<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) 6/23/95
-------
AMERICAN CONSUMER PRODUCTS, INC.
---------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware O-15051 34-1376833
-------- --------- ----------
(State or other (Commission (I.R.S. Employer
jurisdiction File No.) Identification
incorporation or Number)
organization)
31100 Solon Road, Solon, Ohio 44139
-----------------------------------
(Address of Registrant's principal
executive offices)
Registrant's telephone number, including area code 216-248-7000
------------
------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
-------------------------
The Exhibit Index is located at Page 10.
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
As set forth in the press release attached hereto as
Exhibit 99, on June 23, 1995, the Registrant sold substantially all of the
assets of its Sharon Fastener division (the "Division") to Pawtucket Fasteners,
L.P., a Rhode Island limited partnership for approximately $6,900,000 cash and
the assumption of approximately $90,000 of the Division's obligations.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(b) Pro Forma Financial Information.
Introduction to Unaudited Pro Forma Condensed
Financial Information P-1
Unaudited Pro Forma Condensed Statement
of Operations for the Quarter Ended
April 1, 1995 P-2
Unaudited Pro Forma Condensed Statement
of Operations for the Year Ended
December 31, 1994 P-3
Unaudited Pro Forma Condensed Balance Sheet
as of April 1, 1995 P-4
Notes to Unaudited Pro Forma Condensed
Financial Information P-5
(c) Exhibits.
See the Exhibit Index located at sequential page 10 of this Report.
2
<PAGE> 3
AMERICAN CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
INTRODUCTION
- ------------
The following pro forma condensed balance sheet as of April 1, 1995 and pro
forma condensed statements of operations for the year ended December 31, 1994
and for the quarter ended April 1, 1995 reflect the sale of substantially all
of the assets of the Company's Sharon Fastener division ("Sharon") for
approximately $6,900,000 of cash and the assumption of approximately $90,000 of
obligations, which took place on June 23, 1995. The unaudited pro forma
condensed financial information is based on the historical financial
information of the Company, as of and for the periods referred to above.The pro
forma adjustments are based on preliminary estimates, described in the notes
thereto. The final purchase price is subject to a post closing adjustment;
however, the effect of any such adjustment, if any, on the results of
operations and financial position of the Company are not expected to be
material. The pro forma adjustments related to the unaudited pro forma
condensed balance sheet have been computed assuming that the sale was
consummated on April 1, 1995. The pro forma adjustments related to the
unaudited pro forma condensed statements of operations for the year ended
December 31, 1994 and for the quarter ended April 1, 1995 have been computed
assuming that the sale was consummated on the first day of the Company's 1994
fiscal year.
The pro forma information is presented for illustrative purposes only and is
not necessarily indicative of or intended to project the operating results or
financial position that would have occurred had the transaction been
consummated on the first day of the Company's 1994 fiscal year or April 1,
1995, nor is it necessarily indicative of or intended to project future
operating results or financial position.
P - 1
<PAGE> 4
AMERICAN CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
For the Quarter Ended April 1, 1995
($ in 000's except per share data)
<TABLE>
<CAPTION>
Proforma Adjustments
--------------------
Historical Amount Ref. Proforma
------------ ------------ ----- ------------
<S> <C> <C> <C> <C>
Net Sales.............................. $ 26,000 $ (2,655) (F) $ 23,345
Cost of Goods Sold..................... 19,726 (2,471) (F) 17,255
------------ ------------ ------------
Gross Profit........................... 6,274 (184) 6,090
Operating Expenses..................... 5,729 (179) (G) 5,550
------------ ------------ ------------
Income from Operations................. 545 (5) 540
Interest Expense....................... 695 (176) (H) 519
------------ ------------ ------------
Income (Loss) Before Income Taxes...... (150) 171 21
Provision for Income Taxes............. (68) 77 (I) 9
------------ ------------ ------------
Net Income (Loss)...................... $ (82) $ 94 $ 12
============ ============ ============
Net Income (Loss) per Common Share .... $ (0.03) $ 0.00
Weighted Average Shares Outstanding.... 2,486,000 2,486,000
</TABLE>
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<PAGE> 5
AMERICAN CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
($ in 000's except per share data)
<TABLE>
<CAPTION>
Proforma Adjustments
--------------------
Historical Amount Ref. Proforma
------------ ------------ ----- ------------
<S> <C> <C> <C> <C>
Net Sales............................. $ 106,748 $ (11,935) (F) $ 94,813
Cost of Goods Sold.................... 79,568 (11,390) (F) 68,178
------------ ------------ ------------
Gross Profit.......................... 27,180 (545) 26,635
Operating Expenses.................... 23,551 (799) (G) 22,752
------------ ------------ ------------
Income from Operations................ 3,629 254 3,883
Costs Associated with Abandoned
Business Combination................ 370 370
Interest Expense...................... 2,492 (592) (H) 1,900
------------ ------------ ------------
Income Before Income Taxes............ 767 846 1,613
Provision for Income Taxes............ 346 380 (I) 726
------------ ------------ ------------
Net Income ........................... $ 421 $ 466 $ 887
============ ============ ============
Net Income per Common Share .......... $ 0.17 $ 0.36
Weighted Average Shares Outstanding.... 2,473,000 2,473,000
</TABLE>
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<PAGE> 6
AMERICAN CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
April 1, 1995
($ in 000's)
<TABLE>
<CAPTION>
Proforma Adjustments
ASSETS --------------------
Current Assets: Historical Amount Ref. Proforma
------------ ------------ ----- ------------
<S> <C> <C> <C> <C>
Cash................................................. $ 112 $ $ 112
Accounts receivable, net 14,829 14,829 (J)
Inventories.......................................... 27,440 (4,600) (B) 22,840
Prepaid expenses and other assets.................... 1,931 500 (A),(B) 2,431
------------ ------------ ------------
Total current assets........................... 44,312 (4,100) 40,212
------------ ------------ ------------
Property and Equipment, net.................................. 10,284 (1,800) (B) 8,484
Other Assets:
Cost in excess of net tangible assets of
acquired businesses, net........................... 2,550 (2,230) (B) 320
Deferred income taxes................................ 488 488
Deferred costs and other assets...................... 244 244
------------ ------------ ------------
3,282 (2,230) 1,052
------------ ------------ ------------
Total assets................................... $ 57,878 $ (8,130) $ 49,748
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term obligations.......... $ 398 $ $ 398
Accounts payable..................................... 4,875 4,875
Accrued liabilities and income taxes................. 4,499 665 (C),(D) 5,164
------------ ------------ ------------
Total current liabilities...................... 9,772 665 10,437 (J)
------------ ------------ ------------
Long-term Obligations, net of current maturities............. 29,441 (6,300) (A) 23,141
------------ ------------ ------------
Total liabilities.................................... 39,213 (5,635) 33,578
Stockholders' Equity:
Common stock and Paid in Capital..................... 8,372 8,372
Retained earnings.................................... 10,293 (2,495) (E) 7,798
------------ ------------ ------------
Total stockholders' equity..................... 18,665 (2,495) 16,170
------------ ------------ ------------
Total liabilities and stockholders' equity..... $ 57,878 $ (8,130) $ 49,748
============ ============ ============
</TABLE>
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<PAGE> 7
AMERICAN CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
($ in 000's)
(A) American Consumer Products, Inc. ("ACPI")
received approximately $6,900 in cash at the
closing, approximately $6,300 of which has been
applied to reduce outstanding indebtedness under
the Company's revolving credit facility. The
remaining $600 of the proceeds has been placed in
escrow and is subject to claims for indemnification
under the purchase agreement. Subject to such
claims, 50% of this amount is to be distributed to
ACPI by September 30, 1995 and the balance is to
be distributed to ACPI by March 31, 1996.
