability insurance with Federal Insurance Company (a Chubb Company), policy
number 8155-43-57G, and National Union Insurance Company of Pittsburgh,
Pennsylvania, policy number 444-26-14 (RIN 442-28-83), maintained by ACPI and
ACPI Subsidiaries with respect to matters occurring prior to the Effective Date,
or (ii) other policies (including without limitation, policies providing "tail
coverage" for the then remaining portion of the six-year period for a one-time
premium) with scope of coverage, policy limits, retention amounts, and other
material terms that are no less favorable to the Indemnified Parties than those
of the policy referred to in (i) above.
DEFENSE. Any Indemnified Party will promptly notify ACPI of any claim,
action, suit, proceeding, or investigation for which such party may seek
indemnification under this Letter Agreement. In the event of any such claim,
action, suit, proceeding, or investigation, (i) ACPI will have the right to
assume the defense thereof, and ACPI will not be liable to such Indemnified
Party for any legal expenses of other counsel or any other expenses subsequently
incurred thereafter by such Indemnified Party in connection with the defense
thereof, except that an Indemnified Party will have the right to retain separate
counsel, acceptable to the Indemnified Party and ACPI at the expense of ACPI if
the named parties to any such proceeding include both the Indemnified Party and
the ACPI and the representation of such parties by the same counsel would be
inappropriate due to a conflict of interest between them; provided that, ACPI
will not be responsible for the legal expenses of more than one law firm in
connection with any one matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the legal
positions of any two or more Indemnified Parties, (ii) the Indemnified Parties
will cooperate in the defense of any such matter, and (iii) ACPI will not be
liable for any settlement affected without its prior written consent.
Notwithstanding the foregoing, ACPI will not have any obligation to indemnify an
Indemnified Party when and if a court of competent jurisdiction ultimately
determines, and such determination becomes final, that the indemnification of
such Indemnified Party in the manner contemplated hereby is prohibited by
applicable. law.
INDEMNIFICATION BY BUYERS. Vista shall indemnify each Indemnified Party
for and hold such party harmless against any Losses to the extent that such
Losses are not paid by ACPI or its insurer(s). Vista's obligations under this
paragraph shall be absolute and unconditional irrespective of any lack of
validity or enforceability of this Letter Agreement or any other instrument or
document related hereto.
SURVIVAL; AMENDMENT. This Letter Agreement and the obligations of ACPI and
Vista herein set forth will survive the consummation any merger, purchase or
sale, tender offer, or other transaction involving ACPI (whether or not ACPI is
the surviving corporation); is intended to benefit ACPI and the Indemnified
Parties; will be binding on all successors and assigns of ACPI; and may not be
amended, modified, terminated, or otherwise changed in any respect that would
adversely affect the rights and protections afforded the Indemnified Parties
hereunder, without the written consent of each Indemnified Party so affected.
2
<PAGE> 3
To acknowledge and accept the foregoing terms and conditions please execute
the enclosed two copies of this Letter Agreement in the space provided below and
return one copy to me, retaining the other copy for your records.
Very truly yours,
VISTA 2000, INC.
By: /s/ RICHARD P. SMYTH
-----------------------------------
Name: Richard P. Smyth
---------------------------------
Title: Chairman & CEO
--------------------------------
The foregoing terms and conditions
are hereby acknowledged and accepted
by the undersigned on this 29th
day of August, 1995.
AMERICAN CONSUMER PRODUCTS, INC.
By: /s/ STEPHAN W. COLE
-----------------------------------
Name: Stephan W. Cole
---------------------------------
Title: President
--------------------------------
3
<PAGE> 1
Exhibit (c)(8)
SUBLEASE
SUBLEASE
between
31100 SOLON ROAD, INC.
and
AMERICAN CONSUMER PRODUCTS, INC.
31100 Solon Road
Solon, Ohio 44139
As of February 24, 1988
1
<PAGE> 2
SUBLEASE
31100 Solon Road, Solon, Ohio
31100 Solon Road, Inc., Lessor
American Consumer Products, Inc., Lessee
Index Page
1. Leased Premises_____________________________ 1
2. Term________________________________________ 2
3. Rent________________________________________ 2
4. Use_________________________________________ 3
5. Prime Lease_________________________________ 4
6. Condition of Leased Premises________________ 4
7. Taxes_______________________________________ 5
8. Utilities___________________________________ 6
9. Insurance___________________________________ 6
10. Waiver of Subrogation_______________________ 9
11. Repairs and Maintenance_____________________ 9
12. No Waste____________________________________ 10
13. Alterations and Improvements by Lessee______ 10
14. Liens_______________________________________ 11
15. Non-Liability of Lessor_____________________ 11
16. Indemnification_____________________________ 12
17. Compliance with Laws________________________ 12
18. Fixtures and Equipment______________________ 12
19. Damage or Destruction_______________________ 13
20. Eminent Domain______________________________ 14
21. Lessee's Default; Lessor's Remedies_________ 15
2
<PAGE> 3
Index Page
22. Signs_______________________________________ 18
23. Subletting and Assignment___________________ 18
24. Surrender___________________________________ 18
25. Sale by Lessor______________________________ 19
26. Reservation of Lessor_______________________ 19
27. Rent Demand_________________________________ 19
28. Subordination_______________________________ 19
29. Notices_____________________________________ 20
30. Holdover____________________________________ 20
31. Accord and Satisfaction_____________________ 20
32. Estoppel Certificates_______________________ 20
33. No Waiver___________________________________ 21
34. Quiet Enjoyment_____________________________ 21
35. Memorandum of Lease_________________________ 21
36. Entire Agreement____________________________ 22
37. Sublease Inures to the Benefit of Assignees_ 22
38. Mortgages___________________________________ 22
39. Governing Law_______________________________ 22
40. Successors__________________________________ 22
41. Lessee's Option to Purchase_________________ 22
42. Procedure Upon Tenant's Purchase____________ 24
43. Option to Renew Lease_______________________ 26
44. Force Majeure_______________________________ 26
(ii)
3
<PAGE> 4
SUBLEASE
THIS SUBLEASE, made as of February 24, 1988,
by and between 31100 SOLON ROAD, INC., an Ohio corporation,
having its principal office at 31100 Solon Road, Solon, Ohio
44139 ("Lessor"), and AMERICAN CONSUMER PRODUCTS, INC., an
Ohio corporation also having its principal office at 31100
Solon Road, Solon, Ohio 44139 ("Lessee").
W I T N E S S E T H:
1. Leased Premises. Upon the provisions
and conditions hereinafter contained, Lessor does hereby
let and lease to Lessee, and Lessee does lease from Lessor,
that certain piece or parcel of real property situated in
the City of Solon, Cuyahoga County, Ohio and more particu-
larly described on Exhibit A attached hereto and made a
part hereof, together with the one-story building located
thereon containing approximately 197,000 square feet of
floor area (the "Building"), all other structures, addi-
tions and improvements presently located thereon and all
facilities, fixtures, fittings, machinery, apparatus, in-
stallations, furniture, equipment and other property there-
unto belonging, all of which personal property is set forth
on Exhibit B attached hereto and made a part hereof, to-
gether with any additions and improvements to any of the
foregoing, modifications thereof and substitutions therefor
(collectively, the "Leased Premises"), subject in all re-
spects to the terms of the Prime Lease (as hereinafter
defined), the terms of the AVA Assignment (as hereinafter
defined) and the consent of AVA's Assignor incorporated in
the AVA Assignment, and the terms and conditions herein-
after set forth. The "Prime Lease" shall mean the Lease
between the City of Solon ("Prime Lessor") as Lessor and
American Automatic Vending Corporation (now known as The
Tranzonic Companies ["Tranzonic"]) as Lessee, dated as of
March 1, 1968, and recorded at Volume 458, Page 229 of
Cuyahoga County Records (the "Records"), as amended by
Supplement to Lease, dated as of August 23, 1968, re-
corded at Volume 467, Page 485 of Records and Third Supple-
mental Lease, dated August 31, 1970, recorded at Volume
474, Page 637 of Records. The interest of AAVC in the
Prime Lease was assigned to American Vending Associates
("AVA") by Assignment and Assumption of Lease dated August
31, 1983, recorded in Volume 83-0777, Page 51 of Records
(the "Tranzonic Assignment"), and was further assigned by
AVA to Lessor by Assignment and Assumption of Lease ("AVA
Assignment") dated February 24, 1988, and recorded as
Instrument No. ___ of Records.
4
<PAGE> 5
2. Term. TO HAVE AND TO HOLD the Leased
Premises unto Lessee for a Term of ten (10) years plus the
period from the Commencement Date (as hereinafter defined)
to March 1, 1988, commencing on the date upon which the AVA
Assignment is recorded in Records (the "Commencement Date")
and expiring on February 28, 1998, unless sooner terminated
as hereinafter provided ("Initial Term"; the Initial Term
and any Renewal Term(s) are collectively referred to as
"Term"). In the event the Commencement Date shall not have
occurred prior to March 1, 1988, then the Initial Term shall
be ten (10) years, and shall expire on the day immediately
preceding the tenth (10th) anniversary of the Commencement
Date. Upon determination of the Commencement Date, Lessor
and Lessee shall execute a Supplement to Lease prepared by
Lessor stipulating the Commencement Date and the date upon
which the Initial Term hereof shall expire. In the event
that the Commencement Date is not determined on or prior to
June 30, 1988, either Lessor or Lessee may terminate this
Lease, effective upon the giving of written notice of such
termination, whereupon this Lease shall be of no further
force and effect, and neither party shall have any further
rights or obligations hereunder.
3. Rent. (a) Lessee covenants and agrees,
without demand and without deduction or setoff of any kind,
to pay rent for the Leased Premises to Lessor, at Lessor's
address hereinafter specified for receipt of notices or at
such other address as Lessor from time to time may desig-
nate in writing, as follows: (i) during the first Lease
Year, the sum of Three Hundred Twenty-Five Thousand and
00/100 Dollars ($325,000.00), in equal monthly installments
of Twenty-Seven Thousand Eighty-Three and 33/100 Dollars
($27,083.33); (ii) during the second through sixth Lease
Years, the sum of Five Hundred Twenty-Five Thousand and
00/100 ($525,000.00) per Lease Year, in equal monthly in-
stallments of Forty-Three Thousand Seven Hundred Fifty and
00/100 Dollars ($43,750.00); during the seventh through
tenth Lease Years, during any partial Lease Year at the end
of the Initial Term, and, in the event this Lease is extend-
ed in accordance with Paragraph 43 hereof, during both Re-
newal Terms, the sum of Five Hundred Seventy-Five Thousand
and 00/100 Dollars ($575,000.00) per Lease Year, prorated
during any partial Lease Year, in equal monthly install-
ments of Forty-Seven Thousand Nine Hundred Sixteen and
66/100 Dollars ($47,916.66). Monthly installments of rent
shall be paid in advance on the first day of each calendar
month during the Term. With respect to any partial calen-
dar month during any Lease Year, the rental payment for
that month shall be prorated on a per diem basis.
-2-
5
<PAGE> 6
(b) As used in this Sublease, the Term
"Lease Year" means a period of twelve consecutive months,
the first of which shall begin on the Commencement Date and
all others of which shall begin on each anniversary of the
Commencement Date during the Term of this Lease, and the
Term "Lease Years" shall mean more than one Lease Year.
(c) The rent provided for in this Para-
graph 3 shall be in addition to, and over and above, all
payments to be made by Lessee as hereinafter provided in
other parts of this Sublease and, except for the rent spec-
ified in Section 4.3 of the Prime Lease, all additional
payments due or which may become due under the Prime Lease,
and such rent shall be absolutely net to Lessor. It is the
intention of the parties hereto that this Lease be an abso-
lute net lease and that Lessor shall receive the rent and
any sum or sums which shall or may become payable hereunder
by Lessee under any contingency (which rent and all other
sums are collectively referred to as the "Rent"), free from
all taxes (including any taxes imposed on Rent in lieu of
or in addition to real estate taxes but excluding income,
franchise, personal property, estate, gift or inheritance
tax), charges, expenses, damages and deductions of every
kind or sort whatsoever relating to the Leased Premises or
activities conducted on the Leased Premises, including,
without limitation, any additional charges or expenses
imposed by Prime Lessor under the Prime Lease. Lessee
shall and will and hereby expressly agrees to pay all such
Rent, and Lessee shall indemnify and hold Lessor harmless
from and against any of the same. Lessee's obligation to
pay Rent accruing prior to expiration or termination of
this Sublease shall survive expiration or termination of
this Sublease in the event of a default by Lessee.
4. Use. The Leased Premises shall be used
and occupied only by Lessee and only for manufacturing,
office and warehouse purposes which are compatible with
the structure and construction of the Leased Premises, and
in accordance with the terms and provisions of the Prime
Lease, and for no other purpose whatsoever. Lessee shall
provide Lessor with at least 14 days' prior written notice
of any change in the type of goods being warehoused, or the
nature of the business being conducted in or from, the
Leased Premises. Lessee warrants that no business will be
conducted on the Leased Premises which will violate any
zoning ordinances or the provisions of any insurance policy
on the Leased Premises.
-3-
6
<PAGE> 7
5. Prime Lease.
(a) This Sublease is subject and subordi-
nate in all respects to the Prime Lease and to all of its
terms, covenant, conditions and provisions; provided, how-
ever, that notwithstanding anything to the contrary con-
tained in this Sublease, Lessee shall have no right or
obligation with respect to Sections 10.3 and 10.4 of the
Prime Lease, it being the understanding of the parties
hereto that all such rights and obligations shall remain
exclusively with Lessor. Lessee hereby acknowledges re-
ceipt of the Prime Lease. If the Prime Lease is terminated
or cancel led for any reason whatsoever (except as provided
in paragraph (c) below), this Sublease, without liability
to Lessor, will automatically terminate as of the date of
termination of the Prime Lease; provided, however, if the
Prime Lease terminated because of the action or conduct of
Lessee, which action or conduct constitutes a default here-
under, then the termination of the Prime Lease and the
resulting termination of this Sublease shall not relieve
Lessee from liability for the default. Provided Lessee is
not in default under this Sublease, Lessor covenants and
agrees to pay all rent when due under the Prime Lease.
Lessor shall have no other obligations or duties with
respect to the Prime Lease.
(b) In no event shall Lessor have any re-
sponsibility or liability for the conduct or actions of
Prime Lessor except as expressly provided in Paragraph 34
below or shall Lessee have the right to abate, reduce,
withhold or off set Rent under this Sublease by reason of
the action, negligence or non-action of Prime Lessor.
Lessor hereby assigns, transfers, and sets over unto Lessee
any and all claims and/or causes of action which Lessor now
has or may hereafter acquire in connection with, or arising
out of the Leased Premises.
(c) In the event Lessor acquires fee title
to the Leased Premises during the term, Lessor and Lessee
agree that this Sublease shall not terminate and each shall
recognize the other as landlord or tenant, as appropriate.
At the request of Lessor, Lessee shall execute a lease with
Lessor containing the terms and conditions of this Sublease.
6. Condition of Leased Premises. Lessee
agrees that Lessor has made no representation or warranty
of any nature whatsoever, express or implied, as to the
condition or quality of the Building and other improvements
included in the Leased Premises, and Lessee will and does
-4-
7
<PAGE> 8
hereby accept the Leased Premises and the Building and
other improvements included therein "as is" in such condi-
tion they are in on the Commencement Date, subject to all
defects therein, whether concealed or otherwise, and whe-
ther known or unknown to Lessor, and releases and forever
discharges Lessor from any and all damages of every kind
and nature that may be in any way occasioned thereby.
Lessor hereby grants to Lessee any and all rights, claims
and causes of action which Lessor possesses or may here-
after possess against AVA arising out of a breach of any of
the representations and/or warranties given by AVA under
that certain Purchase Agreement, dated February , 1988;
between AVA, as Seller, and Lessor, as Purchaser.
7. Taxes. (a) Lessee shall pay before
delinquency, all taxes and assessments, whether general or
special, license fees, and other charges of any kind that
may be levied or assessed against Lessee's personal prop-
erty installed or located in, on, or upon the Leased Prem-
ises.
(b) Lessee shall pay all real estate taxes
and assessments and other governmental charges and imposi-
tions of every kind and nature whatsoever, extraordinary as
well as ordinary, foreseen and unforeseen, including, but
not limited to, any sales tax hereinafter imposed upon the
Rents (collectively, "Taxes"), and each and every install-
ment thereof, which shall or may during the Term hereof be
assessed, imposed or become due and payable out of, or for,
any land, buildings, or improvements comprising the Leased
Premises, including any of which may have been assessed or
have become a lien prior to the Commencement Date but which
are payable after the Commencement Date. Lessee shall have
the right to contest the amount or validity, in whole or in
part, of any Taxes or to seek a reduction in the valuation
of the land or Building assessed for tax purposes, and
Lessor shall cooperate in any such contest, including,
without limitation, executing such documents as shall be
necessary or proper for Lessee to pursue such contest. Any
tax refund shall be paid to Lessee in such amount as is
equal to the difference between the payment by Lessee of
Taxes for the tax fiscal years covered by any contest and
the payment that would have been made under the decision
rendered in such contest. Lessor shall have the right to
participate in any such proceeding at its expense, regard-
less of whether the proceeding has been commenced by Lessee.
(c) In the event Lessor is obligated to
escrow Taxes under the terms of any financing secured by
-5-
8
<PAGE> 9
all or any portion of the Leased Premises or any interest
therein, then Lessee shall pay to Lessor, concurrently with
the monthly installments of Rent, a sum equivalent to the
amount that Lessor is so obligated to escrow. Provided
Lessee has made all required payments as aforesaid, Lessor
will apply such payments to satisfy its escrow obligations
with such mortgagee with respect to payment of Taxes.