(B) All of the inventories, fixed assets and certain
other assets used in the Sharon Fastener division
were sold to Pawtucket Fasteners, L.P.
("Pawtucket"). In addition, the cost in excess
of net tangible assets of acquired businesses,
relating to Sharon, has been written off.
(C) The pro forma adjustments include the amounts of
the obligations which Pawtucket assumed from ACPI.
In addition, the pro forma adjustments include an
accrual for professional fees and other direct
expenses associated with the sale of Sharon.
(D) ACPI does not anticipate that any tax benefit
will be realized on the write off of the cost in
excess of net tangible assets of acquired
businesses. As a result, the tax effect of the
transaction is expected to be immaterial and no
pro forma adjustment for income taxes is included
in the pro forma condensed balance sheet.
(E) Retained earnings have been reduced by the amount
of the estimated loss on the sale of Sharon. The
loss consists of the net book value of the assets
sold minus the total proceeds, including the
obligations assumed by the buyer, plus the
transaction costs.
(F) Net sales and cost of goods sold have been
adjusted to eliminate the actual amounts generated
by Sharon in the periods shown. ACPI entered into
an agreement with Pawtucket, in connection with
the sale of assets, under which ACPI will continue
to serve as a sales representative for Sharon. Net
sales have also been adjusted to include the
estimated amount of commissions that ACPI would
have received from Pawtucket, according to the
terms of the sales representation agreement, had
the agreement commenced on the first day of the
Company's 1994 fiscal year. There can be no
assurance as to the amount of revenues that will
be generated under the sales representation
agreement in the future.
(G) Operating expenses have been adjusted by the
estimated savings that would result from a reduced
administrative staff and the elimination of other
marketing and general and administrative expenses
associated with Sharon.
P - 5
<PAGE> 8
(H) Interest expense has been adjusted for the pro
forma effect of reduced borrowings. The cash
generated from the sale was assumed to be applied
to the Company's revolving credit facility and
the effect on interest expense was determined
using the weighted average interest rates in
effect for the period. The cash proceeds, net
of the transaction costs, were assumed to have
been realized on the first day of the Company's
1994 fiscal year and the collection of the Sharon
accounts receivable retained by the Company and
the payment of the Sharon liabilities retained by
the Company were assumed to have occurred in
early 1994.
(I) The provision for income taxes has been adjusted
at the Company's effective income tax rate, which
approximates the statutory rate for Federal,
state and local income taxes.
(J) ACPI retained the accounts receivable and
substantially all of the liabilities of Sharon.
The Company expects to collect the accounts
receivable and to pay the liabilities as they
become due resulting in net additional cash
receipts of approximately $1,000.
P - 6
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date: July 10, 1995 AMERICAN CONSUMER PRODUCTS, INC.
BY:/s/Joel M. Falck
-----------------
Joel M. Falck
Vice President - Finance
<PAGE> 10
Exhibit Index
Exhibit No. Description Page
- ----------- ----------- ----
2 Asset Purchase Agreement dated June
23, 1995 between American Consumer
Products, Inc. and Pawtucket Fasteners,
L.P. (Upon request, the Registrant shall
furnish supplementally a copy of any omitted
schedule to the Securities and Exchange
Commission) 11
99 Press Release dated June 23, 1995 59
<PAGE> 1
EXHIBIT 2
ASSET PURCHASE AGREEMENT
BETWEEN
AMERICAN CONSUMER PRODUCTS, INC.
SELLER
AND
PAWTUCKET FASTENERS, L.P.
BUYER
DATED: JUNE 23, 1995
<PAGE> 2
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
I TRANSFER AND SALE OF ASSETS . . . . . . . . . . . 1
1.1. Transfer of Assets . . . . . . . . . . 1
II ASSUMPTION OF CERTAIN LIABILITIES . . . . . . . . 4
2.1. Liabilities Being Assumed . . . . . . 4
2.2. Shared Liabilities . . . . . . . . . . 4
2.3. Liabilities Not Being Assumed . . . . . 5
III CLOSING . . . . . . . . . . . . . . . . . . . . . 5
3.1. Closing . . . . . . . . . . . . . . . 5
3.2. Instruments of Conveyance and Transfer
and Other Deliveries at Closing by
Seller . . . . . . . . . . . . . . . . 5
3.3. Instruments of Assumption and Other
Deliveries at Closing by Buy . . . . . 7
3.4. Right to Possession . . . . . . . . . . 8
IV PURCHASE PRICE . . . . . . . . . . . . . . . . . . . 8
4.1. Consideration . . . . . . . . . . . . 8
4.2. Initial Payment . . . . . . . . . . . . 8
4.3. Determination of Initial Payme . . . . . 8
4.4. Audit . . . . . . . . . . . . . . . . . 9
4.5. Settlement . . . . . . . . . . . . . . . 10
4.6. Apportionment of Charges . . . . . . . . 11
4.7. Allocation of Purchase Price . . . . . . 11
V REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . 11
5.1. Organization; Good Standing;
Qualification and Power . . . . . . . .11
5.2. Authority . . . . . . . . . . . . . . . 11
5.3. No Violation . . . . . . . ... . . . . . 12
5.4. Financial Statements . . . . . . . . . . 12
5.5. Absence of Undisclosed Liabilities . . . 12
-i-
<PAGE> 3
ARTICLE PAGE
- ------- ----
5.6. Absence of Changes . . . . . . . . . . . . . . 13
5.7. Assets . . . . . . . . . . . . . . . . . . . 15
5.8. Real Property Leases . . . . . .. . . . . . . 15
5.9. Equipment . . . . . . . . . . . . . . . . . . 16
5.10. Inventory . . . . . . . . . . . . . . . . . . .16
5.11. Personal Property Leases . . . . . . . . . . . 16
5.12. Agreements . . . . . . . . . . . . . . . . . . 16
5.13. Litigation . . . . . . . . . . . . . . . . . . 18
5.14. Compliance; Governmental Authorization . . . . 18
5.15. Labor Relations; Employees . . . . . . . . . . 19
5.16. Employee Benefit Plans . . . . . . . . . . . . 19
5.17. Customers and Suppliers . . . . . . . . . . . 20
5.18. Disclosure . . . . . . . . . . . . . . . . . . 20
5.19. Brokers . . . . . . . . . . . . . . . . . . . 20
5.20. Tax Matters . . . . . . . . . . . . . . . . . 20
5.21. Assigned Contracts . . . . . . . . . . . . . . 21
5.22. Lender Consents . . . . . . . . . . . . . . . 21
5.23. Miscellaneous . . . . . . . . . . . . . . . . 21
VI REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . 21
6.1. Organization, Good Standing and Power. . . . . 22
6.2. Authority . . . . . . . . . . . . . . . . . . 22
6.3. No Violation . . . . . . . . . . . . . . . . . 22
6.4. No Financing Condition . . . . . . . . . . . . 22
6.5. Brokers . . . . . . . . . . . . . . . . . . . 22
6.6. Employees . . . . . . . . . . . . . . . . . . 22
6.7. Litigation . . . . . . . . . . . . . . . . . . 23
VII COVENANTS OF SELLER . . . . . . . . . . . . . . . . . . . 23
7.1. Conduct of Business Until Closing Date . . . . 23
7.2. Access to Properties and Records . . . . . . . 24
7.3. Advise of Changes . . . . . . . . . . . . . . 24
7.4. Conduct . . . . . . . . . . . . . . . . . . . 24
7.5. Post Closing Financial Information . . . . . . 24
7.6. Lease Repairs . . . . . . . . . . . . . . . . 25
VIII COVENANTS OF BUYER . . . . . . . . . . . . . . . . . . . . 25
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<PAGE> 4
ARTICLE PAGE
- ------- ----
8.1. Cooperation . . . . . . . . . . . . . 25
IX CONDITIONS TO OBLIGATIONS OF SELLER . . . . . . . 25
9.1. Authorization . . . . . . . . . . . . 25
9.2. Payment and Closing Documents . . . . 25
9.3. Accuracy of Representations and
Warranties . . . . . . . . . . . . . 25
9.4. Performance of Agreements . . .. . . . 28
X CONDITIONS TO OBLIGATIONS OF BUYER . . . . . . .. . 26
10.1. Authorization . .. . . . . . . . . . . 26
10.2. Closing Documents . . . . . . . . . . 26
10.3. Accuracy of Representations and
Warranties . . . . . . . . . . . . . 26
10.4. Performance of Agreements . . . . . . 26
XI OTHER COVENANTS AND AGREEMENTS . . . . . . . . . . 26
11.1. Sales Service Contract . . . . . . . . 26
11.2. Retention of, and Access to, Records . .27
11.3. Covenant Not to Compete or to
Solicit or Terminate Employees . . . .27
11.4. Escrow Agreement . . . . . . . . . . . 28
11.5. Employees Benefits . . . . . . . . . . 28
11.6. Accounts Receivable . . . . . . . . . 28
11.7. Further Assurances . . . . . . . . . . 28
11.8. Bulk Sales Law . . . . . . . . . . . . 29
11.9. Phoenix Facility . . . . . . . . . . . 29
11.10. Data Processing Services . . . . . . . 29
11.11. PMI Agreement . . . . . . .. . . . . . 29
11.12. Make Records Available . . . . . . . . 29
XII SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION . . . .29
12.1. Survival of Representations . . . . . 29
12.2. Indemnification . . . . . .. . . . . . 29
12.3. Conditions of Indemnification
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<PAGE> 5
ARTICLE PAGE
- ------- ----
Generally . . . . . . . . . . . . . . . . . 31
12.4. Conditions of Indemnification for
Third Party Claims . . . . . . . . . . . . . 32
XIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 33
13.1. Termination . . . . . . . . . . . . . . . . . 33
XIV DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . 34
14.1. Arbitration . . . . . . . . . . . . . . . . . 34
14.2. Demand for Arbitration . . . . . . . . . . . . 34
14.3. Qualifications . . . . . . . . . . . . . . . . 34
14.4. Decisions Final . . . . . . . . . . . . . . 34
14.5. Compensation of Arbitrator . . . . . . . . . . 34
14.6. Performance to Continue . . . . . . . . . . . 35
14.7. Agreement Controlling . . . . . . . . . . . . 35
XV MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 35
15.1. Expenses; Transfer Taxes . . . . . . . . . . . 35
15.2. Parties in Interest . . . . . . . . . . . . . 35
15.3. Entire Agreement; Amendments . . . . . . . . . 35
15.4. Headings . . . . . . . . . . . . . . . . . . . 36
15.5. Notices . . . . . . . . . . . . . . . . . . . 36
15.6. Counterparts . . . . . . . . . . . . . . . . . 37
15.7. Governing Law . . . . . . . . . . . . . . . . 37
15.8. Waivers . . . . . . . . . . . . . . . . . . . 37
15.9. No Disclosure of Agreement; Press
Releases . . . . . . . . . . . . . . . . . . 38
15.10. Definition of Knowledge . . . . . . . . . . . 38
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<PAGE> 6
INDEX OF DEFINED TERMS
Andersen . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . 10
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Assigned Contracts . . . . . . . . . . . . . . . . . . . . . 2
Assumed Obligations . . . . . . . . . . . . . . . . . . . . . 4
Audited Inventory Schedule . . . . . . . . . . . . . . . . . 9
Basket . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Bill of Sale, Assignment and Assumption Agreement . . . . . . 6
Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Buyer's Notice . . . . . . . . . . . . . . . . . . . . . . . 10
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Closing Assumed Obligations Schedule . . . . . . . . . . . . 9
Closing Assumed Obligations Value . . . . . . . . . . . . . . 10
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 5
Closing Inventory Value . . . . . . . . . . . . . . . . . . . 10
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Data Processing Services Agreement . . . . . . . . . . . . . 32
Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . 16
Environmental Laws . . . . . . . . . . . . . . . . . . . . . 21
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . 31
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . 31
Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . 3
Excluded Obligations . . . . . . . . . . . . . . . . . . . . 5
Financial Statements . . . . . . . . . . . . . . . . . . . . 13
Hazardous Substance . . . . . . . . . . . . . . . . . . . . . 20
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . 34
Initial Assumed Obligations Value . . . . . . . . . . . . . . 9
Initial Inventory Value . . . . . . . . . . . . . . . . . . . 8
Initial Payment . . . . . . . . . . . . . . . . . . . . . . . 8
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Inventory Schedule . . . . . . . . . . . . . . . . . . . . . 9
Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LGCD . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
McDonald . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Overstock Inventory . . . . . . . . . . . . . . . . . . . . . 2
Party to be Indemnified . . . . . . . . . . . . . . . . . . . 34
-v-
<PAGE> 7
Phoenix Sublease . . . . . . . . . . . . . . . . . . . . . . 32
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
PMI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
PMI Agreement . . . . . . . . . . . . . . . . . . . . . . . . 32
Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . 2
Property . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Proposed Adjustments . . . . . . . . . . . . . . . . . . . . 10
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 8
Racks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sales Service Contract . . . . . . . . . . . . . . . . . . . 29
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sharon . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sharon Business . . . . . . . . . . . . . . . . . . . . . . . 1
Shared Liabilities . . . . . . . . . . . . . . . . . . . . . 4
-vi-
<PAGE> 8
INDEX TO EXHIBITS
-----------------
SECTION AND EXHIBIT DESCRIPTION
- ------------------- -----------
3.2(a) Bill of Sale, Assignment and Assumption of Agreement
3.2(c) Opinion of Seller's Counsel
3.2(k) Estoppel Letters/Agreements from Lessors
3.3(c) Opinion of Buyer's Counsel
4.4(a) Andersen Audit Report
4.4(b) Indemnification Letter
5.4 Andersen Letter
5.15 Personnel Policies
7.5(b) Seller's Certificates
7.5(c) Andersen Letter (Post Closing Financials)
7.6 Lease Repairs
11.1 Sales Service Contracts
11.4 Escrow Agreement
11.9 Phoenix Agreement
11.10 Data Processing Services Agreement
11.11 PMI Agreement
15.3 Phoenix Letter Agreement
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INDEX TO SCHEDULES
-------------------
SECTION AND SCHEDULE DESCRIPTION
- -------------------- -----------
1.1(a) Leases
1.1(d) Prepaid Expenses
1.1(e) Proprietary Assets
1.1(f) Assigned Contracts
1.1(g) Assigned Books, Records and Files
1.2(a) Excluded Computer Hardware and Software
1.2(b) Excluded Inventory
1.2(i) Other Excluded Assets
2.1(a) Assumed Obligations
4.1 Valuation of Inventory
4.7 Allocation of Purchase Price
5.3 Exceptions to Compliance
5.4 Other Financial Statements
5.5 Undisclosed Liabilities Exceptions
5.6 Absence of Changes Exceptions
5.7 Encumbrances to Title
5.8 Real Property Leases
5.9 Customer Racks by Locations
5.10 Inventory by Location
5.11 Personal Property Leases
5.12 Agreements
5.13 Litigation
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<PAGE> 10
5.14 Hazardous Substances
5.14(b) Reports
5.15 Employees, Salaries and Benefits
5.16 Employee Benefit Plans
5.17 Customers and Suppliers
5.23 Miscellaneous Materials
11.3 Employees Not to be Terminated by Seller
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<PAGE> 11
ASSET PURCHASE AGREEMENT, dated June 23, 1995, by and between AMERICAN
CONSUMER PRODUCTS, INC., a Delaware corporation ("Seller"), and PAWTUCKET
FASTENERS, L.P., a Rhode Island limited partnership ("Buyer").