(d) If Lessee shall not promptly pay, prior
to delinquency thereof, any Taxes, Lessor may, but shall
not be required to, pay the same without waiving or affect-
ing any right herein, and Lessee shall pay to Lessor with
the next installment of Rent due hereunder the amount, if
any, so paid by Lessor by reason of Lessee's non-payment
thereof, with interest thereon at a rate of interest per
annum three points in excess of the prime rate of National
City Bank, changing as and when said prime rate changes
(the "Interest Rate"), from date of advance to date of
repayment, and failing such timely repayment Lessor shall
have all the remedies hereunder, as in the case of non-
payment of rent.
8. Utilities. Lessee shall pay all charges
for water, sewage, heating, air conditioning, electricity,
gas, telephone and all other utilities and utility services
consumed in, furnished to, or charged against the Leased
Premises, or any part thereof, during the Term of this
Lease. Lessee shall furnish and pay for all services fur-
nished to, required or used by, it in connection with its
occupancy of the Leased Premises, including without limita-
tion, the replacing of all light bulbs, fluorescent tubes,
starters and ballasts as needed, all janitorial and clean-
ing services, removal of debris, rubbish and waste, clean-
ing of all windows and glass in or on the Leased Premises,
keeping clean and free from debris and cleaning the snow
and ice from the sidewalks, driveways, alleyways and
accessways within the Leased Premises and all parts there-
of, as well any and all vacant or unimproved land on or
comprising part of the Leased Premises, and all other serv-
ices required by Lessee in connection with its occupancy of
the Leased Premises. Lessor shall not be liable for any
delays, breakdowns, stoppages or deficiencies in furnishing
any such utilities or services, and any of the same shall
not be deemed constructive eviction of Lessee or as giving
the Lessee any rights against Lessor.
9. Insurance. In addition to the rent
hereinbefore provided, Lessee shall, at all times during
the Term maintain insurance as follows:
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<PAGE> 10
(a) Lessee shall, at its sole cost and
expense, keep the Leased Premises, together with
all improvements thereon, insured (i) against loss
or damage by fire, lightning, tornado, windstorm
or cyclone, vandalism, malicious mischief, and
such other perils as are now or may hereafter be
included in the Term "extended coverage," or as
Lessor may from time to time reasonably require,
in an amount of not less than the full replacement
cost thereof (excluding foundation and excavation
costs) under an "agreed amount endorsement," (ii)
against loss or damage by any steam boiler, pres-
sure vessel or other such apparatus as Lessor may
deem necessary to be covered by such insurance,
but in any event to cover all equipment used in
Lessee's business, to the full replacement value
of the Leased Premises, and (iii) against such
other risks, of a similar or dissimilar nature,
as are or shall be customarily covered with re-
spect to properties similar in construction,
general location, use and occupancy to the Leased
Premises, or as may be required by the holder of
any first mortgage against the Leased Premises.
Deductibles in any of the foregoing policies of
insurance shall not exceed the sum of Fifty Thou-
sand and 00/100 Dollars ($50,000.00). If the
Leased Premises is located in an area identified
by the U.S. Department of Housing and Urban De-
velopment as an area having special flood haz-
ards, flood insurance shall be maintained in an
amount not less than the unpaid principal balance
which may, at any time, be owing under the Exist-
ing Financing Documents, or the maximum limit of
coverage available under the National Flood In-
surance Act of 1968, as amended, whichever is
less.
(b) Lessee, at its sole cost and ex-
pense, shall also maintain single limit compre-
hensive general liability insurance insuring
Lessee, Lessor, Prime Lessor and such other par-
ties as Lessor may designate against claims for
personal injury, death or property damage occur-
ring upon, in or about the Leased Premises and
on, in or about the adjoining streets and pas-
sageways, such insurance to afford protection to
limits of not less than Lessor reasonably may
require from time to time.
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<PAGE> 11
(c) Lessee shall, at its sole cost and
expense, maintain the workers' compensation cov-
erage required of it under the applicable laws of
the State of Ohio, and during any period of con-
struction, contractor's liability and workmen's
compensation insurance.
(d) All insurance required under sub-
paragraphs (b) and (c) above shall insure Lessee,
Lessor, Prime Lessor and such other parties as
Lessor reasonably shall request, against any
liability incident to the use of or resulting
from any accident occurring in or about the
Leased Premises.
(e) All policies of insurance main-
tained by Lessee under this Paragraph 9 shall (i)
be valid and enforceable, and issued by insurance
companies qualified to do business in the State
of Ohio and acceptable to Lessor and Prime Lessor
and the companies issuing such insurance shall be
notified, instructed and authorized to make any
and all loss drafts thereunder payable to Lessor
and/or Lessor's designee, and (ii) provide that
the insuring company waives all right of recovery
by way of subrogation against Lessor in connec-
tion with any loss or damage covered by any such
policy. Each policy of insurance shall be writ-
ten so as not to be subject to cancellation or
substantial modification without at least 10
days' advance written notice to Lessor, Prime
Lessor, any mortgagee of the Leased Premises or
any interest therein (a "Mortgagee") and Tran-
zonic, and the holder of the Existing Financing
Documents, or any other first mortgage of the
Leased Premises, and Lessee shall obtain a
written obligation on the part of each insurance
carrier to give such written notice. Lessor
shall be furnished with the original policies
of insurance required to be maintained by Lessee
hereunder. In the event of the expiration of any
policy of insurance required of Lessee hereunder,
a renewal policy shall be delivered to Lessor
promptly after the commencement of the term there-
under. Lessee agrees, at Lessee's sole cost and
expense as further Rent hereunder, to pay all
premium charges for said insurance during the
continuance of this Lease, and, on demand, Lessee
shall deliver to Lessor evidence of such payment.
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<PAGE> 12
(f) In the event Lessor is obligated
to escrow premiums for policies of insurance with
any Mortgagee, then Lessee shall pay to Lessor,
concurrently with the monthly installments of
Rent, a sum estimated by Lessor to be equivalent
to the amount which Lessor is so obligated to
escrow. Provided Lessee has made all required
payments as aforesaid, Lessor will apply such
payments to satisfy its escrow obligations with
such mortgagee with respect to payment of insur-
ance premiums.
10. Waiver of Subrogation. Lessor and
Lessee do hereby waive, to the extent no insurance coverage
is invalidated thereby and to the extent not inconsistent
with the Prime Lease, any and all right of recovery, claim,
action or cause of action against the other, their respec-
tive agents and employees, for any loss or damage that may
occur to the Leased Premises, including the building or any
additions or improvements thereto, or any contents therein,
by reason of fire, the elements or any other cause which
could be insured against under the terms of a standard
fire, vandalism, malicious mischief, and extended coverage
insurance policy or policies, building contents and busi-
ness interruption insurance policies, or for which Lessor
or Lessee may be reimbursed as a result of insurance cover-
age affecting any loss suffered by either party hereto,
regardless of cause or origin, including the negligence of
Lessor or Lessee, or their respective agents and employees.
All casualty insurance policies carried by either party
covering the Leased Premises, including, but not limited
to, contents, fire and other casualty insurance, shall
expressly waive any right on the part of the insurer
against the ether party for damage to or destruction of the
Leased Premises resulting from the acts or omissions of the
other party.
11. Repairs and Maintenance. (a) Lessee,
at Lessee's sole cost and expense, will keep and maintain
the entire Leased Premises (including landscaping) in good
condition and repair and will make promptly all necessary
repairs, interior and exterior, structural and nonstruc-
tural, ordinary as well as extraordinary, foreseen as well
as unforeseen, with such repairs being at least equal in
quality and class with the original work. In furtherance
thereof, Lessee hereby agrees to initiate and carry out a
program of regular maintenance and repair of the Leased
Premises. Lessee covenants to keep the Leased Premises and
sidewalks in a clean and orderly condition and free of
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<PAGE> 13
dirt, rubbish, snow and ice, and not to do or suffer any
waste or damage, disfigurement or injury to the Leased
Premises with all improvements thereon. Lessee shall keep
the premises in compliance with the laws of the State of
Ohio, and in accordance with all directions, rules and
regulations of the health officer, fire marshal, building
inspector or other proper officers of the governmental
agencies having jurisdiction, at the sole cost and expense
of Lessee, and Lessee shall comply with all requirements of
law, ordinance or otherwise, affecting the Leased Premises.
(b) Lessee shall not remove any fixture or
article of personal property included in the demise here-
under, nor remove or demolish any building or improvement
located on the Leased Premises, without the prior written
consent of Lessor.
12. No Waste. Lessee will not commit, or
suffer to be committed, any waste upon the Leased Premises.
13. Alterations and Improvements by Lessee.
(a) Lessee shall have the right, at any time and from time
to time, to make such nonstructural additions, alterations,
improvements, and changes (hereinafter sometimes collec-
tively referred to as "Alterations") in or to the Leased
Premises as Lessee shall consider necessary or desirable
in connection with the conduct of its business, subject,
however, to each of the following:
(i) Lessee shall pay all costs and
expenses thereof;
(ii) all Alterations shall be made in
a good and workmanlike manner in accordance with
all applicable laws, ordinances, orders, rules,
regulations, and requirements of governmental
authorities and shall not cause a reduction in
value of the Leased Premises or adversely affect
the structural soundness of the building or im-
provements comprising part thereof;
(iii) Lessee shall have procured all
required permits and authorizations of governmen-
tal authorities having jurisdiction;
(iv) all Alterations shall be made
free and clear of mechanic's liens or other liens
or claims in connection therewith;
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<PAGE> 14
(v) Lessee shall pay any increases in
real estate taxes due to such Alterations;
(vi) upon request of Lessor, Lessee
shall provide performance and payment bonds or
otherwise secure the cost of such Alterations to
the reasonable satisfaction of Lessor;
(vii) Lessee shall furnish to Lessor
notice of any nonstructural Alterations costing
in excess of Fifty Thousand and 00/100 Dollars
($50,000.00) at least thirty (30) days prior to
commencement of construction of same; and
(viii) In no event shall Lessee make
any structural Alterations to the Leased Prem-
ises which exceed, in each instance, the sum
of Fifty Thousand and 00/100 Dollars ($50.000.00),
without the prior consent of Lessor, which con-
sent shall not be unreasonably withheld.
(b) Except as elsewhere specifically pro-
vided to the contrary, all Alterations made by either of
the parties hereto to or upon the Leased Premises shall be
the property of Lessor and shall remain upon and be sur-
rendered with the Leased Premises at the termination of
this Lease. Lessee agrees that construction of any Altera-
tions by it as aforesaid will be performed by Lessee on its
own behalf and not as Lessor's agent.
(c) Lessor hereby agrees to contribute the
sum of Three Hundred Thirty Thousand and 00/100 Dollars
($330.000.00) toward the cost of any Alterations agreed
upon by Lessor and Lessee during the first five (5) Lease
Years.
14. Liens. Lessee will keep the Leased
Premises free of liens of any sort, except for any liens
placed upon the Leased Premises by Lessor or Prime Lessor,
and will indemnify and hold Lessor harmless from any liens
which hereafter may be placed upon the Leased Premises by
Lessee, its agents, contractors, employees and offices.
15. Non-Liability of Lessor. Lessor shall
not be liable for any damage occasioned by the condition
of the Leased Premises, or for failure of the Leased Prem-
ises to be in repair (it being Lessee's responsibility to
maintain the Leased Premises), or for any damage done or
occasioned by or from fire, explosion, falling plaster,
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<PAGE> 15
dampness, the electrical system, the heating, air condi-
tioning system, the plumbing and sewer system, in, above,
upon or about the Leased Premises or for damages occasioned
by water, snow or ice being upon or coming through the
roof, walls, windows, doors or otherwise, or for any resul-
tant damage to or loss of personal property or other prop-
erty.
16. Indemnification. Lessee hereby indem-
nifies Lessor and Prime Lessor and agrees to save Lessor
and Prime Lessor harmless from and against any and all
claims, actions, damages, liability and expenses in con-
nection with loss or damage to property or injury or death
to persons occurring in, on or about or arising out of, the
Leased Premises and adjacent sidewalks and loading plat-
forms or areas, or occasioned wholly or in part by any act
or omission of Lessee, Lessee's agents, contractors, custo-
mers or employees.
17. Compliance with Laws. Lessee shall
use and occupy the Leased Premises in a careful, safe and
proper manner, being careful not to overload any floors or
other parts of the Building or other improvements on the
Leased Premises, and will, at Lessee's expense, comply with
the direction of the proper public officers as to the use,
repair and maintenance of the Leased Premises.
18. Fixtures and Equipment. (a) All fix-
tures and equipment paid for by Lessor, if any, and all
fixtures and equipment which may be paid for by Lessee from
time to time but which are so incorporated and affixed to
the Building or other improvements now or hereafter includ-
ed within the Leased Premises that their removal would
involve structural change to the aforesaid Building or
other improvements, or which are required for the proper
use and operation of the Building, shall be and remain the
property of Lessor.
(b) Lessee shall file with Lessor on or
before June 1 of each Lease Year a certificate betting
forth a description of any fixtures and equipment, and of
any additions, remodeling, alterations, modifications or
improvements to the land or the Building, which has become
part of the Leased Premises during the preceding 12 calen-
dar months, in order to enable Lessor to comply with Sec-
tion 5.1 of the Prime Lease.
(c) All furnishings, equipment, and fix-
tures other than those specified in Paragraph 18(a) above,
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<PAGE> 16
which are paid for and placed upon the Leased Premises by
Lessee from time to time, shall remain the property of
Lessee and may be removed by Lessee upon termination of the
Lease, provided that Lessee shall be obligated to repair
any damage caused by such removal.
19. Damage or Destruction. (a) If less
than fifty percent of the replacement cost of the Building
shall be damaged by fire or other casualty, Lessor shall
repair the Leased Premises only to the extent of the net
proceeds of all insurance carried with respect thereto and
made available to the Lessor by the Mortgagee(s), if any,
and any other portion with an interest therein. Neither
the Rent nor any portion thereof shall abate during the
period of repair and restoration.
(b) If more than fifty percent of the
Building shall be damaged by fire or other casualty, Lessor
may elect, by written notice to Lessee within sixty (60)
days after the date of such casualty, to terminate this
Lease, in which event Lessor shall not be required to re-
store or rebuild the Leased Premises, and Lessee's liability
for Rent shall cease as of the date of such termination. If
this Lease is not terminated as aforesaid, Lessor shall
undertake reconstruction or repairs as soon as possible and
prosecute the work with reasonable diligence, provided that
Lessor's obligation hereunder shall be only to the extent
of net proceeds of insurance carried with respect thereto
and made available to the Lessor by the Mortgagee(s), if
any, and any other party with an interest therein. Neither
the Rent nor any portion thereof shall abate during the
period of repair and restoration.
(c) In the event that (i) any repair or
restoration of the Leased Premises undertaken by Lessor
pursuant to subparagraphs 19(a) or (b) above is not com-
pleted within eight (8) months after the date of Lessor's
commencement of such repair or restoration for any reason
including the inadequacy of insurance proceeds, provided
that Lessee complies with the insurance requirements of
this Sublease (subject to extension for an event of Force
Majeure as defined in Paragraph 44 below), then Lessee may
elect, by written notice to Lessor within thirty days after
the end of such eight (8) month period (as extended if
necessary by reason of Force Majeure) to terminate this
Lease, in which event Lessor shall not be required to
restore or rebuild the Leased Premises, and Lessee's
liability for rent shall cease as of the date of such
casualty.
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<PAGE> 17
(d) Lessor shall in no event be liable for
any inconvenience or interruption of Lessee's business
caused by fire or other casualty.
20. Eminent Domain. (a) In the event the
Leased Premises or any part thereof shall be taken or con-
demned either permanently or temporarily for any public or
quasi-public use or purpose by any competent authority in
appropriation proceedings or by right of eminent domain,
the entire compensation award therefor, including, but not
limited to, all damages as compensation for diminution in
value of the leasehold, reversion and fee, shall belong to
Lessor without any deduction therefrom for any present or
future estate of Lessee, and Lessee hereby assigns to Les-
sor all its right, title and interest to any such award.
All damages in the event of any condemnation are to belong
to Lessor, whether such damages are awarded as compensation
for diminution in value of the leasehold, reversion, and
fee, shall belong to Lessor without any deduction therefrom
for any present or future estate of Lessee, and Lessee
hereby assigns to Lessor all its right, title and interest
to any such award. Although all damages in the event of
any condemnation are to belong to Lessor, whether such
damages are awarded as compensation for diminution in value
of the leasehold, reversion or to the fee of the Leased
Premises, Lessee shall have the right to claim and recover
from the condemning authority, but not from Lessor, such
compensation as may be separately awarded or recoverable by
Lessee in Lessee's own right on account of any and all
damages to Lessee's business by reason of the condemnation
and for or on account of any cost or loss to which Lessee
might be put in removing Lessee's merchandise, furniture,
fixtures, leasehold improvements and equipment.
(b) If the whole of the Leased Premises
shall be taken by any public authority under the power of
eminent domain, this Lease shall terminate as of the day
possession shall be so taken by such public authority, and
Lessee shall pay Rent up to that date. If less than 10% of
the acreage of the Leased Premises and none of the Building
included within the Leased Premises shall be so taken, this
Lease shall terminate only with respect to the acreage so
taken by such public authority, and Lessee shall pay rent
up to that day with an appropriate refund by Lessor of such
rent as may have been paid in advance for a period subse-
quent to the date of the taking and, thereafter, the rent
shall be equitably adjusted, and Lessor shall at its ex-
pense restore the Leased Premises to the extent necessary
to permit Lessee to continue its use of the Leased Prem-
ises, but only to the extent of damages received from such
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<PAGE> 18
condemnation and made available to Lessor by the Mort-
gagee(s), if any, and any other party with an interest
therein. If 10% or more of the acreage of the Leased Prem-
ises or any portion of the Building included within the
Leased Premises shall be so taken, then this Lease shall
terminate with respect to the part so taken from the day
possession shall be taken by such public authority, and
Lessee shall pay rent up to that day with an appropriate
refund by Lessor of such rent as may have been paid in
advance for a period subsequent to the date of the taking,
and Lessor shall have the right and option to either termi-
nate this Lease upon notice in writing within 30 days after
such taking of possession or to restore the Leased Premises
to the extent necessary to permit Lessee to continue its
use of the Leased Premises, but only to the extent of dam-
ages received from such condemnation and made available to
Lessor by the Mortgagee(s), if any, and any other party
with an interest therein. In the event that Lessee remains
in possession, and if Lessor does not so terminate, all of
the terms herein provided shall continue in effect except
that the Rent shall be equitably abated. If any portion of
the Building included within the Leased Premises shall be
so taken, and if the remaining portion thereof, in the
judgment of Lessor, cannot reasonably be used for the use
set forth in Paragraph 4 hereof, then Lessee may elect to
terminate this Lease by written notice to Lessor within 30
days following the day possession shall be taken by such
public authority, any such termination to be effective upon
such day.
21. Lessee's Default; Lessor's Remedies.
(a) In the event that any installment of Rent shall not be
paid within 10 days after notice that the same becomes due,
or in the event that Lessee shall at any time be in default
in the observance or performance of any of the other cove-
nants, agreements, terms, provisions and conditions assumed
by or imposed upon it hereunder or under the Prime Lease,
and such default continues for a period of 30 days after
written notice from Lessor to Lessee of such default (un-
less Lessee within said 30 day period has commenced the
curing of such default and diligently proceeds without
delay to cure the same), or within 30 days after notice if
any waste be committed or damage done upon or to the Leased
Premises, or if a temporary or permanent receiver or trus-
tee of Lessee's property be appointed by any court and such
receiver or trustee shall not be discharged within 60 days
after his appointment, or if the Lessee shall make a gene-
ral assignment for the benefit of creditors, or if any
execution or attachment shall be issued against the Lessee
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<PAGE> 19
or any of the Lessee's property on the Leased Premises (and
such execution or attachment shall not be discharged within
60 days after its issuance), as a result of which the Leased
Premises shall be taken or occupied by someone other than
the Lessee, then and in any one or more of such events,
Lessor shall be entitled, at its election, to exercise,
concurrently or successively, any one or more or all of the
following rights and remedies:
(i) to pay any sum lawfully and legal-
ly required to be paid by Lessee to others than
the Lessor which Lessee has failed to pay, and to
perform any obligation lawfully and legally re-
quired to be performed by Lessee, for the account
of the Lessee, and any amount so paid by Lessor,
with interest thereon from date of payment at the
Interest Rate specified in Paragraph 7(d) above.
(ii) to enjoin any breach by the Lessee
of any covenant, agreement, term, provision, or
condition hereof.
(iii) to bring suit for the collection
of the rent or other amounts for which Lessee may
be in default, or for the specific performance of
any other covenant devolving upon Lessee for
performance, and for damages for the nonperform-
ance thereof, all without entering into posses-
sion or terminating this Lease.
(iv) to re-enter the Leased Premises
or any part thereof, by summary proceedings or
otherwise, and take possession thereof, without
thereby terminating this Lease, and thereupon
Lessor may expel and remove all property there-
from, either peaceably or by such force as may be
necessary, without becoming liable to prosecution
or otherwise obligated therefor, and relet the
Leased Premises or any part thereof for such
periods and upon such terms according to Lessor's
sole discretion, and receive the rent therefrom,
applying the same first to the payment of the
reasonable expenses of such re-entry and the cost
of such reletting, and then to the payment of the
rent accruing hereunder, and Lessee, whether or
not the Leased Premises are relet, shall remain
liable for any deficiency. It is agreed that the
commencement and prosecution of any action by
Lessor in forcible entry and detainer, ejectment
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<PAGE> 20
or otherwise, or the appointment of a receiver,
or any execution of any decree obtained in any
action to recover possession of the Leased Prem-
ises, or any re-entry, shall not be construed as
an election to terminate this Lease unless Lessor
shall, in writing, expressly exercise its elec-
tion to declare the Term hereunder ended and to
terminate this Lease, and, unless this Lease be
expressly terminated, any such re-entry or entry
by Lessor, whether had or taken under summary
proceedings or otherwise, shall not be deemed to
have absolved or discharged Lessee from any of
its obligations and liabilities for the remainder
of the Term of the Lease.
(v) to terminate this Lease, re-enter
upon the Leased Premises and take possession
thereof unencumbered by this Sublease. In the
event Lessor shall elect to terminate this Lease
as aforesaid, all rights of Lessee, and of any
permitted successors and assigns, shall cease and
determine and Lessor shall have and retain full
right to sue for and collect all rents and other
amounts for the payment of which Lessee shall
then be in default, and shall have full right to
sue for and collect damages to Lessor by reason
of such breach, and Lessee shall surrender and
deliver up the entire Leased Premises to Lessor,
together with all improvements and additions
thereto, and upon any default by Lessee in so
doing Lessor shall have the right to recover
possession by summary proceedings or otherwise,
and to obtain a receiver and other ancillary
relief in such action, and again to have and
enjoy the Leased Premises, fully and completely,
as if this Lease had never been made. However,
any such termination of this Sublease and dispos-
session of Lessee shall not be deemed to have
absolved or discharged Lessee from any of its
obligations and liabilities accruing prior to the
date of termination of this Sublease. Lessee
hereby expressly waives any and all rights of
redemption granted by or under any present or
future laws in the event of Lessee being evicted
or dispossessed for any cause, or in the event of
Lessor obtaining possession of the Leased Prem-
ises by reason of the breach or violation by Les-
see of any of the covenants and conditions in
this Lease contained or otherwise.
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<PAGE> 21
(b) Any amount or amounts paid by Lessor
for the account of Lessee for the performance of any obli-
gations required to be performed by Lessee shall be treated
as further Rent due hereunder, and Lessor may exercise
concurrently or successively any one or more of the rights
and remedies contained herein for the enforcement of or
default in the payment of rent.
(c) After service of notice or commencement
of suit by Lessor for possession of the Leased Premises, or
after final judgment for possession of the Leased Premises
in favor of Lessor, Lessor, without prejudice, may receive
and collect rent and other sums due from Lessee, and the
payment of said rent or other sums shall not waive or af-
fect said notice, suit, or judgment.
(d) All rights and remedies granted herein
and any other rights or remedies which Lessor may have at
law or in equity are hereby declared to be cumulative and
not exclusive, and the fact that Lessor may have exercised
any remedy without terminating this Lease shall not impair
Lessor's rights thereafter to terminate or to exercise any
other remedy herein granted or to which Lessor may other-
wise be entitled.
22. Signs. Lessee may place signs on the
Leased Premises advertising Lessee's business or products,
provided such signs (a) are professionally made, (b) comply
with all laws or ordinances regulating signs on the Leased
Premises, and (c) are kept in first-class sightly condition
at all times.
23. Subletting and Assignment. Lessee may
sublet all or any portion of the Leased Premises or assign,
whether voluntarily, involuntarily or by operation of law,
this Sublease or any interest in the Leased Premises, with-
out the consent of Lessor, subject, however, to such limi-
tations as may be set forth in the Tranzonic Assignment and
the AVA Assignment and the Consent of Tranzonic attached
thereto. Lessee shall notify Lessor of any assignment or
subletting. In the event of any sublease or assignment,
the named Lessee shall remain liable for the performance of
all of Lessee's covenants hereunder.
24. Surrender. Whenever this Lease is
terminated, whether by lapse of time, forfeiture, or in
any other way, Lessee will yield and deliver up the Leased
Premises, including the Building and other improvements
included therein, peaceably to Lessor in as good repair as
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<PAGE> 22
when taken, except for reasonable and normal wear and tear
from the date of the last repair or replacement required
under Paragraph 11 hereof, takings of eminent domain, and
for damage or destruction resulting from causes which are
covered by the casualty insurance policy or policies ob-
tained by Lessee, provided the proceeds are paid to Lessor
in accordance with the provisions of this Lease.
25. Sale by Lessor. In the event of a sale
or conveyance by Lessor of its interest in the Leased Prem-
ises, the same shall operate to release Lessor from any
future liability upon any of the covenants or conditions,
express or implied, herein contained in favor of Lessee,
and in such event Lessee agrees to look solely to the suc-
cessor in interest of Lessor in and to this Lease for per-
formance and fulfillment of-the obligations imposed upon
Lessor hereunder after the date of such sale or conveyance.
This Lease shall not be affected by any such sale or con-
veyance, and Lessee agrees to attorn to the purchaser or
assignee, such attornment to be effective and self-operative
without the execution of any further instruments on the
part of any of the parties to this Lease.
26. Reservation of Lessor. Lessor reserves
the right to enter the Leased Premises at all reasonable
times to inspect the same, to perform any acts with respect
thereto as it is obligated or entitled to perform and dur-
ing the last twelve months of the Term to show the Leased
Premises to prospective tenants.
27. Rent Demand. Every demand for Rent due
wherever and whenever made shall have the same effect as if
made at the time it falls due and at the place of payment,
and after the service of any notice or commencement of any
suit, or final judgment therein, Lessor may receive and
collect any Rent due, and such collection or receipt shall
not operate as a waiver of nor affect such notice, suit or
judgment.
28. Subordination. Lessee agrees to sub-
ordinate its rights under this Lease to the lien of any
mortgage that may hereafter be placed upon the Leased Prem-
ises or any part thereof and to any and all advances to be
made thereunder, and to the interest thereon, and all re-
newals, replacements and extensions thereof; provided that
the holder of such mortgage agrees not to disturb the ten-
ancy of Lessee following foreclosure so long as Lessee is
not in default hereunder. Lessee also agrees that any
mortgagee may elect to have this Lease prior to the lien
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<PAGE> 23
of its mortgage, and upon notification to Lessee on such'
election, this Lease shall be deemed prior in lien to such
mortgage. Lessee agrees that, upon the request of Lessor,
or any mortgagee, it shall execute and deliver whatever
instruments may be required to carry out the intent of this
paragraph, and in the event Lessee fails so to do within
ten days after demand in writing, Lessee does hereby make,
constitute and irrevocably appoint Lessor as its attorney
in fact and in its name, place and stead so to do.
29. Notices. Any notices, statements,
payments, acknowledgments and consents required to be given
by or on behalf of either party to the other shall be in
writing and shall be given by mailing such by certified
mail, return receipt requested, addressed to such party at
the address indicated in the Preamble hereof or at such
other address as may be specified by such a notice from
time to time. Except as otherwise provided in Paragraphs
41 and 43 below, such notices shall be effective when they
are deposited in an official United States Post Office,
postage prepaid.
30. Holdover. Should Lessee hold over the
Leased Premises or any part thereof after the expiration
of the Term hereof, unless otherwise agreed to in writing,
such tenancy shall constitute a tenancy from month to month
only, and Lessee shall pay monthly rental equal to 150%
of the monthly rental in effect immediately preceding the
expiration of the Term hereof, payable in advance on the
first day of each calendar month, but otherwise on the same
terms and conditions as herein provided.
31. Accord and Satisfaction. No payment by
Lessee or receipt by Lessor of a lesser amount than the
rental herein stipulated shall be deemed to be other than
on account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accom-
panying any check or payment as rent be deemed an accord
and satisfaction, and Lessor may accept such check or
payment without prejudice to Lessor's right to recover the
balance of such rent or pursue any other remedy provided
ford in this Lease or available at law or in equity.
32. Estoppel Certificates. Lessee agrees
that at any time and from time to time within ten days
following request by Lessor, Lessee will execute, acknowl-
edge and deliver to Lessor a statement in writing certify-
ing (a) that this Lease is unmodified and in full force and
effect (or if there have been modifications that the same
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<PAGE> 24
is in full force and effect as modified and identifying the
modifications), (b) the dates to which the rent and other
charges have been paid, and (c) that Lessor is not in de-
fault under any provisions of this Lease or if there has
been a default the nature of said default. It is intended
that any such statement may be relied upon by any person
proposing to acquire Lessor's interest in this Lease or any
prospective mortgage of, or assignee of any mortgage upon,
such interest.
33. No Waiver. No waiver of any condition
or legal right of remedy shall be implied by the failure of
Lessor to declare a forfeiture, or for any other reason,
and no waiver of any condition or covenant shall be valid
unless it be in writing signed by Lessor. No waiver by
Lessor of a breach of any condition may be claimed or
pleaded to excuse a future breach of the same condition or
covenant. The mention in this Lease of any specific right
or remedy shall not preclude Lessor from exercising any
other right or from having any other remedy or from main-
taining any action to which it may be otherwise entitled
either at law or in equity; and for the purpose of any suit
by Lessor brought or based on this Lease, this Lease shall
be construed to be a divisible contract, to the end that
successive actions may be maintained as successive periodic
sums shall mature under this Lease and it is further agreed
that failure to include in any suit or action any sum or
sums then matured shall not be a bar to the maintenance of
any suit or action for the recovering of said sum or sums
so omitted.
34. Quiet Enjoyment. Lessor hereby cove-
nants and agrees that if Lessee shall perform all the cov-
enants and agreements herein stipulated to be performed on
Lessee's part. Lessee shall at all times during the contin-
uance hereof have the peaceable and quiet enjoyment and
possession of the Leased Premises without any manner of let
or hindrance from the Prime Lessor or persons lawfully
claiming by or through Lessor.
35. Memorandum of Lease. The parties cov-
enant and agree that this Lease shall not be recorded, but
upon written request of Lessor or Lessee, a Memorandum of
Lease, prepared by Lessor describing the property herein
demised, giving the Term of this Lease and the name and
address of Lessor and Lessee, and referring to this Lease
(but containing no other terms or provisions hereof except
as may be permitted or required by Lessor) shall be prompt-
ly executed, acknowledged and delivered by both parties.
Such Memorandum of Lease may be recorded by either party.
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<PAGE> 25
36. Entire Agreement. This Lease and the
exhibits attached hereto set forth all the covenants, prom-
ises, agreements, conditions and the understandings of the
parties hereto. Except as herein otherwise provided, no
subsequent alterations, amendment, change or addition to
this Lease shall be binding upon Lessor or Lessee unless
reduced to writing and signed by them.
37. Sublease Inures to Benefit of Assignees.
This Sublease and all the covenants, provisions and condi-
tions herein contained shall inure to the benefit of and be
binding upon the parties and their respective successors
and assigns; provided, however, that no assignment by, from,
through or under Lessee in violation of the provisions
hereof shall vest in the assigns any right, title or in-
terest whatever.
38. Mortgages. Notwithstanding the pro-
visions of Paragraph 29 hereof, no notice to Lessor here-
under shall be effective unless and until a copy hereof
shall have been forwarded to each Mortgagee in the same
manner as notices are to be given pursuant to Paragraph 29
hereof provided that Lessee theretofore has been provided
in writing the identity and notice address of Mortgagee(s).
39. Governing Law. This Lease shall be
governed by, and construed in accordance with, the laws of
the State of Ohio.
40. Successors. Lessee understands and
agrees that in the event that the Lessor's interest in and
to this Lease shall pass to any successor of Lessor or any
other party succeeding to the Lessor's interest in and to
this Lease, that such successor of Lessor or to the Les-
sor's interest in and to this Lease shall not be bound by
prepayments of Rent for more than one month in advance, nor
by any offsets or defenses of Lessee against Lessor, nor,
with respect to the holder of any security interest affect-
ing the Lessor's interest in this Lease, by any amendment
to this Lease to which such holder has not consented in
writing; provided, however, nothing herein contained shall
limit Lessee's right to enforce the provisions of this
Lease against any such successor from and after the date
upon which such successor succeeds to the Lessor's interest
in and to this Lease.
41. Lessee's Option to Purchase. Provided
that on the date of the notice of exercise described in
subsection 41(a) Lessee is not in material default of its
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<PAGE> 26
obligations under this Lease, Lessee shall have the right
and option to purchase the Leased Premises (the "Option")
upon the following terms and conditions:
(a) The Option shall be exercisable by writ-
ten notice to Lessor not earlier than twelve (12) months
nor later than the one hundred eightieth (180th) day prior
to the expiration of each of the fifth (5th), tenth (10th),
and if applicable, fifteenth (15th) and twentieth (20th)
Lease Years during the Term.
(b) The purchase price for the Leased Prem-
ises under the Option shall be an amount mutually agreed
upon by the parties hereto. In the event the parties are
unable to agree upon a purchase price within five (5) days
following Lessee's notice to Lessor given pursuant to
subparagraph 41(a) above, then the purchase price shall be
equal to the Fair Market Value (as hereinafter defined)
of the Leased Premises on the date of the exercise of the
Option. As used herein, the term "Fair Market Value" shall
mean the price in terms of money which the Leased Premises
would bring, free and clear of all indebtedness, if exposed
to the open market, allowing a reasonable time to find a
purchaser, who buys with knowledge of the current use of
the Leased Premises as a manufacturing, warehouse and dis-
tribution facility and for purposes of maintaining such
use. Except as otherwise herein provided, Fair Market
Value shall be determined by an independent member of
the American Institute of Real Estate Appraisers "M.A.I.