PURPOSE
-------
Seller's Sharon Fastener Company Division ("Sharon") is engaged in the
business of sourcing, packaging, distributing and marketing a complete line of
fasteners which it sells directly to retail outlets across the United States
(the "Sharon Business"). This Agreement sets forth the terms upon which Seller
is selling to Buyer, and Buyer is purchasing from Seller, substantially all of
the properties and assets used in the Sharon Business and owned by Seller
specified in Article I hereof, subject to the assumption by Buyer of certain
liabilities specified in Article II hereof.
NOW THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements contained herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
TRANSFER AND SALE OF ASSETS
---------------------------
1.1. TRANSFER OF ASSETS. On the terms hereinafter set forth, at the
Closing (as hereinafter defined), Seller shall sell, convey, transfer and
assign to Buyer and Buyer shall purchase from Seller, for the aggregate
purchase price set forth in Article IV hereof, the following assets and
property (the "Assets"):
(a) all of Seller's rights under the leases listed on Schedule 1.1(a)
attached hereto pursuant to which Seller leases real property or
personal property (singularly a "Lease" and collectively the
"Leases");
(b) all of Seller's machinery, equipment, furniture, fixtures, office
and computer (hardware and software) equipment, leasehold
improvements, fastener racks at customers (the "Racks"), vehicles and
other tangible personal property substantially used in the Sharon
Business other than those items disposed of in the ordinary course of
the business prior to the Closing Date, but including such items as
are acquired prior to the Closing Date (the "Equipment");
(c) all of Seller's Sharon Business inventory (other than the
inventory listed on Schedule 1.2(b)), including inventory that is more
than thirty six (36) months of usage or inventory with no shipments in
the twelve (12) full fiscal months prior to the Closing Date
(collectively, "Overstock Inventory"), and that as of the Closing
<PAGE> 12
Date is either (i) on hand, or (ii) the title to which has passed to
Seller, or (iii) the payment for which has been made by Seller,
together with any prepaid broker charges, duty and freight thereon
(the "Inventory");
(d) prepaid expenses, security deposits on the Leases and
other advances, escrows and deposits, if any, which relate to the
Assets, as listed on Schedule 1.1(d) attached hereto other than
amounts as may be used or consumed prior to the Closing Date, but
including such amounts as may be paid prior to the Closing Date
(the "Prepaid Expenses");
(e) all of Seller's Sharon Business telephone numbers, patents,
trademarks and trade names, trademark and trade name registrations,
service marks and service mark registrations, copyrights and
copyright registrations, the applications therefor and the licenses
and franchises, in each case listed on Schedule 1.1(e) attached
hereto, and all of Seller's Sharon Business trade secrets, technology,
processes, know-how, inventions, designs, drawings, patterns,
royalties, privileges, permits and all other similar intangible
personal property owned by Seller;
(f) all of Seller's rights under all contracts, agreements,
licenses, sales orders, purchase orders, leases, permits and other
commitments relating to the Assets or to the Sharon Business of
Seller, including those which are described on Schedule 1.1(f)
attached hereto (the "Assigned Contracts");
(g) all books, records and files of Seller described on
Schedule 1.1(g) attached hereto;
(h) all rights of Seller, if any, in and to insurance and
indemnity claims relating to the Assets or the Assumed Obligations (as
hereinafter defined);
(i) all Sharon Business stationery, purchase orders, forms,
invoices, labels, shipping materials, catalogues, brochures,
marketing art work, photographs and advertising, merchandising and
display materials;
(j) all rights to the name "Sharon Fastener Company" and any
name or names used by Seller other than Cole Consumer
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<PAGE> 13
Products and American Consumer Products (or any derivative of either)
in the conduct of the Sharon Business; and
(k) all of Seller's other Sharon Business assets not heretofore
described in items (a) through (j) above, other than the Excluded
Assets (as hereinafter defined).
1.2. EXCLUDED ASSETS. Anything contained in Section 1.1
hereof to the contrary notwithstanding, the following assets and properties of
Seller are specifically excluded from the Assets, and shall be retained by
Seller (the "Excluded Assets"):
(a) the computer hardware and software described on Schedule
1.2(a) attached hereto;
(b) the inventory described on Schedule 1.2(b) attached hereto;
(c) all accounts receivable of Seller;
(d) all cash on hand, including bank accounts and temporary
cash or other investments;
(e) claims for refunds of taxes and other governmental charges
for periods ending on or prior to the Closing Date and, appropriately
prorated as of the Closing Date, for periods commencing on or prior to
the Closing Date and ending after the Closing Date;
(f) claims or rights against third parties relating to
liabilities or obligations that are not assumed by Buyer hereunder;
(g) prepaid insurance;
(h) all books, records and files of Seller, whether or not
related to or used in the operation of the Sharon Business, other than
those identified on Schedule 1.1(g) attached hereto; and
(i) any other assets, whether or not used in or relating to the
Sharon Business, described on Schedule 1.2(i) hereto.
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<PAGE> 14
ARTICLE II
ASSUMPTION OF CERTAIN LIABILITIES
---------------------------------
2.1. LIABILITIES BEING ASSUMED. Except as otherwise
provided herein and subject to the terms and conditions of this Agreement,
simultaneously with the transfer, conveyance and assignment to Buyer of the
Assets, Buyer shall assume, honor, pay and discharge (when and as they become
due and payable) the following liabilities and obligations, and only the
following liabilities and obligations, of Seller (the "Assumed Obligations"):
(a) those liabilities and obligations set forth in Schedule
2.1(a) attached hereto;
(b) those liabilities and obligations incurred or arising
from events occurring or conditions existing after the Closing under
the Assigned Contracts to the extent they are effectively assigned and
transferred to Buyer pursuant to Section 1.1(f) hereof; and
(c) those liabilities and obligations of Seller under and with
respect to the Leases, other than the responsibility to make any lease
payments or to perform any obligations due prior to the Closing Date.
2.2. SHARED LIABILITIES. The following liabilities and
obligations relating to the Sharon Business and the Assets (the "Shared
Liabilities") shall not be subject to the Basket as defined in Section 12.2(a)
below and shall be shared pro rata between Buyer and Seller as follows:
(a) UTILITIES. With respect to utility charges that relate to
billing periods beginning before the Closing Date and ending after the
Closing Date, the responsibility for such charges will be prorated
between Buyer and Seller on the basis of the proportional number of
days in the relevant billing period that Buyer and Seller owns the
Assets.
(b) RENT. With respect to rentals and any other amounts
payable under the real property Leases included as part of the Assets
that relate to lease periods beginning before and ending after the
Closing Date, the responsibility for payment will be allocated between
the parties on the basis of the proportional number of days that Buyer
and Seller, respectively, used such leased property during the relevant
lease period.
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<PAGE> 15
(c) TAXES. With respect to ad valorem property, real
estate and similar taxes for the applicable tax year, the
responsibility for payment will be prorated between the
parties on the basis of the proportional number of days that
Buyer or Seller owns the Assets in the relevant tax year.