Appraiser" with at least five (5) years of experience in
appraising real property in the area in which the Leased
Premises is located. The M.A.I. Appraiser shall be
mutually selected by Lessor and Lessee within thirty (30)
days after the date of Lessee's exercise of the Option,
with Lessor and Lessee each paying one-half of the M.A.I.
Appraiser's fee. The M.A.I. Appraiser will furnish each
party a written appraisal within thirty (30) days, and such
appraisal shall be deemed to be Fair Market Value. If
Lessor and Lessee cannot, within thirty (30) days after
Lessee's exercise of the Option, agree on an acceptable
M.A.I. Appraiser, Lessor and Lessee will each select an
M.A.I. Appraiser. Each selected appraiser will be paid by
the party employing the appraiser and will furnish each
party a written appraisal within thirty (30) days. If the
difference between the two appraisals is an amount not more
than ten percent (10%) of the higher appraisal, Fair Market
Value shall be the average of the two appraisals. If the
difference between the two appraisals is an amount greater
than ten percent (10%) of the higher appraisal, a third
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<PAGE> 27
M.A.I. Appraiser will be appointed by the two selected
appraisers. The appointed M.A.I. Appraiser will be paid
equally by Lessor and Lessee, and will independently ap-
praise the Leased Premises and submit a written appraisal
within thirty (30) days to each party. Fair Market Value
will be equal to the appraisal of the third M.A.I. Apprais-
er. If either party or its selected M.A.I. Appraiser fails
or refuses to select an M.A.I. Appraiser as required above,
then either Lessor or Lessee, on behalf of both, shall have
the right to seek appointment of an M.A.I. Appraiser by
requesting such appointment by the then-presiding adminis-
trative judge of the Common Pleas Court of Cuyahoga County,
Ohio. The other party shall not raise any question as to
such judge's full power and jurisdiction to entertain the
application and make the appointment.
(c) For a period of ten (10) days following
Lessee's receipt of notice of a determination of the pur-
chase price as provided in subparagraph 41(b), Lessee shall
have the right, exercisable by written notice to Lessor,
to rescind its exercise of the Option, whereupon the Option
shall thereafter be of no further force or effect and this
Lease shall remain intact for the balance of the Term. In
the event Lessee exercises its right to rescind the Option,
Lessee shall pay, or reimburse Lessor, as the case may be,
for all fees and expenses of the M.A.I. Appraisers referred
to in subparagraph 41(b) of this Lease.
(d) The consummation of the purchase by
Lessee pursuant to the Option (the "closing") shall occur
sixty (60) days from the date that Fair Market Value is
determined under subparagraph 41(b). On the closing date,
Lessor shall convey the Leased Premises to Lessee pur-
suant to and upon compliance with Paragraph 42 hereof, and
Lessee shall pay to Lessor the purchase price described
above, together with all Rent and all other sums then due
and payable under this Lease to and including the closing
date. On the closing date, this Lease shall terminate
except with respect to obligations and liabilities of
Lessee and Lessor under this Lease, actual or contingent,
which have arisen on or prior to such date or which by
their terms shall survive the closing date.
42. Procedure Upon Tenant's Purchase.
(a) If Lessee shall purchase the Leased
Premises pursuant to Paragraph 41 of this Lease, Lessor
shall convey title on the closing date by limited warranty
deed in form approved by Lessee (the "Deed"), subject only
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<PAGE> 28
to: (i) the Approved Exceptions (as hereinafter defined);
(ii) any charges, liens, security interests and encumbrances
upon the Leased Premises granted by, or attributable to the
acts of, Lessee, and (iii) all applicable zoning ordinances
and taxes and assessments which are a lien but are not yet
due and payable. Within thirty (30) days following the
determination of Fair Market Value under subparagraph 41(b),
Lessor shall cause to be delivered to Lessee a commitment
(the "Owner's Commitment") from Chicago Title Insurance
Company ("Title Company") to issue an ALTA Owner's Fee
Policy of Title Insurance (Form B-Revised 10-17-70) (the
"Title Policy"). If any condition of record, defect in, or
encumbrance on, title to the Leased Premises, other than
those referred to in clauses (i), (ii) and (iii) above,
appears in the Owner's Commitment or if the Survey dis-
closes any encroachments, overlaps, boundary line disputes
or any other matters affecting title to the Leased Property
or resulting in violation of any law, rule or regulation,
Lessor shall have ninety (90) days after the date of the
Owner's Commitment to cause such condition, defect or en-
cumbrance to be removed. If such condition, defect, or
encumbrance is not removed, Lessee shall have the right,
upon written notice given to Lessor and the Title Company
within ten (10) days after expiration of such ninety (90)
day period, to: (x) accept title to the Leased Premises
and proceed with the purchase subject to such defect with
such reduction of the purchase price as reflects the impact
on Fair Market Value of the condition, defect or encum-
brance, or (y) rescind the exercise of the Option, without
terminating the right of Lessee subsequently to exercise
the Option and without terminating this Lease. In the
event Lessee exercises the option designated as (y), all
funds and documents deposited in escrow shall be returned
to the depositing party and all escrow fees and other
charges incurred in anticipation of transfer of title to
Lessee shall be paid or satisfied by Lessor.
(b) Upon the closing date, Lessee shall pay
to Lessor the purchase price specified herein by deposit-
ing same in escrow with the Title Company. Lessor shall
deposit in said escrow the Deed and any other instruments
necessary to transfer, convey or assign to Lessee any other
property included within the Leased Premises, and shall
cause issuance of the Title Policy in the full amount of
the purchase price, without exception for the so-called
standard printed exceptions (rights or claims of parties in
possession not shown by the public records; encroachments,
overlaps, boundary line disputes or any other matters which
would be disclosed by an accurate survey or inspection of
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<PAGE> 29
the Leased Premises; easements or claims of easements not
shown by the public records; or any lien or right to a lien
for services, labor or materials furnished to the Leased
Premises, imposed by law and not shown by the public rec-
ords) unless and except to the extent that any such mat-
ters included in the so-called standard exceptions has
been caused, approved or waived, by Lessee, and showing
as exceptions to title only those matters listed in sub-
paragraph 42(a) above.
(c) Lessee shall pay its attorneys' fees,
recording fees for the deed, one-half of the cost of the
Survey and one-half of any escrow fees charged by the Title
Company in connection with the closing. Lessor shall pay
its attorneys' fees, one-half of any escrow fee charged
by the Title Company in connection with the closing, the
premium for the Title Policy in the full amount of the pur-
chase price specified herein, cost of title examination of
the Leased Premises and the Owner's Commitment, one-half of
the cost of the Survey and all transfer taxes and convey-
ance taxes which may be imposed by reason of such convey-
ance, transfer and assignment and the delivery of the Deed.
43. Option to Renew Lease. (a) Lessor
hereby grants to Lessee, subject to the provisions of
Paragraph 43(b) below, the right to extend this Sublease
for two (2) periods of five (5) years (each a "Renewal
Term" and collectively, "Renewal Terms"), each commencing
upon the expiration of the Initial Term or first Term, as
the case may be, unless sooner terminated as hereinafter
provided, at the same Rent as was payable during the last
Lease Year of the Initial Term and otherwise upon the same
terms, covenants and conditions as applied to the Initial
Term except for the option to extend then exercised.
(b) Lessee shall have the right and option
to extend the Term as hereinabove provided by delivering to
Lessor written notice of such election not later than 11:00
a.m. on the 365th day prior to the expiration of the Ini-
tial Term or the first Renewal Term, as the case may be.
Time shall be of the essence in the exercise of the option.
Notwithstanding the foregoing, the exercise by Lessee of an
option to extend the Term shall not be effective, at the
election of Lessor, if there exists on either the date of
exercise or the intended commencement date of the Renewal
Term a condition or event constituting an event of default.
44. Force Majeure. In the event that either
party hereto shall be delayed or hindered in or prevented
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<PAGE> 30
from the performance of any act required hereunder by reason
of strikes, lockouts, labor troubles, inability to procure
materials, failure of power, restrictive governmental laws
or regulations, riots, insurrection, war or other reason of
a similar or dissimilar nature not the fault of the party
delayed in performing work or doing acts required under the
terms of this Lease (an event of "Force Majeure"), then
performance of such act shall be excused for the period of
the delay and the period for the performance of any such
act shall be extended for a period equivalent to the period
of such delay. The provisions of this Paragraph 44 shall
not operate to excuse Tenant from prompt payment of Rent or
any component thereof.
IN WITNESS WHEREOF, the parties hereto have
caused this Lease to be duly executed on the day and year
first above written.
Signed in the presence 31100 SOLON ROAD, INC.
of: an Ohio corporation
By
AMERICAN CONSUMER PRODUCTS, INC.
an Ohio corporation
By
30
<PAGE> 31
STATE OF OHIO )
) SS.
COUNTY OF CUYAHOGA )
BEFORE ME, a Notary Public in and for said
County and State, personally appeared
the President , of 31100 SOLON ROAD, INC., an
Ohio corporation, who acknowledged that he did sign the
foregoing instrument for and on behalf of said corporation
and that the same is the free act and deed of said corpo-
ration, and his free act and deed individually and as such
officer.
IN TESTIMONY WHEREOF, I have hereunto set my
hand and official seal at Cleveland, Ohio, this 24th day of
February, 1988.
Notary Public
STATE OF OHIO )
) SS.
COUNTY OF CUYAHOGA )
BEFORE ME, a Notary Public in and for said
County and State, personally appeared
the , of AMERICAN CONSUMER PRODUCTS,
INC., an Ohio corporation, who acknowledged that he did
sign the foregoing instrument for and on behalf of said
corporation and that the same is the free act and deed of
said corporation, and his free act and deed individually
and as such officer.
IN TESTIMONY WHEREOF, I have hereunto set my
hand and official seal at Cleveland, Ohio, this 24th day of
February, 1988.
Notary Public
This instrument prepared by:
Thompson, Hine and Flory
1100 National City Bank Building
Cleveland, Ohio 44114
31
<PAGE> 1
Exhibit (c)(9)
ITEM III.H.4
AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE, made this 27th day of June, 1989
by and between CRS LIMITED PARTNERSHIP, an Ohio limited partnership
(hereinafter called "Landlord"), and BOSS MANUFACTURING COMPANY,
a Delaware corporation (hereinafter called "Tenant"),
W I T N E S S E T H:
1. Demised Premises; Possession; Term.
Landlord does hereby demise and lease to Tenant, and
Tenant does hereby hire and lease from Landlord, all of the
premises located at 3464 East Sangamon, Springfield, Sangamon
county, Illinois, more fully described in Schedule A which is
annexed hereto and made a part hereof, together with that certain
office/warehouse building consisting of approximately 80,000 square
feet, thirteen truck dock overhead doors installed on such
premises, and other improvements in or on such premises, and also
all rights, privileges, easements and appurtenances appertaining
or belonging unto said premises, building and improvements; said
real property, building, improvements, rights, privileges,
easements and appurtenances being hereinafter referred to as the
"demised premises".
The term of this lease, and Tenant's obligation to pay
rent, shall commence on July 1, 1989 (the "Commencement Date").
The initial term of this lease (the "Initial Term") shall be for
a period of ten (10) years following the Commencement Date.
2. Net Lease: Rent Absolute.
(a) This lease shall be deemed and construed to be a
"net lease" and it is intended that the fixed rent provided for in
paragraph 3 shall be an absolutely net return to the Landlord
throughout the Initial Term of this lease and any Additional Term
hereof, free of any expense, charge or other deduction whatsoever,
1
<PAGE> 2
with respect to the demised premises and/or the ownership, leasing,
operation, management, maintenance, repair, rebuilding, use or
occupation thereof, or of any portion thereof, or with respect to
any interest of the Landlord therein except only as otherwise
expressly provided herein.
(b) Except as otherwise herein provided, this lease
shall not terminate nor shall Tenant be entitled to any abatement
of rent, reduction thereof, or extension of any term, nor shall
the respective obligations of Landlord and Tenant be affected
(except as herein provided) by reason of damage to or destruction
of all or any part of the premises (from whatever cause), the
lawful prohibition of Tenant's use of the demised premises, the
interference with such use by any private person, firm or
corporation, or by reason of any eviction by paramount title; any
present or future law to the contrary notwithstanding.
3. Rental.
During the first five (5) years of the Initial Term of
this lease, Tenant agrees to pay to Landlord, promptly when due,
without not ice or demand and without deduction or setoff of any
amount for any reason whatsoever, as fixed rent for the demised
premises, the sum of Seven Hundred Sixty Thousand Dollars
($760,000) payable in sixty (60) equal monthly installments of
Twelve Thousand Six Hundred Sixty-Six and 67/100 Dollars
($12,666.67), in advance, on or before the first day of each
calendar month and as hereinafter provided. During the next five
(5) years of the Initial Term of this lease, Tenant agrees to pay
to Landlord and, as fixed rent for the demised premises, the sum
of Seven Hundred Ninety-Seven Thousand Five Hundred Dollars
($797,500) payable in 60 equal monthly installments of Thirteen
Thousand Two Hundred Ninety-One and 67/100 Dollars ($13,291.67),
in advance, on or before the first day of each calendar month as
hereinafter provided. Rent for any portion of a month shall be
prorated on a per diem basis based on the monthly rental set forth
in this paragraph 3. Rental payments hereunder shall be made by
Tenant to Landlord each by a single check or draft payable to the
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<PAGE> 3
order of Landlord and delivered to Landlord either personally or
by mail to Landlord's address set forth in paragraph 22. On the
date of execution of this lease by Tenant (the "Execution Date"),
Tenant shall deliver to Landlord the sum of $12,666.67 representing
payment in advance of the first full calendar month's rent
hereunder.
4. Renewal Options; Rental in Additional Terms.
Tenant is hereby given three (3) separate options to
extend the term of this lease for three (3) separate, successive
periods (collectively, "Additional Term(s)") of five (5) years each
to follow consecutively upon the expiration of the immediately
preceding term of this lease. The option for each Additional Term
shall be exercised by Tenant giving notice to Landlord of Tenant's
exercise of the option along with the first month's rent for such
Additional Term not less than six (6) months prior to the ex-
piration of the Initial Term or the prior Additional Term, as the
case may be; provided, however, that Tenant shall not be entitled
to exercise its option for an Additional Term if it shall be in
default hereunder and such default shall be continuing beyond any
applicable grace period. In the event of any extension of this
lease by reason of Tenant's exercise of any one or more of the
aforesaid options, this lease shall forthwith be extended, and all
of the terms, covenants, conditions and provisions of this lease
shall continue in full force and effect, provided, however, (a) the
rent for the first Additional Term shall be increased by an amount
equal to Eight Hundred Thirty-Five Thousand Dollars ($835,000)
payable in sixty (60) equal monthly installments of Thirteen
Thousand Nine Hundred Sixteen and 67/100 Dollars ($13,916.67); and
(b) the rent for each of the second and third Additional Terms
shall be increased by an amount equal to (i) Fifteen Thousand
Dollars ($15,000) plus (ii) the amount of any increase during such
Additional Term in the debt service under Landlord's first mortgage
which encumbers the demised premises (the "First Mortgage") above
a 12.38% annual constant; provided, however, that for purposes of
calculating the rent increase, in no event shall the amortization
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<PAGE> 4
period for the First Mortgage be less than 20 years, and further
provided that Tenant shall not be obligated to pay any increase in
debt service if such increase is a result of Landlord's default
under the First Mortgage, unless Landlord's default is a result of
Tenant's default hereunder. Landlord agrees that it shall use all
reasonable efforts to obtain the most advantageous terms available
in connection with mortgage financing on the demised premises.
Rent for each Additional Term shall be payable in sixty
(60) successive equal monthly installments, the first said
installment payable on the first day of the respective Additional
Term and each subsequent installment on the same day of each
subsequent month during said Additional Term. Rental payments
hereunder shall be made by Tenant to Landlord each by a single
check or draft payable to the order of Landlord and delivered to
Landlord either personally or by mail c/o Landlord's address set
forth in paragraph 22, or such other address as Landlord may
provide to Tenant.
5. Taxes, Assessments, and Other Charges.
(a) As additional and further rent, Tenant agrees to
pay and discharge promptly on or prior to the last day the same
are payable without interest or penalty all taxes, sewer rents,
water charges, assessments and other imposts and levies of every
kind and nature whatsoever, whether general or special, ordinary
or extraordinary, applicable to any period during the Initial Term
of this lease or any Additional Term thereof, which have been or
may hereafter be imposed, charged, assessed or levied upon or
against, or which have or may become due and payable with respect
to, the demised premises or any part thereof or which may be
imposed, assessed, charged, or levied upon the leasehold estate
hereby created or upon the reversionary estate in the demised
premises, under or by virtue of any present or future law, rule,
requirement, order, direction, ordinance or regulation of any
governmental or other lawful authority whatsoever and which shall
have become or shall become due and payable prior to or during the
Initial Term of this lease or any Additional Term thereof;
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<PAGE> 5
provided, however, that Tenant shall not be obligated to pay any
present taxes in the nature of income, excess profits, inheritance,
devolution, gift, transfer, incorporation or franchise taxes which
may be imposed, charged, assessed or levied against Landlord, or
any such future tax or taxes (unless expressly substituted in whole
or in part for the present real estate or other taxes set forth
above to be paid by Tenant); and provided, further, that said
taxes, sewer rents, water charges, assessments and other charges
shall, as to the tax year or years in which this lease shall
commence and the tax year or years in which this lease shall be
terminated, be apportioned according to the part of such tax year
within the Initial Term or any Additional Term, and if the tax rate
for such tax year has not been determined, it shall be presumed
that the tax rate for such tax year will be the same as for the
previous tax year, subject to adjustment when actual tax bills are
available.