2.3. LIABILITIES NOT BEING ASSUMED. Except as otherwise
expressly provided in this Agreement, Buyer is not assuming any liabilities or
obligations of Seller other than the Assumed Obligations (the liabilities and
obligations of Seller not being assumed by Buyer as aforesaid are hereinafter
collectively referred to as the "Excluded Obligations"). Seller shall take any
and all actions which may be necessary to prevent any person, firm or
governmental authority from having recourse against any of the Assets or
against Buyer as transferee thereof or otherwise with respect to any Excluded
Obligations and shall discharge or contest (to the extent such contest does not
in any event permit such recourse) all Excluded Obligations when and as they
become due and payable.
ARTICLE III
CLOSING
---------
3.1. CLOSING. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at 10:00 a.m., at the
offices of Roberts, Carroll, Feldstein & Peirce Incorporated, Ten Weybosset
Street, Providence, Rhode Island, on June 23, 1995, or on such other date as
shall be mutually satisfactory to the parties hereto (the "Closing Date").
3.2. INSTRUMENTS OF CONVEYANCE AND TRANSFER AND OTHER
DELIVERIES AT CLOSING BY SELLER. At the Closing, Seller shall deliver to
Buyer:
(a) a bill of sale included in the form of Bill of Sale,
Assignment and Assumption Agreement attached hereto as Exhibit 3.2(a)
(the "Bill of Sale, Assignment and Assumption Agreement"),
transferring to Buyer the Assets to be acquired under the terms of
this Agreement;
(b) such other bills of sale, instruments of assignment
(including separate forms of assignment for the licenses, patents and
trademarks being assigned to Buyer) and other appropriate documents
as may be reasonably requested by Buyer in order to effect the
transfer of Assets as contemplated by this Agreement;
(c) an opinion of counsel of Seller in the form attached
hereto as Exhibit 3.2(c);
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<PAGE> 16
(d) an executed copy of the Escrow Agreement (as hereinafter defined);
(e) an executed copy of the Sales Service Contract (as hereinafter
defined);
(f) an executed copy of the Data Processing Services Agreement (as
hereinafter defined);
(g) certified copies of resolutions adopted by Seller's Board of
Directors, certified as of the Closing Date by the Secretary or
Assistant Secretary of the Seller approving the execution and delivery
of this Agreement and the performance by Seller of its obligations
under this Agreement and incumbency certificates, including specimen
signatures, for each officer of Seller executing this Agreement or any
other agreement contemplated hereby;
(h) a certificate signed by a duly authorized officer of Seller
certifying to the accuracy of the representations and warranties of
Seller contained in this Agreement, and in any Schedule or Exhibit
attached hereto, as of the Closing Date;
(i) all necessary consents or approvals of third parties, the absence
of which would adversely affect Buyer's rights hereunder, to the
transfer and assignment of the Assigned Contracts;
(j) a good standing certificate of Seller, dated not more than ten
business days prior to the Closing, from the appropriate authorities
of the State of Delaware (including confirming that all taxes are
current);
(k) estoppel letters or agreements from the lessors of the Leases,
certifying that such Leases are in full force and effect, to the
absence of any events of default thereunder and to the condition of
the leased premises or assets, consenting to the assignments or
subleases of the Leases to the Buyer, and confirming any applicable
rights of first refusal or options for the benefit of the Buyer (which
shall be recorded in the applicable county or local real estate
records for the real estate Leases if not already recorded),
substantially in the form attached hereto as Exhibit 3.2(k);
(l) an executed copy of the PMI Agreement (as hereinafter defined); and
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<PAGE> 17
(m) all other documents, certificates, instruments, or writings
required to be delivered by Seller at the Closing pursuant to this
Agreement or otherwise required in connection herewith.
3.3. INSTRUMENTS OF ASSUMPTION AND OTHER DELIVERIES AT
CLOSING BY BUYER. At the Closing, Buyer shall deliver to Seller:
(a) the Initial Payment of the Purchase Price (as such terms are
defined in Sections 4.1 and 4.2 hereof);
(b) an assumption agreement, in the form included in the Bill of
Sale, Assignment and Assumption Agreement, pursuant to which Buyer
shall assume the liabilities and obligations of Seller set forth in
Sections 2.1 and 2.2 hereof;
(c) an opinion of counsel of Buyer in the form attached hereto as
Exhibit 3.3(c);
(d) an executed copy of the Escrow Agreement;
(e) an executed copy of the Sales Service Contract;
(f) an executed copy of the Data Processing Services Agreement;
(g) copies of resolutions adopted on behalf of the Buyer, certified
as of the Closing Date by the Secretary or an Assistant Secretary of
the Buyer, approving the execution and delivery of this Agreement and
the performance by Buyer of its obligations under this Agreement and
incumbency certificates, including specimen signatures, for each
officers of Buyer executing this Agreement or any other agreement
contemplated hereby;
(h) a good standing certificate for the Buyer's general partner and a
certificate of legal existence for the Buyer, dated not more than ten
business days prior to the Closing, from the State of Rhode Island;
and
(i) all other documents, certificates, instruments, or writings
required to be delivered by Buyer at the Closing pursuant to this
Agreement or otherwise required in connection herewith.
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<PAGE> 18
3.4. RIGHT TO POSSESSION. Buyer's right to possession of
the Assets shall commence at the close of business on the Closing Date, and
Buyer shall take possession of the Assets at the places they are located on the
Closing Date.
ARTICLE IV
PURCHASE PRICE
4.1. CONSIDERATION. The aggregate cash consideration to be
paid by Buyer hereunder (the "Purchase Price") shall be $6,873,856 (the
"Initial Payment"), subject to any adjustment as provided for in Section 4.4,
and the assumption by Buyer of the Assumed Obligations and Buyer's share of the
Shared Liabilities. The Initial Payment represents the sum of:
(i) $4,523,725, representing the value of the Inventory (other
than Overstock Inventory) as of May 27, 1995 determined in
accordance with the valuation methods described on Schedule 4.1
attached hereto; plus
(ii) $134,142, representing the estimated value of the
Overstock Inventory (this amount, together with the value of the
Inventory referred to in Section 4.1(i), shall be referred to as
the "Initial Inventory Value"); plus
(iii) $20,103, representing the amount of the deposits and
escrows included in the Prepaid Expenses and identified on
Schedule 1.1(d); plus
(iv) $2,284,491, representing the value of the Sharon Division
fixed assets, including Racks, as of May 27, 1995; minus
(v) $88,605, representing the value of the Assumed
Obligations as of May 27, 1995 (the "Initial Assumed
Obligations Value").
4.2. INITIAL PAYMENT. At the Closing, against delivery to
Buyer of the appropriate instruments of transfer, conveyance and assignment
with respect to the Assets, Buyer shall deliver the Initial Payment payable by
certified or official bank checks or by wire transfers as follows: (i) $600,000
to the Escrow Agent (as hereinafter defined and provided); and (ii) the balance
to the Seller.
4.3. DETERMINATION OF INITIAL PAYMENT. The amount of the
Initial Payment shall be based on the Seller's internally generated, unaudited
monthly
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<PAGE> 19
financial statements as of May 27, 1995, prepared in a manner consistent with
accounting methods used by Seller since January 1, 1992.
4.4. AUDIT. (a) As promptly as practicable following the
Closing, but not later than 30 days thereafter, Seller shall prepare (i) a
schedule of the Inventory (which shall include Overstock Inventory) valued in
accordance with the accounting methods described on Schedule 4.1 as of the
Closing Date (the "Inventory Schedule") and (ii) a schedule of the Assumed
Obligations showing the net book value of the Assumed Obligations as of the
Closing Date (the "Closing Assumed Obligations Schedule"). Within such 30-day
period, Seller shall cause Arthur Andersen LLP ("Andersen") to conduct an audit
as of the Closing Date of the Inventory Schedule, which audit shall be
conducted in accordance with generally accepted auditing standards and on the
basis of the accounting methods specified on Schedule 4.1. As soon as
available and in any event within 30 days following the Closing Date, Seller
shall prepare and submit to Buyer the audited Inventory Schedule, together with
a summary supporting such schedule showing the components of the audited
inventory and accompanying calculations in accordance with Schedule 4.1 (the
"Audited Inventory Schedule") based on the Andersen audit, (ii) an audit report
of Andersen with respect to the Audited Inventory Schedule in the form of
Exhibit 4.4(a) attached hereto, and (iii) the Closing Assumed Obligations
Schedule.
(b) Upon delivery to Buyer of the Audited Inventory
Schedule, Buyer shall have the right to cause Lefkowitz, Garfinkel, Champi &
DeRienzo P.C. ("LGCD") to conduct a review of the Audited Inventory Schedule
and the Closing Assumed Obligations Schedule on behalf of Buyer.
Representatives of Buyer and LGCD shall have prompt and complete access to all
Seller's and Andersen's personnel involved with the determination of the
Initial Inventory Value, the Audited Inventory Schedule, the Closing Assumed
Obligations Schedule and, subject to the execution of the form of
indemnification letter attached hereto as Exhibit 4.4(b), work papers, journal
entries and all Seller's, and to the extent requested by Buyer, subject to the
execution of the form of indemnification letter attached hereto as Exhibit
4.4(b), Andersen's, books and records, and shall have the right to observe all
physical inventories whenever taken in connection therewith. As promptly as
practicable after Buyer's receipt of both the Audited Inventory Schedule and
the Closing Assumed Obligations Schedule and completion of the review by LGCD,
but in no event later than 30 days after Buyer's receipt of both the Audited
Inventory Schedule and the Closing Assumed Obligations Schedule, Buyer shall
give written notice (the "Buyer's Notice") to Seller stating either that Buyer
accepts the amounts set forth in both the Audited Inventory Schedule (the
"Closing Inventory Value") and the Closing Assumed Obligations Schedule
("Closing Assumed Obligations Value"), or describing in reasonable detail,
including the nature and amount thereof, such adjustments (the "Proposed
Adjustments") that Buyer proposes be made to the
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<PAGE> 20
computation of such amounts. If Seller shall not have received Buyer's Notice
within such 30-day period, Buyer shall be deemed to have accepted the amounts
set forth in the Audited Inventory Schedule and the Closing Assumed Obligations
Schedule.
(c) If Buyer's Notice shall propose any Proposed
Adjustments to the Closing Inventory Value or the Closing Assumed Obligations
Value, then Buyer and Seller shall negotiate in good faith to resolve such
dispute, provided that if the parties have not resolved such dispute within 30
days following Seller's receipt of Buyer's Notice, then Buyer and Seller shall
engage a mutually acceptable firm of independent public accountants to act as
the arbitrator (the "Arbitrator") of such dispute. Any such arbitration shall
be held in Providence, Rhode Island, and shall be limited to the unresolved
Proposed Adjustments set forth in the Buyer's Notice. The parties shall cause
the Arbitrator to act promptly to resolve such unresolved Proposed Adjustments,
and its decision with respect thereto shall be final, binding and conclusive on
both parties. Each party shall pay its own counsel, witness and other costs
incurred by it in connection with any arbitration. The costs of the Arbitrator
and the arbitration itself shall be shared equally by the parties.
4.5. SETTLEMENT. Within 10 days following Buyer's
acceptance of the amount of the Closing Inventory Value and the Closing Assumed
Obligations Value or within 10 days following the date of the resolution of all
Proposed Adjustments set forth in Buyer's Notice pursuant thereto, whether by
agreement of the parties or by the Arbitrator, either of the following
adjustments shall be made:
(a) In the event that the Closing Inventory Value minus the Closing
Assumed Obligations Value (determined as set forth in Section 4.1
hereof) is greater than the Initial Inventory Value minus the Initial
Assumed Obligations Value, Buyer shall deliver to Seller a certified
check payable to Seller, equal to such difference, plus interest on
such difference from the Closing Date to the date such difference is
paid at the prime rate of interest as published in the Money Rates
section of THE WALL STREET JOURNAL in effect on the date paid; or
(b) In the event that the Closing Inventory Value minus the Closing
Assumed Obligations Value (determined as set forth in Section 4.1
hereof) is less than the Initial Inventory Value minus the Initial
Assumed Obligations Value, Seller shall deliver to Buyer a certified
check payable to Buyer, equal to such difference, plus interest on
such difference from the Closing Date to the date such difference is
paid at the prime rate of interest as published in the Money Rates
section of THE WALL STREET JOURNAL in effect on the date paid.
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4.6. APPORTIONMENT OF CHARGES. All ad valorem taxes,
rents, utility charges and other similar and usual expenses in respect of the
Assets shall be apportioned between the parties as of the Closing Date in
accordance with Section 2.2.
4.7. ALLOCATION OF PURCHASE PRICE. Buyer and Seller hereby
agree that the Purchase Price shall be allocated among the Assets to be
acquired hereunder in a manner consistent with Section 4.1 above and in
accordance with the values as specified on Schedule 4.7 attached hereto and on
the Audited Purchase Price Schedule, as adjusted by the parties hereto or the
Arbitrator. All Assets not listed on the Audited Purchase Price Schedule have
only a nominal value. For this purpose, the parties acknowledge that both
parties operate similar businesses, and that Buyer has independent knowledge of
the industry and expertise therein. Buyer and Seller hereby consent and agree
not to take a position on any income tax return, before any government agency
charged with the collection of any income tax or in any judicial proceeding
that is in any way inconsistent with such allocation. Each of the parties
shall make all appropriate tax and other filings on a basis consistent with
such allocation. The parties shall exchange drafts of any information returns
required by Section 1060 of the Internal Revenue Code of 1986, as amended (the
"Code") and all similar state statutes, ten days prior to filing any such
return.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
5.1. ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER.
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to own, lease and operate the Assets and to carry on the Sharon
Business as now being conducted. Seller has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. Seller is duly
qualified and in good standing to do business in all jurisdictions where the
nature of the Sharon Business as now being conducted requires such
qualification and good standing.
5.2. AUTHORITY. The execution, delivery and performance of
this Agreement by Seller, and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of Seller. This Agreement has been duly and validly executed by
Seller and is a valid and binding obligation of Seller, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency, or
other similar laws of general application relating to or affecting the
enforcement of creditors' rights generally and general principles of equity.
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<PAGE> 22
5.3. NO VIOLATION. Neither the execution, delivery and
performance of this Agreement by Seller, nor the compliance by Seller with any
of the provisions hereof will (i) conflict with or result in a breach of any
provision of the Restated Certificate of Incorporation or By-laws of Seller as
they may be amended to date, (ii) except as set forth on Schedule 5.3, cause a
default (or give rise to any right of termination, cancellation, or
acceleration) under any of the terms, conditions or provisions of any note,
bond, lease, mortgage, indenture, license or other instrument or agreement to
which Seller is a party, or by which Seller or any of its properties or assets
is or may be bound, which default, termination, cancellation or acceleration
would have a material adverse effect on the Assets or the Sharon Business, or
(iii) violate any law, statute, rule or regulation or order, writ, judgment,
injunction or decree applicable to Seller or any of the Assets. No consent or
approval by, or any notification of or filing with, any public body or
authority is required in connection with the execution, delivery and
performance by Seller of this Agreement, or the consummation by Seller of the
transactions contemplated hereby.
5.4. FINANCIAL STATEMENTS. Schedule 5.4 attached hereto
contains true and complete copies of a Statement of Historical Contribution of
the Sharon Division for 1991, 1992, 1993 and 1994 and the first quarter of 1995
and a Statement of Selected Assets of the Sharon Division as of December 31,
1994 and April 1, 1995 and Schedule 5.4 attached hereto lists all other
financial statements or information (including monthly gross sales, net sales,
and gross margins for 36 months and 1994 sales by state) provided by Seller to
Buyer for the Sharon Business (collectively, the "Financial Statements").