(b) Tenant covenants that it shall furnish to Landlord
promptly after each payment required to be made by Tenant pursuant
to this paragraph an original or duplicate official receipt
evidencing such payment and such additional evidence of the payment
thereof as Landlord may reasonably require for Landlord's purposes
or to satisfy the requirements of any mortgage or lien which the
Landlord may create upon the demised premises.
(c) If Tenant shall default in the payment of any taxes,
assessments or public charges required to be paid by Tenant and
shall fail to make such payment within ten (10) days after written
notice from Landlord, Landlord shall have the right to pay the same
together with any penalties and/or interest, in which event the
amount so paid by Landlord shall be paid by Tenant to Landlord on
demand together with interest thereon at the Default Interest Rate
(as hereinafter defined).
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<PAGE> 6
6. Contest of Taxes, Assessments and Other Charges.
Anything contained in paragraph 5 to the contrary
notwithstanding, Tenant shall have the right in good faith to
contest at its sole cost and expense and at no cost to Landlord
the validity or amount of any such tax, assessment or other charge
herein agreed to be paid by Tenant, but if Tenant shall elect so
to contest any such tax, assessment or other charge, Tenant shall
notify Landlord in Writing of its intention so to do Within five
(5) days prior to the last day the same are Payable Without
interest or Penalty due date thereof, and so long as the validity
or amount of any such tax, assessment or other charge shall be so
contested by Tenant in good faith and by appropriate proceedings
which shall operate to Prevent the collection of the tax or
assessment, or other charge so contested, and to Prevent the Sale
of the demised Premises or any Part thereof to satisfy the same,
Tenant shall not be deemed to be in default with respect to the
Payment thereof and in any such case any such tax, assessment or
other charge shall not be Paid by Landlord. Landlord agrees to
render Tenant all assistance reasonably possible Without expense
to Landlord in contesting the validity or amount of any such tax,
assessment, or other charge including the coining in and signing
of any protest, pleading or other document Which Tenant may
reasonably deem necessary or advisable to file or use. Tenant
shall be liable for all interest and penalties, if any, as a result
of such contest. It is further agreed by Landlord and Tenant that
should any rebate or recovery be made on account of any tax or
assessment Paid by Tenant, the amount of such rebate or recovery
shall belong to and be Paid to Tenant.
7. Maintenance and Alteration of Demised Premises; No
Mechanic's Liens.
(a) Tenant will accept the demised premises, including
the improvements thereon, in the condition they are in as of the
Commencement Date of this lease. Tenant agrees that it will, at
its own expense, maintain and repair the demised premises,
including all buildings, improvements and all alterations,
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<PAGE> 7
additions, equipment and facilities installed therein or thereon,
including the parking area, sidewalks, driveways, truck docks and
overhead doors, steps, excavations, easement areas, and all
appurtenances, in good and substantial condition and repair and
will make all necessary repairs and replacements to the demised
premises, interior and exterior, structural and non-structural,
ordinary as well as extraordinary. including, without limitation,
those repairs required pursuant to subparagraph (d) hereof, and
keep the demised premises in a clean, safe and healthy condition
so as to conform to all lawful requirements, laws and ordinances
and directions of the proper public authorities and the
requirements of all policies of insurance from time to time in
force during the term of this lease, all at its own sole cost and
expense. Landlord shall be under no obligation to make any repairs
or replacements to the demised premises or any portion thereof.
Tenant shall have the right, at its own cost and expense,
to make such changes, alterations and improvements to the demised
premises as may be incidental to the convenient conduct of its
business, except that no structural alterations or changes shall
be made to the demised premises without the written consent of
Landlord first obtained, which consent shall not be unreasonably
withheld. Prior to making any material structural alteration or
change, Tenant shall send written notice of its intention with
respect thereto to Landlord, together with a plan and
specifications thereof, and in the event no written objection is
received by Tenant within thirty (30) days of the receipt by
Landlord of said notice, said failure on the part of Landlord to
object shall be deemed an acquiescence and consent to the proposed
structural alteration or change.
(b) Upon the expiration or earlier termination of this
lease, Tenant shall not have the right to remove any alterations,
additions, improvements and replacements, whether made by it
pursuant to subparagraph (a) or otherwise, and at such expiration
or earlier termination such alterations, additions, improvements
and replacements shall be delivered up to Landlord with the demised
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<PAGE> 8
premises and no compensation shall be allowed or paid therefor.
Notwithstanding the foregoing provisions of this subparagraph, all
machinery, equipment and other like property and moveable walls,
electrical buss systems, telephone systems and building security
equipment, in each case if brought on to the demised premises by
Tenant, shall be removed by Tenant at the termination of this lease
and Tenant shall repair or pay for the repair of any damage
resulting from such removal. Upon the expiration or earlier
termination of this lease, the demised premises, including, but not
limited to, the parking area, shall be delivered up to Landlord in
a broom clean condition and in accordance with Tenant's obligations
set forth in this paragraph 7.
(c) Tenant will not permit mechanic's, laborer's or
materialmen's liens to stand against the demised premises for any
labor or material furnished to Tenant or claimed to have been
furnished to Tenant in connection with work of any character
performed or claimed to have been performed on said premises by or
at the direction or sufferance of Tenant, provided, however, that
Tenant shall have the right to contest the validity or amount of
any such lien or claimed lien, if Tenant shall give Landlord, upon
demand, reasonable security to insure payment thereof, provided
such security need not exceed one and one-half (l-l/2) times the
amount of such lien or claimed lien. On final determination of the
lien or claim for lien, Tenant will immediately pay any judgment
rendered with all proper costs and charges and shall have the lien
released or judgment satisfied at Tenant's own expense, and
Landlord will promptly return any security which Tenant may have
furnished to Landlord.
(d) Tenant acknowledges that certain recommended repairs
to the demised premises are described in that certain report of
Eckland Consultants, Inc. of Chicago, Illinois, in favor of
Landlord's mortgagee dated June 16, 1989, a copy of which has been
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<PAGE> 9
delivered to Tenant. Tenant covenants and agrees that it shall
cause all such repairs to be made in and to the demised premises
in the ordinary course of Tenant's business.
8. Utility and Janitor Service.
Tenant agrees that it will pay for all water, sewer, gas,
steam, standby sprinkler service, electric current, and all other
utilities used or consumed in the demised premises, at the rates
charged by the utility providing the same, as and when the charges
for the same shall become due and payable, and will, at its own
expense, furnish all security systems, fuel and janitor and other
services required in connection with the operation of the demised
premises.
9. Compliance with Ordinances.
(a) Tenant agrees that in the conduct of its business
and occupancy of the demised premises it will comply with all valid
laws, ordinances, rules and regulations of all public authorities
having any jurisdiction over the demised premises or any part
thereof ("Applicable Legal Requirements").
(b) Tenant shall have the right to contest by due legal
proceedings any purported violation of Applicable Legal
Requirements, as well as the enforcement or imposition thereof,
and may, to the extent permitted by applicable law, postpone
compliance with the pertinent Applicable Legal Requirements;
provided, however, that (1) any such postponement of compliance
shall not subject Landlord or any mortgagee of Landlord to any fine
or penalty or to criminal prosecution or cause the demised premises
to be condemned or vacated and shall not result in loss of or
otherwise affect any insurance coverage provided for in this lease;
(2) Tenant shall commence and diligently prosecute the applicable
contest proceedings within the time frame specified in the notice
of violation or citation or under applicable law; (3) in the event
compliance with the Applicable Legal Requirements cannot be
postponed, Tenant shall commence and diligently prosecute to
completion all action required to achieve such compliance within
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<PAGE> 10
the time specified in the notice of violation, citation, imposition
or enforcement, as the case may be; and (4) upon reasonable request
of Landlord, Tenant shall obtain and furnish to Landlord a bond in
a form and with surety reasonably acceptable to Landlord or such
other security reasonably acceptable to Landlord, which bond or
other security shall be in an amount Which, in the reasonable
judgment of Landlord, is sufficient to pay all costs and expenses
of complying with the Applicable Legal Requirements.
10. Tenant to Pay for Insurance.
(a) Tenant shall, at Tenant's sole cost and expense,
provide, maintain and keep in force the following policies of
insurance:
(i) All risk property insurance against loss or damage
to any improvements on the premises in an amount not less than the
full replacement cost thereof (exclusive of the cost of
excavations, foundations and footings below the lowest basement
floor), without deduction for depreciation, and with not more than
$10,000 deductible from the loss payable for any casualty.
(ii) Comprehensive public liability insurance, including
coverage for elevators and escalators, if any, on the premises and
completed operations coverage for two years after any construction
or repair at the demised premises has been completed, on an
occurrence basis against claims for personal injury, including
without limitation bodily injury, death or property damage
occurring on, in or about the demised premises and the adjoining
streets, sidewalks and passageways, such insurance to afford
immediate minimum protection to a limit of not less than $1,000,000
for one person and.$3,000,000 per occurrence for personal injury
or death and $500,000 per occurrence for damage to property.
(iii) Workers' compensation insurance in accordance with
the requirements of Illinois law.
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(iv) During the course of any construction or repair at
the demised premises, builder's risk insurance against all risks
of physical loss, on a completed value basis, including collapse
and transit coverage, with a deductible not to exceed $10,000, in
nonreporting form, covering the total value of work performed and
equipment, supplies and materials furnished, and containing the
"permission to occupy upon completion of work" endorsement.
(v) Boiler and machinery insurance covering any pressure
vessels, air tanks, boilers, machinery, pressure piping, heating,
air conditioning and elevator equipment and escalator equipment
located on the demised premises, and insurance against loss of
occupancy or use arising from any breakdown therein, all in such
amounts as are satisfactory to Landlord.
(vi) If the demised-premises are located in an area that
has been identified by the United States Department of Housing and
Urban Development as an area having special floor hazards and if
the sale of flood insurance has been made available under the
National Flood Insurance Act of 1968, flood insurance in an amount
equal to the replacement cost of any improvements on the premises
or to the maximum limit of coverage made available with respect to
the particular type of property under the National Flood Insurance
Act of 1968, whichever is less.
(vii) Rent loss insurance in an amount of not less than
the then current annual debt service under the First Mortgage (not
including, in the case of the year in which the final maturity date
of the obligation secured by the First Mortgage occurs, the amount
of principal payable at maturity) plus annual operating expenses
of the demised premises, as estimated by the Landlord.
(viii) Such other insurance, and in such amounts, as may
from time to time be required by the Lender against the same or
other hazards.
All policies of insurance required by terms of this Mortgage shall
contain an endorsement or agreement by the insurer that any loss
shall be payable in accordance with the terms of such policy
notwithstanding any act or negligence of the Tenant, Landlord or
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<PAGE> 12
Mortgagee which might otherwise result in forfeiture of said
insurance and the further agreement of the insurer waiving all
rights of set-off, counterclaim or deductions against the Landlord,
shall contain waiver of subrogation clauses, and shall provide that
the amount payable for any loss shall not be reduced by reason of
co-insurance.
(b) All insurance provided for in this paragraph shall
be effected under valid and enforceable policies issued by insurers
satisfactory to Landlord. All such companies shall have a policy
rating of A or better and financial rating of class X or better by
the most current edition of Best's Insurance Reports, and shall be
authorized to do business in the State of Illinois. Upon the
execution of this lease and thereafter not less than thirty (30)
days prior to the expiration dates of the expiring policies
theretofore furnished pursuant to this section, originals or
duplicate original policies bearing notations evidencing the
payment of premiums or accompanied by other evidence satisfactory
to Landlord of such payment, shall be delivered by Tenant to
Landlord.
(c) All policies of insurance provided for under this
paragraph shall name Landlord and Tenant as the insureds, as their
respective interests may appear, and shall be payable to Landlord
in the event of fire or other casualty, and shall also be payable
if Landlord so requires, to the holder' of any mortgage pursuant to
a standard mortgage clause, without contribution, if obtainable.
All such policies of insurance shall, to the extent obtainable,
provide that any loss shall be payable to Landlord and/or to the
holder of any mortgage, notwithstanding any act of the Tenant which
might otherwise result in forfeiture of said insurance.
All such policies or certificates therefor issued by the
respective insurers shall, to the extent obtainable, contain an
agreement by such insurers that such policies shall not be
cancelled without at least thirty (30) days prior written notice
to Landlord and to the holder of any mortgage to whom loss
thereunder may be payable.
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<PAGE> 13
(d) In consideration of the execution of this Agreement,
each of the parties does hereby release the other, and such other's
agents, employees and invitees from any claim for damage or
destruction to the demised premises or improvements thereto, or to
the contents thereof belonging to either of them, or for business
interruption, caused by fire or other peril included within the
extended coverage endorsement to the standard fire policy, whether
due to the negligence of either of them, or their agents, servants,
employees and invitees or to any other person for whom either of
them may be legally responsible, or otherwise to the extent of the
actual recovery by Landlord or Tenant under any insurance policy
relating to such loss. Each of the parties shall notify its
respective insurance carriers of this provision, and obtain an
endorsement approving said provision on all such fire, extended
coverage and business interruption policies.
11. Damage or Destruction of Demised Premises and Use
of Insurance Proceeds.
In the event that any buildings which are part of the
demised premises or any improvements thereto which have been made
by Tenant are damaged or destroyed by fire or other casualty, this
lease shall not terminate, except as hereinafter provided, nor
shall the liability to pay rent cease or be reduced except to the
extent Landlord has been paid from proceeds of rent insurance
hereinabove provided for, but Tenant shall restore, replace or
rebuild the demised premises with all reasonable speed to the
condition they were in prior to the happening of the fire or other
casualty.
Landlord shall at all times have the right, but not the
obligation, to collect, adjust, and compromise any losses under
any of the insurance aforesaid; provided, however, that so long as
Tenant shall not be in default under this lease, Tenant shall be
entitled to adjust or compromise any such losses, with the written
approval of Landlord as to the amount thereof, which approval shall
not be unreasonably withheld or delayed.
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If at the time any insurance proceeds come into the
possession of Landlord, its mortgage. or Tenant, or while all or
any part of said insurance proceeds are in the possession of
Landlord, its mortgagee or Tenant, Tenant is in default in the
payment of any rent, tax, assessment, lien or other charge or
payment required to be paid by the terms of this lease and the
default has continued after any notice and grace period applicable
thereto, then Landlord shall be entitled to so much of the
insurance proceeds as may be necessary to fully pay or discharge
the amount of any such default, unless said default be as a result
of a bona fide dispute or contest with Landlord.
All insurance proceeds in the possession of Landlord,
its mortgagee and Tenant which are not used or necessary to be used
pursuant to the provisions of the preceding paragraph shall be
available to Tenant for the repair, reconstruction or replacement
of any buildings, machinery, fixtures or equipment included in the
demised premises which are damaged or destroyed, and shall be paid
out by Landlord and its mortgagee from time to time, as far as
necessary, on the estimates and certificate of a responsible
architect, satisfactory to Landlord and the holder of any mortgage;
provided, however, that Landlord or its mortgagee first be
satisfied that any amount necessary to pay the cost of such repair,
reconstruction or replacement, which is in excess of such insurance
proceeds, has been provided by Tenant for such purpose and its
application to such purpose assured. In case there shall be
insurance proceeds remaining after such application and after
complete repair, reconstruction or replacement of the buildings,
machinery, fixtures, or equipment, and provided there be no default
on the part of Tenant hereunder and the default has continued after
any notice and grace period applicable thereto, then if permitted
by the mortgagee, any such amount shall be paid to Tenant, provided
that if said default be as a result of a bona fide dispute or
contest with Landlord, then Landlord shall be entitled to so much
of such amount as may be necessary to fully pay or discharge the
amount of the default. In the event that any such excess insurance
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<PAGE> 15
proceeds are withheld by Landlord pending resolution of an alleged
default on part of the Tenant hereunder and the default has
continued after any notice and grace period applicable thereto,
then immediately upon resolution of such default Landlord may
retain the portion of such withheld amount which is found to be
owing to Landlord and, if permitted by the mortgagee, shall if
permitted by the mortgagee, the immediately pay to Tenant the
balance of such excess amount. To the extent that any such excess
insurance proceeds are not paid to Tenant, then the annual rental
payable by Tenant shall be reduce proportionately in the ratio
which the excess proceeds bears to the then present value of the
annual rentals payable by Tenant with respect to the unexpired
portion of the then term of this Lease, together with any
Additional Term for which Tenant has exercised its option to renew.
Tenant shall commence the repair, reconstruction or
replacement of any buildings, machinery, fixtures, or equipment
which are damaged or destroyed, within ninety (90) days after the
date of such damage or destruction or thirty (30) days after the
insurance proceeds become available for such repair, whichever last
occurs, and shall prosecute the same with reasonable diligence.
In the event of Tenants failure to do so, Landlord may give Tenant
written notice to so proceed and in the event Tenant fails to take
immediate and positive steps to cure said inactivity (except for
conditions beyond its control) within thirty (30) days after
receipt of said notice, then Landlord shall retain the insurance
proceeds as security for the continued performance and observance
by Tenant of the covenants imposed upon it by the terms of this
paragraph 11 and no part thereof shall be paid to Tenant, except
after the complete repair, reconstruction or replacement, as
aforesaid, of the buildings, machinery, fixtures or equipment, or
in the alternative, Landlord may use said proceeds to restore the
damage or destruction.