Except as otherwise noted in the Financial Statements, the Financial Statements
(i) have been prepared from information contained in the books and records of
Seller, (ii) present fairly, in all material respects, those items listed
therein, (iii) with respect to Statement of Historical Contribution included in
the Financial Statements, the dollar amounts of the accounts included in the
Statement of Historical Contribution for the three years ended December 31,
1994 are in agreement with the dollar amounts of such accounts included in
Seller's audited consolidated statements of income for the three years ended
December 31, 1994, before eliminations, and (iv) with respect to the Statement
of Selected Assets included in the Financial Statements, the dollar amounts of
the accounts included in the Statement of Selected Assets as of December 31,
1994 are in agreement with the dollar amounts of such accounts included in
Seller's audited consolidated balance sheet as of December 31, 1994. Seller
has delivered to Buyer a copy of a letter from Andersen, in the form of Exhibit
5.4 attached hereto.
5.5. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set
forth on Schedule 5.5 attached hereto, neither the Sharon Business nor the
Assets, at April 1, 1995, are subject to any liabilities or obligations of any
nature (matured or unmatured, fixed or contingent) other than the Assumed
Obligations and Buyer's share of the Shared Liabilities.
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<PAGE> 23
5.6. ABSENCE OF CHANGES. Since April 1, 1995, except as
set forth on Schedule 5.6 attached hereto, Seller has operated the Sharon
Business in the ordinary course and there has not been:
(a) any adverse change in Sharon's condition (financial or
otherwise), assets, liabilities, earnings or business;
(b) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting any of the Assets;
(c) any increase in the compensation of any officer, employee,
consultant or agent of Sharon (including, without limitation, any increase
pursuant to any bonus, pension, profit-sharing or other plan or commitment)
other than in the ordinary course of business, or the entering into of any
employment contract with any officer or employee of Sharon, or the making of
any loan to, or engagement in any financial transaction with, any officers of
the Sharon Business;
(d) any forward purchase commitments with respect to the Sharon
Business in excess of the requirements for normal operating inventories or at
prices higher than market prices prevailing at the time the commitment was
entered into;
(e) any forward sales commitments with respect to the Sharon Business
other than in the ordinary course of business consistent with past practices;
(f) any change in the manner in which inventory of the Sharon
Business is marketed or any increase in inventory levels of the Sharon Business
in excess of levels reasonably required for the fulfillment of existing orders
in accordance with the terms thereof, or any change in the manner in which the
Sharon Business extends discounts or credit to customers or otherwise deals
with its customers;
(g) any write-down or write-up of the value of any inventory of the
Sharon Business (other than write-downs in the ordinary course of business for
scrap materials);
(h) any obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due) incurred, or any
transaction, contract or commitment entered into, by Seller for the Sharon
Business, other than items incurred or entered
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<PAGE> 24
into (as the case may be) in the ordinary course of business and consistent
with the past practice of Seller for the Sharon Business;
(i) any payment, discharge or satisfaction of any claim, encumbrance
or liability by Seller for the Sharon Business other than in the ordinary
course of business (whether absolute, accrued, contingent or otherwise and
whether due or to become due) other than payment of loans secured by liens on
any of the Assets;
(j) any amendment or termination of any contract, license, lease,
commitment or other agreement to which Seller, in behalf of the Sharon
Business, is a party, except in the ordinary course of business and consistent
with the past practice of Seller;
(k) any labor trouble, problem or grievance or threatened labor
trouble, problem or grievance involving the Sharon Business;
(l) any license, sale, transfer, pledge, mortgage or other
disposition of any Asset except in the ordinary course of business and
consistent with the past practice of Seller for the Sharon Business;
(m) any cancellation of any debts owed to, or claims of, or any
amendment, termination or waiver of any rights of material value to the Sharon
Business relating to the Assets;
(n) any change in the accounting methods or practices followed by
Seller for the Sharon Business or any change in depreciation or amortization
policies or rates theretofore adopted;
(o) any change in the customers or the personnel of Seller for the
Sharon Business other than such routine changes which occur in the ordinary
course of business and which are consistent with the past practice of Seller
for the Sharon Business, which changes have not been, individually or in the
aggregate, adverse to the Sharon Business;
(p) any failure by the Seller to operate the Sharon Business in the
ordinary course of business consistent with past practice, including, but not
limited to, any failure by Seller to pay trade accounts payable when due; or
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(q) any agreement or understanding, whether in writing or otherwise,
for Seller to take in behalf of the Sharon Business any of the actions
specified above in items (a) through (p) above.
5.7. Assets. Seller has good and marketable title to all
of the Assets, free and clear of all mortgages, liens, pledges, charges,
security interests, rights of way, options, rights of first refusal,
conditions, restrictions, or encumbrances of any kind or character, whether or
not relating to the extension of credit or the borrowing of money
(collectively, "Encumbrances"), except for (a) the Encumbrances set forth on
Schedule 5.7 attached hereto, and (b) liens for real estate taxes and
assessments, both general and special, not yet due and payable or which are
being contested in good faith; (c) easements for electricity, water, gas,
telephone lines, and other utilities serving only the real property and
business conducted thereon; and (d) other liens, charges or encumbrances of
record. Except as provided on Schedule 5.7, Seller has paid or will pay all
applicable taxes owing with respect to the Assets (other than Buyer's share of
the Shared Liabilities), and no party other than Seller has, or has made, any
claim to ownership of the Racks. The Assets include all assets of Seller used
in and indispensable to the Sharon Business except for the Excluded Assets.
5.8. Real Property Leases. Schedule 5.8 attached hereto
contains a list and brief description (including with respect to each real
property Lease an accurate summary for the years 1992, 1993 and 1994 of
expenses, including Rent, by location) of the terms of the real property
Leases, true, complete and correct copies of which have been furnished to
Buyer. Each such real property Lease is in full force and effect and
constitutes a legal, valid and binding obligation of the Seller and, to the
best of Seller's knowledge, the other parties thereto. All rents and
additional rents due to date on each such real property Lease have been paid.
In each case (except as may be otherwise set forth on Schedule 5.8), the Seller
is in peaceable possession under such real property Lease and has a valid
leasehold interest therein and is not in default thereunder and no waiver,
indulgence or postponement of the lessee's obligations thereunder has been
granted by the lessor, nor to Seller's knowledge does there exist any event,
condition or occurrence which, with the giving of notice or the lapse of time,
or both, would constitute such a default under any such real property Lease.
Seller has not violated any of the terms or conditions under any such real
property Lease in any respect which violation would give rise to the right of
the other party thereto to terminate such real property Lease or sue for
damages thereunder. All buildings, structures, appurtenances or real property
leased by Seller under the real property Leases (the "Property") (i) are
adequate and suitable for the uses for which intended by Seller, and (ii)
afford adequate rights of ingress and egress for operation of the Sharon
Business as presently conducted. To Seller's knowledge, no condemnation
proceeding is pending or threatened which would preclude or impair the use of
the Property by Seller for the uses for which intended
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by it. To the best of its knowledge, Seller's use of the Property conforms in
all respects to applicable Federal, state, territorial, local, and foreign laws
and regulations (including applicable environmental and occupation safety and
health laws and regulations and zoning and building ordinances).
5.9. EQUIPMENT. All of the Equipment is in such operating
condition and repair as is suitable for the uses for which intended by Seller
in the ordinary course of the Sharon Business. Schedule 5.9 attached hereto
accurately sets forth as of the date thereof the quantity and date of shipment
of the Racks for each customer by location in summary form for the period
commencing January 1, 1992 and ending June 15, 1995.