If the Building shall at any time during the final six
months of the then term of this lease be damaged or destroyed by
fire or other casualty and (i) such damage or destruction totals
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fifteen percent (15%) or more of the value of such Building above
the foundation thereof and (ii) repair and restoration (to the
extent required in this Paragraph), exercising reasonable
diligence, would not be completed more than three (3) months prior
to the end of the term of this lease (meaning the end of the next
succeeding Additional Term if prior to such damage or destruction
Tenant has given the Written notice to renew the term as above
provided), Landlord and Tenant shall each have the option,
exercisable by Written notice to the other Within thirty (30) days
after such damage or destruction, to terminate this lease as of the
end of the calendar month in Which such notice of termination is
given; Provided, however, that as to such notice by Landlord, such
thirty (30) day Period shall not commence until Tenant has notified
Landlord in Writing of the damage or destruction. In the event of
such termination, Landlord shall be entitled to retain all
insurance Proceeds.
12. Condemnation.
In the event that (a) title to the fee of the whole of
the demised premises shall be taken or condemned by any competent
authority, for any public or quasi-public use, or (b) title to the
fee of less than the whole of the demised premises shall be so
taken or condemned, and if as a result of such taking or
condemnation it shall be impracticable for Tenant to continue its
operations in the remaining Portions of the demised premises, in
Tenant's judgment reasonably exercised, this lease shall cease and
terminate and all rental paid or Payable by Tenant shall be
apportioned as of the date of vesting of title in such condemnation
proceeding Landlord and Tenant shall share in the total award
made in such condemnation proceeding in accordance with their
respective interests in the demised premises as of the date
immediately preceding the date of such vesting of title. In
addition, Tenant shall be entitled separately to claim and recover
its damages for business interruption, relocation expenses and
moving expenses.
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If title to the fee of less than the whole of the demised
premises shall be so taken or condemned, and if, notwithstanding
such taking or condemnation it shall be practicable for the Tenant
to continue its operations in the remaining portion of said
premises, in Tenant's judgment reasonably exercised, this lease
shall, except as hereinafter in this section provided, remain in
full force and effect. In such event, Tenant shall restore the
remaining portion of the demised premises, as nearly as may be
possible under the circumstances, and in accordance with the plans
and specifications to be approved by Landlord, to the same
character, condition and value of said premises as existed
immediately prior to such taking or condemnation and, to the extent
of the net award received and retained by Landlord in such
condemnation proceeding and, to the extent that the mortgagee
permits the next award received in such condemnation proceeding to
be so applied, Landlord shall make the award available to Tenant
for payment of the cost of such restoration and shall be paid out
by Landlord and its mortgagee from time to time, as far as
necessary, on the estimates and certificate of a responsible
architect, satisfactory to Landlord and the holder of any mortgage;
provided, however, that Landlord or its mortgage first be satisfied
that any amount necessary to pay the cost of such repair,
reconstruction or replacement, which is in excess of such insurance
proceeds, has been provided by Tenant for such purpose and its
application to such purpose assured. That part or portion of the
demised premises so affected by such taking shall be eliminated
from this lease, and this lease cancelled and terminated with
respect thereto. If after such reimbursement any balance of such
net award shall remain in the possession of Landlord the annual
rental payable by Tenant shall, subject to the mortgagee's consent,
be reduced proportionately to the amount taken, effective as of the
date of final reimbursement by Landlord to Tenant for the cost of
such restoration work, in the ratio which said balance of such net
award shall bear to the then present value of the annual rentals
payable by Tenant with respect to the unexpired portion of the then
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term of this lease together with any Additional Term for which
Tenant has exercised its option to renew.
Whenever in this paragraph reference is made to:
(a) the "net award" received and retained by Landlord
in any condemnation proceeding, such net award shall mean the net
amount actually received and retained by Landlord in such
proceeding after deducting all expenses, including attorney's fees,
incurred by Landlord in or as a result of such proceedings; and
(b) the "present value of the annual rentals" reserved
hereunder for the unexpired portion of the term of this lease, such
present value shall be their discounted value calculated on the
basis of interest at the rate of seven percent (7%) per annum.
13.. Assignment and Subletting.
(a) Landlord may at any time assign its rights and
obligations hereunder or sell, exchange or transfer fee title to
the demised premises to any person, firm or entity at any time.
(b) Except as hereinafter specifically provided, Tenant
may not, without the prior written consent of Landlord, which shall
not be withheld unreasonably, assign, encumber or sublet this lease
or its rights hereunder. Tenant may assign or sublet this lease
or its rights hereunder to an entity which is related to Tenant,
provided that Tenant and ACPI remain liable for the payment and
performance of all obligations of the Tenant to be paid or
performed under this lease. Specifically, Tenant shall be deemed
to have assigned this lease if any one or more of the following
events occur:
Tenant or ACPI, as the case may be, shall be liquidated
or dissolved (other than in connection with a merger of Tenant or
ACPI into, or a sale of all, or any substantial part, of Tenant's
or ACPI's assets to, another corporation, provided that the
survivor of such merger or the purchaser of such assets shall
assume all of Tenant's or ACPI's obligations under this lease or
the Guarantee, respectively, and provided further that immediately
after giving effect to any such merger, the corporation surviving
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the same shall have a Tangible Net Worth [hereinafter defined] at
least equal to the greater of (i) the Tangible Net Worth of Tenant
or ACPI, as the case may b., on the commencement date hereof or
(ii) the Tangible Net Worth of Tenant or ACPI, as the case may be,
immediately prior to such merger), or shall begin proceedings
toward such liquidation or dissolution, or shall in any manner,
permit the divestiture of all or any substantial part of Tenant's
or ACPI's assets.
(c) "Tangible Net Worth" for purposes of this paragraph
shall mean the aggregate amount of all assets of Tenant or ACPI,
as the case may be, as may be properly classified as such, other
than goodwill and such other assets as are properly classified as
"intangible assets," less the aggregate indebtedness of Tenant or
ACPI, as the case may be, all-as shown on its most current balance
sheet prepared in accordance with generally accepted accounting
principles as at the end of its most recent fiscal year and on a
fully consolidated basis.
14. Termination.
(a) Tenant agrees, subject to the provisions of this
paragraph 14 that (i) if Tenant shall be in default in the payment
of any rent or other sums due under this lease and such default
shall be continuing for five (5) days after the date such payment
became due and payable; or (ii) if Tenant shall neglect or fail to
perform or observe any of the other covenants contained in this
lease on Tenant's part to be performed and shall not have remedied
the same within fifteen (15) days after written notice thereof
given by Landlord; or (iii) if any execution or attachment shall
be issued against Tenant and such execution or attachment shall not
be discharged within 60 days after levy or seizure thereunder; or
(iv) if Tenant shall in any way fail to perform and satisfy the
requirements of any insurance policy referred to herein which
failure shall constitute a default thereunder and Tenant shall not
either abate such default and cause such policy to be reinstated
or procure other insurance which shall conform to the provisions
of paragraph 10 hereof; or (v) if there shall be filed against
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Tenant in any court, pursuant to any statute either of the United
States or of any state thereof, a petition alleging bankruptcy or
insolvency of Tenant, or for reorganization of Tenant, or for the
appointment of a receiver or trustee of all or a portion of
Tenant's property, and any such petition is not dismissed within
60 days after such filing, or any receiver or trustee so appointed
is not discharged within 60 days after such appointment, or if any
petition is filed by Tenant, or if Tenant makes an assignment for
the benefit of creditors; then, and in any one or more such events,
this lease and the term hereof shall, upon the date specified in
a written notice given by Landlord to Tenant setting forth the
nature of such default, breach, matter or condition, cease and
determine, with the same force and effect as though the date so
specified were the date hereinabove set forth as the date of the
expiration of this lease, and neither Tenant nor any person
claiming through or under Tenant by virtue of any statute or order
of any court or otherwise, shall be entitled to possession or to
remain in possession of the demised premises, but shall forthwith
quit and surrender the same. In the event of such termination,
Landlord may reenter the demised premises and take possession of
the same by summary proceedings, reentry or otherwise, and remove
all persons and/or any property from the demised premises without
being liable to indictment, prosecution or damages therefor, and
without prejudice to any other rights which it may have by reason
of such breach, default, matter or condition.
(b) In case of any such termination, re-entry, or
dispossess by summary proceedings or otherwise, the annual rent
and all other charges required to be paid by the Tenant hereunder
shall thereupon become due and be paid up to the time of such
termination, re-entry or dispossess, and the Tenant shall also pay
to the Landlord all expenses which the Landlord may then or
thereafter incur for legal expenses, attorneys' fees, brokerage
commissions, and all other costs paid or incurred by the Landlord
for restoring the demised premises to good order and condition and
for altering and otherwise preparing the same for reletting. The
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Landlord may, at any time and from time to time, relet the demise
premises, in whole or in part, either in its own name or as agent
of the Tenant, for a term or terms which, at the Landlord's option,
may be for the remainder of the then current term of this lease,
or for any longer or shorter period, and (unless the statute or
rule of law which governs or shall govern the proceeding in which
such damages are to be proved, limits or shall limit the amount of
such claim capable of being so proved and allowed, in which case
the Landlord shall be entitled to prove as and for liquidated
damages and have allowed an amount equal to the maximum allowed by
or under any such statute or rule of law) the Tenant shall be
obligated to, and shall pay to the Landlord as damages, upon
demand, and the Landlord shall be entitled to recover of and from
the Tenant, at the election of the Landlord, either
(a) liquidated damages, in an amount, at the time of such
termination, re-entry or dispossess by the Landlord, as
the case may be, equal to the excess, if any, of the then
present value of the installments of annual rent reserved
hereunder, for the period which would otherwise have
constituted the unexpired portion of the then current
term of this lease, over the then present value of the
then fair market rental value of the demised premises for
such unexpired portion of the then current term of this
lease, both discounted at the nominal rate of seven per
cent (7%) per annum; or
(b) damages (payable in monthly installments, in advance, on
the first day of each calendar month following such
termination, re-entry or dispossess, and continuing until
the date originally fixed herein for the expiration of
the then current term of this lease) in an amount or
amounts equal to the excess, if any, of the sum of the
aggregate expenses paid by the Landlord during the month
immediately preceding such calendar month for all such
items as, by the terms of this lease, are required to be
paid by the Tenant, plus an amount equal to the amount
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<PAGE> 22
of the installment of annual rent which would have been
payable by the Tenant hereunder in respect of such
calendar month, had this lease and the demise term not
been so terminated, or had the Landlord not so re-
entered, over the rents, if any, collected by or accruing
to the Landlord in respect of such calendar month
pursuant to such reletting, and any suit or action
brought to collect the amount of the deficiency for any
month shall not prejudice in any way the rights of the
Landlord to collect the deficiency for any subsequent
month by a similar proceeding.
The Landlord, at its option, may make such alterations, repairs
and/or decorations in the demised premises as in its reasonable
judgment the Landlord considers advisable and necessary, and the
making of such alterations, repairs and/or decorations shall not
operate or be construed to release the Tenant from liability
hereunder. The Landlord shall in no event be liable in any way
whatsoever for failure to relet the demised premises, or in the
event that the demised premises are relet, for failure to collect
rent thereof under such reletting; and in no event shall the Tenant
be entitled to receive any excess of such annual rents over the
sums payable by the Tenant to the Landlord hereunder. Suit or
suits for the recovery or such damages or any installments thereof,
may be brought by the Landlord from time to time at its election,
and nothing herein contained shall be deemed to require the
Landlord to postpone suit until the date when the term of this
lease would have expired if it had not been terminated under the
provisions of this lease, or under any provision of law, or had the
Landlord not re-entered into or upon the demised premises.
Any sums which are not paid by Tenant when same shall
become due and payable shall be paid to Landlord with interest at
a rate per annum equal to five (5) percent over the rate per annum
announced from time to time by _____________ as its prime or base
lending rate or other equivalent rate (the "Default Interest
Rate"). In the event that any rent due hereunder is not paid
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<PAGE> 23
within five (5) days from the date it is due, Tenant will pay a
late charge of 4% of the amount overdue. This late payment charge
shall apply to each rant payment past due, and there shall be no
daily pro rata adjustment.
15. Inspection of Landlord.
Subject to governmental or other security regulations,
Landlord by any duly authorized agent or representative shall have
access to the demised premises and each and every part thereof at
any and all reasonable time or times during business hours to
inspect the same for any purpose including, without limitation of
the foregoing, the determination of the condition of the demised
premises or any part thereof, the progress of any work undertaken
by Tenant, and generally Tenant's performance of and compliance
with the terms and provisions of this lease.
16. Hold-Over.
Tenant will, at the termination of this lease by lapse
of time or otherwise, yield up immediate possession to Landlord,
and failing so to do, it shall-be deemed a tenant from month to
month only, at a monthly rental equal to one and one-half times
the rental paid by Tenant for the last preceding month. In such
event the rights, duties and obligations of Landlord and Tenant
shall be governed, except as to rent and duration of the term, by
the provisions of this lease.
17. Subordination by Tenant; Estoppel Certificate by
Tenant.
(a) This lease is made subject to zoning, building and
other governmental ordinances and resolutions and any amendments
thereto and to restrictions, covenants, easements, encumbrances,
reservations and rights of way, which may now affect the demised
premises. In addition, this lease, without any further instrument,
shall at all times be subject and subordinate to any and all
mortgages created by Landlord and encumbering the demised premises,
and to all advances made or hereafter to be made upon the security
of any such mortgages, to the interest on all obligations secured
by them, and to all renewals, modifications, consolidations,
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<PAGE> 24
replacements and extensions thereof and Tenant agrees that it shall
execute and deliver from time to time to the holder or holders of
any such mortgages such estoppel certificates as such holders or
Landlord may reasonably request; provided, however, that Tenant,
concurrently with the execution and recording of any such mortgage,
receives from the holder or holders of such mortgage a non-
disturbance agreement.which shall provide, among other things,
that, provided Tenant is not in default under this Lease,
foreclosure or other enforcement of the terms and conditions of
such mortgage will not result in either a termination of this Lease
or a diminution or impairment or any of the rights granted to
Tenant herein or in an increase in any of Tenant's obligations
hereunder.
(b) Tenant agrees-at any time and from time to time,
upon not less than ten (10) days' prior written request by
Landlord, to execute, acknowledge and deliver to Landlord a
statement in writing certifying that this lease is unmodified and
in full force and effect (or if there have been modifications that
the same is in full force and effect as modified and stating the
modification), and the dates to which the fixed rent and other
charges have been paid in advance, if any, it being intended that
any such statement delivered pursuant to this paragraph may be
relied upon by any prospective purchaser of the fee or mortgagee
or assignee of any mortgage upon the fee of the demised premises.
(c) Landlord agrees at any time and from time to time,
upon not less than 10 days prior written request by Tenant, to
execute, acknowledge and deliver to Tenant a statement in writing
certifying that this lease is unmodified and in full force and
effect (or if there have been modifications that the same is in
full force and effect as modified and stating the modification),
and the dates to which the fixed rent and other charges have been
paid in advance, if any, it being intended that any such statement
delivered pursuant to this paragraph may be relied upon by any
prospective assignee or sublessee of Tenant, pursuant to any
assignment or sublease permitted hereunder.
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<PAGE> 25
18. Indemnification.
Tenant agrees to indemnify and save harmless Landlord
against and from any and all claims by or on behalf of any person,
firm or corporation arising from the use, occupancy, conduct or
management of or from any work or thing whatsoever done in or about
the demised premises, and will further indemnify and save Landlord
harmless against and from any and all claims arising during the
Initial Term of this lease or any Additional Term from any
condition of the Building on the demised premises or any street,
curb or sidewalk adjoining the demised premises, or of passageways
or spaces therein or appurtenant thereto, or arising from any
breach or default on the part of Tenant in the performance of any
covenant or agreement on the part of Tenant to be performed,
pursuant to the terms of this lease, or arising from any act of
Tenant, or any of its agents, contractors, servants, employees or
licensees, or arising from any accident, injury or damage
whatsoever caused other than by gross negligence of Landlord, its
agents, contractors, servants, employees or licensees, to any
person, firm or corporation occurring during the Initial Term of
this lease or any Additional Term, in or about the demised
premises, or upon the sidewalks and land adjacent thereto, and from
and against all costs, counsel fees, expenses, liabilities incurred
in or about any such claim or action or proceeding brought thereon;
and in case any action or proceeding be brought against Landlord
by reason of any such claim, Tenant upon notice from Landlord
covenants to resist or defend such action or proceeding by counsel
reasonably satisfactory to Landlord. Indemnification by Tenant
hereunder shall not extend to any matter against which, and to the
extent which, Landlord has been indemnified from insurance paid for
by Tenant.
Tenant is fully familiar with the physical condition of
the demised premises, the buildings, improvements, fixtures and
equipment thereof. Landlord has made no representations of
whatever nature in connection with the condition of the demised
premises or of the buildings, improvements, fixtures or equipment
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<PAGE> 26
thereof and the Landlord shall not be liable for any latent or
patent defects therein.
Tenant covenants and agrees to pay, and to indemnify
Tenant against, all legal costs and charges, including counsel
fees, lawfully and reasonably incurred in obtaining possession of
the demised premises after default of Tenant or upon expiration or
earlier termination of the term of this lease, or in enforcing any
covenant or agreement of Tenant herein contained.
19. Quiet Enjoyment.
Landlord for itself and Landlord's successors and assigns
covenant with Tenant that upon performing the covenants hereunder
on its part to be performed Tenant shall and may peaceably and
quietly have, hold and enjoy the demised premises without let or
hindrance of any person claiming by, through or under Landlord.
20. Remedies Cumulative.
No remedy or election given by any provision in this
lease shall be deemed exclusive unless so indicated, but each shall
wherever possible be cumulative with all other remedies in law or
equity, except as otherwise specifically provided.
21. Waiver.
A waiver by Landlord or Tenant of any default or breach
by the other party of any covenant or covenants of this lease shall
be limited to the particular instance and shall not operate or be
deemed as a waiver of any future defaults or breaches of said
covenant or covenants.
22. Notices.
All notices and formal requests or demands required or
appropriate hereunder shall be in writing and personally delivered
or sent by registered or certified mail and shall be deemed to have
been served or given when personally delivered or enclosed in a
properly sealed and addressed envelope or wrapper, and deposited
postage prepaid in a post office, branch post office, or post
office box regularly maintained by the United States Government.
Notices to Landlord shall be delivered or addressed to it c/o
Brainard Place, 29001 Cedar Road, Cleveland, Ohio 44124, Attention:
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<PAGE> 27
Dan K. Silverberg or to such other person and place in the United
States of America as Landlord may from time to time designate in
writing, and notices to Tenant shall be delivered or addressed to
Tenant at 221 West First St., Kewonee, Illionis 61443, Attention:
Ken Fristad or to such other person or place as Tenant may from
time to time designate in writing.
23. Condition of Premises.
No representations have been made to Tenant concerning
the condition of the demised premises nor have any promises to
remodel, alter, or improve the demised premises been made by
Landlord.
24. Heirs, Successors and Assigns.
Subject to the provisions of paragraph 13 hereof, this
lease shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, successors and assigns.
25. Memorandum of Lease - Recording.
Landlord and Tenant agree that at the request of either
party they will cause to be prepared and executed, a memorandum of
this lease in the form prescribed by statute, which memorandum, and
not this lease, shall then be so filed for record at the sole
expense of the party requesting same.
26. Paragraph Headings.
The paragraph headings inserted in this lease are for
convenience only and are not intended to and shall not be
considered to limit, enlarge or affect the scope or intent of this
lease nor the meaning of any provision hereof.
27. Use.
Tenant is hereby given the privilege of using the demised
premises for office space and manufacturing and storage of
products; provided, however, that such use shall at all times be
in conformity with all environmental laws, rules and regulations
then applicable, and further provided that no "Hazardous Material,"
as hereinafter defined, shall be manufactured used or stored on the
premises. "Hazardous Material" means any hazardous substance or
any pollutant or contaminant defined as such in (or for purposes
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<PAGE> 28
of) the Comprehensive Environmental Response, Compensation, and
Liability Act, any so-called "Superfund" or "Superlien" law, The
Toxic Substances Control Act, or any other federal, state or local
statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability or standards of
conduct concerning any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect;
asbestos or any substance or compound containing asbestos;
polychlorinated biphenyls or any substance or compound containing
any polychlorinated biphenyl; and any other hazardous, toxic or
dangerous waste, substance or material. Items which are being
stored on the demised premises as of the Execution Date hereof,
all as permitted by and in conformity with all applicable zoning,
building and other ordinances and laws (and all rules, orders and
regulations issued pursuant thereto) and in conformity with all
applicable restrictions and conditions of record and for no other
purpose or purposes.
28. Brokers.
Landlord and Tenant each warrant to one another that no
broker or agent has been retained by them, respectively, in
connection with this lease other than Rothenfeld Financial Corp.,
and agree to indemnify and to hold each other harmless from any
expenses, fees or expenses arising in connection with any other
broker making a claim for such through either Landlord or Tenant,
respectively.
29. Governing Law. The parties agree that terms and
provisions of this lease shall be governed by and construed in
accordance with the laws of the State of Illinois.
30. Limitation of Landlord's Liability.
The term "Landlord" as used in this lease so far as
covenants or obligations on the part of Landlord are concerned
shall be limited to mean and include only the owner or owners at
the time in question of the fee of the demised premises, and in
the event of any transfer or transfers of the title to such fee
Landlord herein named (and in case of any subsequent transfers or
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<PAGE> 29
conveyances the then grantor) shall be automatically freed and
relieved from and after the date of such transfer or conveyance of
all liability as respects the performance of any covenants or
obligations on the part of Landlord contained in this lease
thereafter to be performed, provided that any funds in the hands
of such Landlord or the then grantor at the time of such transfer,
in which Tenant has an interest, shall be turned over to the
grantee and any amount then due. and payable to Tenant by Landlord,
or the then grantor under any provision of this lease, shall be
paid to Tenant, and provided further that upon any such transfer,
the grantee or transferee shall expressly assume, subject to the
limitations of this paragraph, all of the term., covenants and
conditions in this lease contained to be performed on the part of
Landlord, it being intended hereby that the covenants and
obligations contained in this lease on the part of Landlord shall,
subject as aforesaid, be binding on Landlord, it. successors and
assigns, only during and in respect of their respective successive
periods of ownership.
31. Landlord's Right to Perform Tenant's covenants.
Tenant covenants and agrees that if it shall at any time
fail to make any payment or perform any other act on its part to
be made or performed as in this lease provided, then Landlord may,
but shall not be obligated so to do, and with due notice to or
demand upon Tenant, and without waiving or releasing Tenant from
any obligations of Tenant in this lease contained, may make any
such payment or perform any other act on the part of Tenant to be
made and performed as in this lease provided, in such manner and
to such extent as Landlord may reasonably deem desirable, and in
exercising any such rights to pay necessary and incidental costs
and expenses, employ counsel and incur and pay reasonable
attorney's fees. All sums so paid by Landlord and all necessary
and incidental costs and expenses in connection with the
performance of any such act by Landlord, together with interest
thereon at the Default Interest Rate from the date of the making
of such expenditure by Landlord, shall be deemed additional rent
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<PAGE> 30
hereunder and, except as otherwise in this lease expressly
provided, shall be payable to Landlord on demand or at the option
of Landlord may be added to any rent then due or thereafter
becoming due under this lease, and Tenant covenants to pay any such
sum or sums with interest as aforesaid and Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights
and remedies in the event of the non-payment thereof by Tenant as
in the case of default by Tenant in the payment of rent. Whenever
practicable Landlord, before proceeding as provided in this
paragraph, shall give Tenant notice in writing of the failure of
Tenant that Landlord proposes to remedy, and shall allow to Tenant
such length of time as may be reasonable in the circumstances, not
exceeding thirty (30) days from the giving of the notice (unless
such default cannot be reasonably cured within said thirty (30) day
period, in which event, if Tenant shall commence within said thirty
(30) day period and thereafter prosecute with diligence the curing
of such default, said thirty (30) day period shall be extended for
such reasonable length of time as may be required to enable Tenant
to cure such default) to remedy the failure itself and if the
Tenant shall not remedy the failure in the time so allowed, the
Landlord may proceed as provided in this paragraph; provided,
however, that nothing in this sentence shall prevent the Landlord's
effecting forthwith any insurance coverage required to be and not
effected by Tenant, or Landlord's paying any premiums therefor in
time to prevent the cancellation or lapse of any such coverage in
force.
32. Invalid Provisions.
If any one or more of the provisions of this lease or
the applicability of any such provisions to a specific situation,
shall be held invalid or unenforceable, such provision shall be
modified to the minimum extent necessary to make it or its
application valid and enforceable, and the validity and
enforceability of all other provisions of this lease and all other
applications of any such provision shall not be affected thereby.
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<PAGE> 31
IN WITNESS WHEREOF, this lease has been duly executed by
Landlord and Tenant as of the date first above written.
LANDLORD
Signed and acknowledged
in the presence of: CRS LIMITED PARTNERSHIP
By:
Dan K. Silverberg
General Partner
As to Landlord
TENANT
Signed and acknowledged BOSS MANUFACTURING COMPANY
in the presence of
(as to both):
By
Stephan W. Cole
TITLE
And
TITLE
As to Tenant Richard F. Bern
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<PAGE> 32
STATE OF OHIO )
) SS:
COUNTY OF CUYAHOGA )
BEFORE ME, a Notary Public in and for said County and
State, personally appeared DAN K. SILVERBERG, who acknowledged that
he did sign the foregoing instrument, and that the same is his free
act and deed.
IN TESTIMONY WHEREOF, I have hereunto set my hand and
official seal at , Ohio, this day of
__________________, 1989.
Notary Public
STATE OF _____ )
) SS:
COUNTY OF )
BEFORE ME, a Notary Public in and for said County and
State, personally appeared BOSS MANUFACTURING, by
, its , and ,
its , who acknowledged that they did sign the
foregoing instrument, on behalf of such corporation, and that the
same is the free act and deed of said corporation and the free act
and deed of each of them personally and as an officer of said
corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and
official seal at , , this day of
, 1989.
Notary Public
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EXHIBIT A
Part of the Northeast Quarter of the North-
west Quarter of Section 19, Township 16 North, Range 4 West
of the Third Principal Meridian, Sangamon County, Illinois,
described as follows:
From the intersection of the Quarter Section
line and South right of way line of Illinois S.A. Route 3,
West on the aforesaid right Of way line 212.39 feet; thence
deflecting to the right 00~39'20" on aforesaid right of way
line 87.61 feet to the point of beginning, thence deflecting
to the left 90~52'00", 794.26 feet; thence deflecting to the
right 71~49'50", 109.56 feet to the point of curve of a
curve to the right of radius of 60.00 feet; thence North-
westerly on said curve for a chord distance of 58.53 feet;
thence deflecting to the right from the chord of the curve
29~11'31" 288.68 feet to the point of curve of a curve to
the right of radius of 20.00 feet; thence Northwesterly on
said curve a chord distance of 17.32 feet to the point of
curve of a curve to the left of radius of 60.00 feet; thence
Northwesterly on aforesaid curve a chord distance of 37.70
feet; thence North parallel to the first line described
585.00 feet to the aforesaid right of way line; thence East
on the right of way line 400.00 feet to the point of begin-
ning.
Except the coal and other minerals underlying
the surface of said land and all rights and easements in
favor of the estate of said coal and minerals.
33
<PAGE> 1
Exhibit (c)(10)
KEY BLANK AND MACHINE SUPPLY AGREEMENT
THIS AGREEMENT is entered into on the 30th day of March, 1995 between
AMERICAN CONSUMER PRODUCTS, INC., a Delaware corporation ("Seller"), and
THINGS REMEMBERED, INC., a Delaware corporation ("Buyer").
Witnesseth:
WHEREAS Buyer wishes to buy and Seller wishes to sell, during the term of
this Agreement (as defined in Paragraph 15 hereof), such quantity of certain
brass, rubberhead, "Color Plus" and such other key blanks (the "Blanks") to be
manufactured by Seller, and such quantity of key machines for the duplicating
of keys to be assembled by Seller (the "Machines") and key machine replacement
parts (the "Parts") therefor as shall satisfy certain of Buyer's needs, on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto hereby agree as follows:
1. Purchase of Blanks.
During the term of this Agreement (as defined in Paragraph 15
hereof), Buyer will purchase from Seller and Seller will sell to Buyer such
quantity of Blanks (hereinafter described) as shall reasonably satisfy certain
of Buyer's requirements for use in its retail key duplicating business during
such period. Subject to the terms of Paragraph 10 of this Agreement, Buyer will
purchase from Seller no less than ten million five hundred thousand
(10,500,000) Blanks during each annual period of this Agreement, prorated for
any partial period (the "Annual Minimum Purchase Obligation"). However, in no
event shall Seller be required to sell Buyer in excess of twenty million two
hundred fifty thousand (20,250,000) Blanks during each annual period of this
Agreement (prorated for any partial annual period) except by mutual agreement
of the parties. From and after the Non-Affiliation Date (as defined in
Paragraph 15 hereof), Buyer will purchase from Seller no less than two million
four hundred fifteen thousand (2,415,000) Blanks and Seller shall not be
required to sell Buyer in excess of three million three hundred seventy five
thousand (3,375,000) Blanks during each remaining annual period (prorated for
any partial annual period) of this Agreement except by mutual agreement of the
parties.
If Buyer should fail to fulfill its Annual Minimum Purchase Obligation
during the term of this Agreement, then in such event, within sixty (60) days
after the end of such period, Buyer shall pay to Seller an amount equal to Five
Dollars ($5.00) for each one thousand (1,000) Blanks below the Annual Minimum
Purchase Obligation for such annual period; provided, however, that if Buyer,
during any subsequent annual period, should place orders in excess of the
aggregate of its Annual Minimum Purchase Obligation for said annual period and
all prior annual periods, then in such event, Seller, within sixty (60) days
after the end of said subsequent annual period, shall refund to Buyer,
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<PAGE> 2
to the extent of any sums previously paid by Buyer pursuant to this provision,
an amount equal to Five Dollars ($5.00) for each one thousand (1,000) Blanks in
excess of the aggregate Annual Minimum Purchase Obligation for which orders
were placed by Buyer during any such subsequent annual period.
2. Purchase of Machines and Parts.
Buyer will purchase from Seller and Seller will sell to Buyer
during the term of this Agreement, such quantity of Machines and Parts
therefore as shall reasonably satisfy Buyer's requirements for use in its
retail key duplicating business during such period.
3 Price - Blanks; Adjustments.
(a) Buyer and Seller have attached hereto as Schedule A a
description of each type of Blank which is the subject of this Agreement, it
being understood that the purchase by Buyer hereunder may consist, from time to
time, of one or more of said types of Blanks in varying quantities. Set forth
on said Schedule A are the initial packaged prices (the "Base Price") of each
type of Blank, which prices shall remain in effect during the period from
February 1, 1995 through January 31, 1996 (the "First Annual Period") subject
to adjustment as hereinafter provided. Buyer and Seller agree that the Base
Prices for Blanks purchased by Buyer during the term of this Agreement shall be
"cost-plus" and computed in accordance with the formula stipulated in the Key
Blank Pricing section of Schedule A hereof.
At any time during the First Annual Period, the Base Prices for
Blanks may be adjusted upward or downward in response to a significant change
(in excess of five percent [5%]) in Seller's cost of materials (brass and zinc)
related to the manufacture of such Blanks ("Extraordinary Adjustment"). Such
Extraordinary Adjustment in the Base Prices of Blanks shall be certified by an
executive officer of Seller in writing to Buyer, with sufficient supporting
data to Buyer's satisfaction, and such Base Prices as so adjusted and mutually
approved by Buyer and Seller shall be the Base Prices in effect for Blanks for
the balance of the First Annual Period or until further adjusted pursuant to
the provisions of this Paragraph 3(a).
(b) For the period from February 1, 1996 through January 31, 1997
(the "Second Annual Period"), the Base Prices shall be increased or decreased
as to each type of Blank, as follows: In the event that Seller shall project an
increase or decrease in its cost of materials, scrap, labor, overhead,
inventory carrying cost factor, packaging and indirect overhead ("Standard
Costs") during the Second Annual Period, properly allocable to the manufacture
or purchase of the Blanks to be sold to Buyer hereunder, Seller shall compute,
in a manner consistent with its prior cost accounting practices, the effect
thereof upon the Base Price during the First Annual Period for each type of
Blank, and each Base Price for the Second Annual Period hereunder shall be
increased or decreased accordingly. The proposed increase or decrease in any
Base Price for the Second Annual Period shall be certified to Buyer by an
executive officer of Seller in writing with sufficient supporting data to
Buyer's satisfaction within forty-five (45) days after the end of the First
Annual Period and such
2
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<PAGE> 3
adjusted Base Prices shall be subject to the mutual approval of Buyer and
Seller. Such Base Prices as mutually approved by Buyer and Seller shall be the
initial Base Prices in effect for Blanks for the Second Annual Period or until
further adjusted pursuant to the provisions of this Paragraph 3(b).
Notwithstanding the foregoing, however, in no event shall Seller's cost factor
for Standard Costs, as defined in Schedule A hereof, increase in the aggregate
in excess of eight percent (8%) above the aggregate amount of such costs during
the First Annual Period.
At any time during the Second Annual Period, the Base Prices for
Blanks may be adjusted upward or downward in response to a significant change
(in excess of five percent [5%]) in Seller's cost of materials (brass and zinc)
related to the manufacture of such Blanks ("Extraordinary Adjustment"). Such
Extraordinary Adjustment in the Base Prices of Blanks shall be certified by an
executive officer of Seller in writing to Buyer, with sufficient supporting
data to Buyer's satisfaction, and such Base Prices as so adjusted and mutually
approved by Buyer and Seller shall be the Base Prices in effect for Blanks for
the balance of the Second Annual Period or until further adjusted pursuant to
the provisions of this Paragraph 3(b).
(c) For the period from February 1, 1997 through January 31, 1998
(the "Third Annual Period"), the Base Prices shall be increased or decreased as
to each type of Blank, as follows: In the event that Seller shall project an
increase or decrease in its cost of materials, scrap, labor, overhead,
inventory carrying cost factor, packaging and indirect overhead ("Standard
Costs") during the Third Annual Period, properly allocable to the manufacture
or purchase of the Blanks to be sold to Buyer hereunder, Seller shall compute,
in a manner consistent with its prior cost accounting practices, the effect
thereof upon the Base Price during the Second Annual Period for each type of
Blank, and each Base Price for the Third Annual Period hereunder shall be
increased or decreased accordingly. The proposed increase or decrease in any
Base Price for the Third Annual Period shall be certified to Buyer by an
executive officer of Seller in writing with sufficient supporting data to
Buyer's satisfaction within forty five (45) days after the end of the Second
Annual Period and such adjusted Base Prices shall be subject to the mutual
approval of Buyer and Seller. Such Base Prices as mutually approved by Buyer
and Seller shall be the initial Base Prices in effect for Blanks for the Third
Annual Period or until further adjusted pursuant to the provisions of this
Paragraph 3(c). Notwithstanding the foregoing, however, in no event shall
Seller's cost factor for Standard Costs, as defined in Schedule A hereof,
increase in the aggregate in excess of eight percent (8%) above the aggregate
amount of such costs during the Second Annual Period.
At any time during the Third Annual Period, the Base Prices for
Blanks may be adjusted upward or downward in response to a significant change
(in excess of five percent [5%]) in Seller's cost of materials (brass and zinc)
related to the manufacture of such Blanks ("Extraordinary Adjustment"). Such
Extraordinary Adjustment in the Base Prices of Blanks shall be certified by an
executive officer of Seller in writing to Buyer, with sufficient supporting
data to Buyer's satisfactions, and such Base Prices as so adjusted and mutually
approved by Buyer and Seller shall be the Base Prices in effect for Blanks for
the balance of the Third Annual Period or until further adjusted pursuant to
the provisions of this Paragraph 3(c).
3
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<PAGE> 4
(d) (This subparagraph shall be effective only in the event that
the Non-Affiliation Date shall be on or after August 1, 1995 but on or prior to
January 31, 1998, but shall not replace Subparagraph 3(c) hereof.) On each
February 1 occurring on or after February 1, 1998 during the remaining term of
this Agreement, the Base Prices shall be increased or decreased as to each type
of Blank, as follows: In the event that Seller shall project an increase in its
Standard Costs during the next annual period or portion thereof during the
remaining term of this Agreement, properly allocable to the manufacture or
purchase of the Blanks to be sold to Buyer hereunder, Seller shall compute, in
a manner consistent with its prior cost accounting practices, the effect
thereof upon the Base Price during the immediately preceding annual period for
each type of Blank, and each Base Price for the annual period or portion
thereof then commencing hereunder shall be increased or decreased accordingly.
The proposed increase or decrease in any Base Price for the annual period or
portion thereof then commencing shall be certified to Buyer by an executive
officer of Seller in writing with sufficient supporting data to Buyer's
satisfaction within forty five (45) days after the end of the preceding annual
period and such adjusted Base Prices shall be subject to the mutual approval of
Buyer and Seller. Such Base Prices as mutually approved by Buyer and Seller
shall be the initial Base Prices in effect for Blanks for the annual period or
portion thereof then commencing or until further adjusted pursuant to the
provisions of this Paragraph 3(d). Notwithstanding the foregoing, however, in
no event shall Seller's cost factor for Standard Costs, as defined in Schedule
A hereof, increase on any February 1 in the aggregate in excess of eight
percent (8%) above the aggregate amount of such costs during the preceding
annual period.
At any time during an annual period or portion thereof commencing
on or after February 1, 1995, the Base Prices for Blanks may be adjusted upward
or downward in response to a significant change (in excess of five percent
[5%]) in Seller's cost of materials (brass and zinc) related to the manufacture
of such Blanks ("Extraordinary Adjustment"). Such Extraordinary Adjustment in
the Base Prices of Blanks shall be certified by an executive officer of Seller
in writing to Buyer, with sufficient supporting data to Buyer's satisfactions,
and such Base Prices as so adjusted and mutually approved by Buyer and Seller
shall be the Base Prices in effect for Blanks for the balance of such annual
period or portion thereof or until further adjusted pursuant to the provisions
of this Paragraph 3(d).
(e) Buyer shall hold for Seller's pick-up or shipping instructions
at Seller's cost and expense, all Blank order selection cartons (#C48A) used by
Seller in shipping Blanks to Buyer. In the event that any such cartons are lost
or damaged by Buyer, Buyer shall have the option of reimbursing Seller for the
replacement cost or purchasing new cartons for Buyer's own account to which
cartons Buyer shall have title.
(f) All prices hereunder shall be those in effect at the time of
the delivery date scheduled by Buyer for delivery of any portion of any order
placed by Buyer hereunder. All prices hereunder shall be F.O.B. Seller's plant
in Solon, Ohio.
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4. Price - Key Machines and Parts; Adjustments.
(a) Buyer and Seller have attached hereto as Schedule B a partial
list and description of each type of Machine and Part which is the subject of
this Agreement, it being understood that the purchases by Buyer hereunder may
consist, from time to time, of one or more of said types of Machines and Parts
in varying quantities. Set forth on said Schedule B are the initial prices (the
"Base Prices") of each type of Machine and Part, which prices shall remain in
effect during the period from February 1, 1995 through January 31, 1996 (the
"First Annual Period").
(b) For the period from February 1, 1996 through January 31, 1997
(the "Second Annual Period"), the Base Prices shall be increased or decreased
as to each type of Machine and Part, as follows: In the event that Seller shall
have experienced during the First Annual Period an increase or decrease in its
cost of Parts, labor, overhead, inventory carrying cost factor, packaging and
indirect overhead ("Costs") or if Seller shall project an increase or decrease
in such Costs during the Second Annual Period, properly allocable to the
manufacture or assembly of the Machines or purchase of the Parts to be sold to
Buyer hereunder, Seller shall compute, in a manner consistent with its prior
cost accounting practices, the effect thereof upon the Base Price during the
First Annual Period for each type of Machine or Part, and each Base Price for
the Second Annual Period hereunder shall be increased or decreased accordingly.
The proposed increase or decrease in any Base Price for the Second Annual
Period shall be certified to Buyer by an executive officer of Seller in writing
with sufficient supporting data to Buyer's satisfaction within forty five (45)
days after the end of the First Annual Period and such adjusted Base Prices
shall be subject to the mutual approval of Buyer and Seller.
(c) For the period from February 1, 1997 through January 31, 1998
(the "Third Annual Period"), the Base Prices shall be increased or decreased as
to each type of Machine and Part as follows: In the event that Seller during
the Second Annual Period shall have experienced an increase or decrease in its
Costs or if Seller shall project an increase or decrease in such Costs during
the Third Annual Period, properly allocable to the manufacture or assembly of
the Machines or purchase of the Parts to be sold to Buyer hereunder, Seller
shall compute, in a manner consistent with its prior cost accounting practices,
the effect thereof upon the Base Price during the Second Annual Period for each
type of Machine or Part, and each Base Price for the Third Annual Period
hereunder shall be increased or decreased accordingly. The proposed increase or
decrease in any Base Price for the Third Annual Period shall be certified to
Buyer by an executive officer of Seller in writing within forty five (45) days
after the end of the Second Annual Period and such adjusted Base Prices shall
be subject to the mutual approval of Buyer and Seller.
(d) (This subparagraph shall be effective only in the event that
the Non-Affiliation Date shall be on or after August 1, 1996 but on or prior to
January 31, 1998, but shall not replace Subparagraph 4(c) hereof.) On each
February 1 occurring on or after February 1, 1998 during the remaining term of
this Agreement, the Base Prices shall be increased or decreased as to each type
of Machine and Part as follows: In the event that Seller shall have experienced
during the preceding annual period an increase or decrease in such Costs during
the annual period or portion thereof then
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commencing properly allocable to the manufacture or assembly of the Machines or
purchase of the Parts to be sold to Buyer hereunder, Seller shall compute, in a
manner consistent with its prior cost accounting practices, the effect thereof
upon the Base Price during the preceding annual period for each type of Machine
or Part, and each Base Price for the annual period or portion thereof then
commencing shall be increased or decreased accordingly. The proposed increase
or decrease in any Base Price for the annual period or portion thereof then
commencing shall be certified to Buyer by an executive officer of Seller in
writing with sufficient supporting data to Buyer's satisfaction within forty
five (45) days after the end of the preceding annual period and such adjusted
Base Prices shall be subject to the mutual approval of Buyer and Seller.
(e) All prices hereunder shall be those in effect at the time of
the delivery date scheduled by Buyer for delivery of any portion of any order
placed by Buyer hereunder. All prices hereunder shall be F.O.B. Seller's plant
in Solon, Ohio.
5. Payment.
Buyer shall make payment to Seller within fifteen (15) days after
the later to occur of the date of receipt of invoice or delivery to Buyer of
any portion of any order placed by Buyer hereunder.
6. Delivery.
All purchase orders placed by Buyer under this Agreement shall be
filled by Seller within thirty (30) days after any scheduled delivery date
specified by Buyer for any portion of any such purchase order, and shall be
delivered to Buyer, at Buyer's expense, within said time period at Buyer's
warehouse in Highland Heights, Ohio, or at such other location or locations as
to which Buyer shall notify Seller within a reasonable time prior to any
scheduled delivery date, not to exceed, however, four (4) locations for any
shipment. Notwithstanding anything in this Agreement to the contrary, no
purchase order or orders for Blanks shall require delivery by Seller in excess
of one million four hundred thirty thousand (1,430,000) Blanks in any one month
during the term of this Agreement if prior to the Non-Affiliation Date and, if
after the Non-Affiliation Date, three hundred thirty thousand (330,000) in any
one month during the term. if Seller shall deliver such shipments to Buyer's
Highland Heights, Ohio warehouse using Seller's truck and labor, Buyer shall
pay Seller a delivery charge per shipment of Seventy Nine Dollars and Twenty
Five Cents ($79.25), subject to a mutually agreeable annual cost adjustment by
the parties on February 1 of each year, commencing February 1, 1995. Seller's
delivery obligations and Buyer's acceptance obligations under this Agreement
shall be subject to Seller's being excused for any delay in delivery and
Buyer's being excused for any delay in acceptance, respectively, of any such
order due to federal, state or municipal action or regulations, strikes or
other labor troubles, destruction or damage in whole or in part to the subject
matter of the order while in transit, or any other causes or circumstances not
subject to its control, including, but without limitation, strikes, war, riot,
embargo, acts of God or other unavoidable cause other than Buyer's or Seller's
own respective misconduct or negligence. On removal of the cause of any such
delay, performance shall be resumed by Buyer and Seller.
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7. Additional Types.
From time to time Buyer and Seller may agree, in writing, upon
additional types of Blanks, Machines or Parts to become the subject of this
Agreement, and upon the Base Prices therefor, and thereupon said types and
prices shall become part of and subject to this Agreement.
8. Forecasts.
Buyer will deliver to Seller by March 15, 1995 Schedule C, being
Buyer's initial five (5) month forecast for brass keys and initial nine (9)
month forecast for rubberhead and imported Color Plus keys, setting forth
Buyer's presently estimated purchase requirements for delivery of such Blanks
identified as to type and with estimated delivery dates. Thereafter, Buyer
shall provide Seller with an annual forecast and a five (5) month rolling
forecast, revised monthly, and firm order commitments three (3) months in
advance of delivery with respect to Buyer's purchase of brass keys. Buyer
shall also provide Seller with an annual forecast and a nine (9) month rolling
forecast, revised monthly, and firm order commitments six (6) months in advance
of delivery with respect to the purchase of rubberhead and import Color Plus
keys, and an annual forecast with a five (5) month rolling forecast, revised
monthly, and firm order commitments three (3) months in advance of delivery
with respect to the purchase of domestic Color Plus keys. Seller shall maintain
an adequate inventory of Blanks so as to be able to service Buyer respecting
the forecasts and orders. With respect to Blanks which are manufactured by
Seller exclusively for sale by Buyer, Buyer agrees to place minimum orders of
at least fifteen thousand (15,000) pieces for each such style of Blank ordered
from Seller.
9. Quality.
Seller warrants that each type of Blank manufactured and purchased
hereunder shall conform in all respects to the respective duplicate samples
exchanged and initialed by Buyer and Seller (including workmanship, appearance,
materials and design). In the event any of the Blanks, Machines or Parts is
rejected by Buyer as being non-conforming to the requirements of this
Agreement, Seller shall replace the non-conforming items with items conforming
to the requirements of this Agreement without additional cost to Buyer, freight
prepaid. Any non-conforming items will be promptly repackaged and returned by
Buyer freight collect within ninety (90) days after delivery by Seller. The
foregoing shall be the sole remedy of Buyer for any failure of Blanks,
Machines, or Parts to conform to the requirements of this Agreement. SELLER
MAKES NO OTHER WARRANTY OR REPRESENTATION WHATSOEVER, EXPRESS OR IMPLIED, OF OR
IN RESPECT OF THE BLANKS, MACHINES, AND/OR PARTS SOLD TO BUYER, INCLUDING
WARRANTIES OF MERCHANTABILITY' AND FITNESS, AND ALL SUCH OTHER WARRANTIES ARE
HEREBY EXPRESSLY EXCLUDED. SELLER SHALL NOT BE LIABLE FOR SPECIAL, INCIDENTAL
OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUES OR
PROFITS.
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10. Assignment.
Except as provided in this Paragraph 10, neither this Agreement
nor any right hereunder shall be delegated or assigned by either party hereto
without the prior written consent of the other party and any attempted
delegation or assignment shall be void. In the event either party to this
Agreement shall sell all or substantially all of its stock or assets relating
to its key business, the selling party shall cause the purchaser to agree in
writing to assume all the covenants and obligations of the selling parry under
this Agreement for the remaining term, and the selling party shall assign all
of its rights in this Agreement for the remaining term to the purchaser;
provided, further, the selling party shall remain secondarily liable on all its
covenants and obligations under this Agreement for the remaining term.
Notwithstanding any provision of this Agreement to the contrary,
from and after the Non-Affiliation Date, Buyer shall have the option to reduce
its Annual Minimum Purchase Obligation from ten million five hundred thousand
(10,500,000) Blanks to two million four hundred fifteen thousand (2,415,000)
Blanks for each remaining annual period prorated for any partial annual period.
11. Entire Agreement.
This Agreement contains the entire understanding of the parties
and is intended as a final expression of their agreement and a complete
statement of the terms thereof, and shall not be modified except in a writing
signed by the parties hereto. No waiver by any party hereto of any default
shall be deemed a waiver of any subsequent default. This Agreement shall be
binding upon the parties hereto and their respective successors and permitted
assigns.
12. Risk of Loss.
If the items ordered hereunder are delivered to Buyer by Seller's
truck, risk of loss or damage thereto shall be borne by Seller until Buyer
accepts delivery of such items; otherwise, Buyer assumes the risk of loss or
damage once the items leave Seller's premises.
13. Notices; Governing Laws: Paragraph Headings.
Any notices required to be given under this Agreement or by law
shall be in writing and personally delivered or mailed, postage prepaid, by
registered or certified mail, return receipt requested, and if given to Buyer,
at Buyer's principal place of business in Highland Heights, Ohio at 5340 Avion
Park Drive, Highland Heights, Ohio, 44143, Attention: President, and if given
to Seller, at its principal place of business at 31100 Solon Road, Solon, Ohio,
44139, Attention: President. This Agreement shall be governed by and
interpreted under the Uniform Commercial Code as in effect at the date hereof
in the State of Ohio. Paragraph headings contained herein are for convenience
only and shall not be used in construing this Agreement.
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14. Adjudication of Bankruptcy.
In the event either party hereto shall be adjudicated a bankrupt
or insolvent, or admit in writing its inability to pay its debts as they
mature, or make an assignment for the benefit of creditors, or consent to or
apply for the appointment of a receiver or otherwise consent to or have
instituted against it any bankruptcy or similar proceedings, and any of the
foregoing, if instituted against it but not otherwise, is not dismissed or
discharged within thirty (30) days, then, in any such event, the other party
hereto may, at its respective option, without notice, terminate this Agreement
as to any rights and obligations respecting orders which otherwise might or
would be placed thereafter hereunder.
15. Term; Non-Affiliation Date.
The term of this Agreement shall commence as of February 1, 1995
and shall continue to January 31, 1998; provided, however, if the
Non-Affiliation Date (as hereinafter defined) shall occur on or after August 1,
1996 but on or prior to January 31, 1998 as a result of the occurrence of any
of the events described in clause (ii) below, the term of this Agreement shall
continue for a period of eighteen (18) months following the Non-Affiliation
Date. The term "Non-Affiliation Date" means the date of: (i) the sale of a
controlling interest of the stock of Cole Gift Centers, Inc. (for purposes of
this Agreement, the phrase "sale of controlling interest" shall mean the sale
of such shares of stock of Cole Gift Centers, Inc. which gives the purchaser of
such stock the power, directly or indirectly, to direct or cause the direction
of the management or policies of Cole Gift Centers, Inc., whether through the
direct ownership of voting securities or by contract or otherwise) to a person
or entity not controlled (directly or indirectly) by Cole National Group, Inc.
or the sale of all or substantially all the assets of Cole Gift Centers, Inc.
or the merger or consolidation of Cole Gift Centers, Inc. with or into an
entity or person not controlled (directly or indirectly) by Cole National
Group, Inc., or (ii) the sale of a controlling interest of the stock of Buyer
(for purposes of this Agreement, the phrase "sale of controlling interest"
shall mean the sale of such shares of stock of Buyer which gives the purchaser
of such stock the power, directly or indirectly, to direct or cause the
direction of the management or policies of Buyer, whether through the direct
ownership of voting securities or by contract or otherwise) to a person or
entity not controlled (directly or indirectly) by Cole National Group, Inc. or
the sale of all or substantially all the assets of Buyer or the merger or
consolidation of Buyer with or into an entity or person not controlled
(directly or indirectly) by Cole National Group, Inc.
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IN WITNESS WHEREOF, the parties have hereunto set their hands the day and
year first above written.
AMERICAN CONSUMER PRODUCTS, INC.
By:
Title: President
THINGS REMEMBERED, INC.
By:
Title: President
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