5.10. INVENTORY. The Inventory consists of a salable
quality, and does not include any off-specification, rejected, damaged, or
below standard quality item or items which do not meet current industry
specifications; Schedule 5.10 accurately sets forth (i) Seller's sales by
warehouse location for the years 1993 and 1994 and for the first quarter of
1995 and (ii) Seller's inventory value as of December 31, 1994 and March 31,
1995; and the data described on Schedule 5.10 (which is included in the
perpetual inventory discs provided by Seller to Buyer) is true and correct.
5.11. PERSONAL PROPERTY LEASES. Schedule 5.11 attached
hereto contains a list of all personal property Leases under which Seller, with
respect to any of the Assets, is lessee of or holds or operates any items of
machinery, equipment, motor vehicles, office furniture or fixtures owned by any
third party, true, complete and correct copies (or, in the case of oral leases
or agreements, descriptions) of which have been furnished to Buyer, and
accurately sets forth a summary for the years 1992, 1993 and 1994 of the costs
for such Leases (including maintenance agreements and contracts). Seller is
the owner and holder of all of the leasehold estates purported to be granted by
such personal property Leases, and each of such personal property Leases and
agreements is in full force and effect and constitutes a legal, valid and
binding obligation of the Seller and, to the best of the Seller's knowledge,
the other parties thereto. There is not under any of such personal property
Leases or agreements any existing default or event, condition or occurrence
which, with the giving of notice or lapse of time, or both, would constitute a
material default thereunder. Each of such items of machinery, equipment, motor
vehicles, office furniture and fixtures covered by such personal property
Leases or agreements is in such operating condition and repair as is suitable
for the uses for which intended by Seller in the ordinary course of the Sharon
Business.
5.12. AGREEMENTS. Schedule 5.12 attached hereto sets forth
a true, complete and correct list and brief description (including a statement
as to whether there is any requirement of consent of any party other than
Seller to
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assignment) of all written or oral contracts, agreements and other instruments
relating to the Sharon Business and not made in the ordinary course of
business, to which Seller is a party, or made in the ordinary course of
business and referred to in clauses (a) through (l) of the next sentence of
this Section 5.12. Except as set forth on said Schedule 5.12, as to the Sharon
Business the Seller is not a party to any written or oral, formal or informal,
(a) collective bargaining agreement or contract with or
commitment to any labor union or any organization or association;
(b) continuing contract or purchase order for the future
purchase of inventory, equipment, or services or any liability for returns
and/or buybacks;
(c) contract in excess of $5,000 for the future sale of
Inventory pursuant to customer's purchase order including any commitments to
new merchandising or bin programs;
(d) contract or commitment for the employment of any
officer, employee or consultant or any other type of contract or understanding
with any officer, employee, sales representative or consultant;
(e) profit-sharing, bonus, stock option, stock purchase,
savings and investment, pension, retirement, post employment, disability,
hospitalization, insurance or similar plan or agreement, formal or informal,
providing benefits to any current officer, employee or consultant or spouse or
dependent of any of the foregoing;
(f) indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money, for a
letter of credit, for a line of credit or for any leasing transaction including
operating leases or transactions of a type required to be capitalized in
accordance with Statement of Financial Accounting Standards No. 13, issued by
the Financial Accounting Standards Board;
(g) contract or commitment for capital expenditures in
excess of $5,000 individually or in excess of $10,000 in the aggregate;
(h) agreement or arrangement for the sale of any assets,
properties or rights requiring the consent of any party to the transfer and
assignment of such assets, properties and rights, other than inventory in the
ordinary course of business;
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(i) licenses, patents, trademarks or software agreements; or
(j) non-competition or similar agreement which restricts
Seller from engaging in any aspect of the Sharon Business anywhere in the
world.
5.13. LITIGATION. Except as set forth on Schedule 5.13
attached hereto, there are no (i) audits, inspections, actions, suits, claims,
investigations or legal or administrative or arbitration proceedings pending
or, to Seller's knowledge, threatened against Seller affecting the Assets or
the Sharon Business, whether at law or in equity, whether civil or criminal in
nature or whether before or by any Federal, state, municipal, or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, nor, to the best knowledge and belief of Seller, does any
basis exist therefor, or (ii) judgments, decrees, injunctions or orders of any
court, governmental department, commission, agency, instrumentality or
arbitrator against Seller with respect to the Sharon Business or any of the
Assets.
5.14. COMPLIANCE; GOVERNMENTAL AUTHORIZATION. (a) Seller
has to the best of its knowledge complied with all Federal, state, territorial,
local or foreign laws, ordinances, regulations or orders applicable to the
Sharon Business or the Assets, including, by way of description, and not
limitation, matters relating to the environment, anti-competitive practices,
discrimination, employment, health and safety. Seller has to the best of its
knowledge all Federal, state, territorial, local and foreign governmental
licenses and permits necessary in the conduct of the Sharon Business as
presently conducted, which licenses and permits are in full force and effect,
and to Seller's knowledge, no violations are outstanding or uncured with
respect to any such licenses or permits and no proceeding is pending or
threatened to revoke or limit any of them.
(b) Schedule 5.14(b) attached hereto lists (i) all
reports provided to Seller of inspections by public authorities of Seller's
Sharon Business operations from January 1, 1992, through the date hereof under
OSHA, U.S. EPA, and under all other applicable Federal (including the Fastener
Quality Act as amended), state and local health and safety laws and
regulations, and (ii) all reports of landlords, fire or insurance companies and
workers compensation self-insurance group administrators and management
companies relating to Seller's Sharon Business operations during such period,
copies of all of which reports have been furnished to Buyer.
(c) As used in this Agreement, "hazardous substance" shall
mean and include all hazardous or toxic substances, wastes or materials, any
pollutants or contaminants (including, without limitation, asbestos and raw
materials which include hazardous constituents), or any other similar
substances, or materials which are included under or regulated by any local,
state or Federal law, rule or
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regulation pertaining to environmental regulation, contamination, clean-up or
disclosure, including, without limitation, the Clean Air Act, the Federal Water
Pollution Control Act, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of
1986, the Resource Conservation and Recovery Act of 1976, the Toxic Substances
Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, the
Occupational Safety and Health Act, the Emergency Planning and Community
Right-to-Know Act of 1986, and all comparable state laws, orders and
regulations, as any of the foregoing has heretofore been amended (collectively,
"Environmental Laws").
(d) Except as disclosed on Schedule 5.14(b), Seller
has not, to the best of its knowledge, released or discharged, and has no
knowledge of the presence, storage, disposition, release or discharge of, any
hazardous substance on, under or about the Assets or the Property in violation
of applicable Environmental Laws.
5.15. LABOR RELATIONS; EMPLOYEES. To the best of Seller's
knowledge, Seller enjoys a satisfactory employer-employee relationship with its
Sharon Business employees, taken as a whole. Seller is in compliance with all
Federal, state, territorial, local and foreign laws and regulations respecting
labor, employment and employment practices, terms and conditions of employment
and wages and hours for its Sharon Business employees. There is no unfair
labor practice complaint against Seller involving its Sharon Business employees
pending before the National Labor Relations Board or any comparable state,
local or foreign agency. There is no labor strike, dispute, slowdown, stoppage
or organizational effort by the Sharon Business employees actually pending
against the Seller or, to Seller's knowledge, threatened against the Seller;
and no collective bargaining agreement presently covers any Sharon Business
employees of the Seller, nor is any currently being negotiated by Seller.
Schedule 5.15 attached hereto lists all employees of Seller who do not work at
its Solon, Ohio offices and are exclusively employed by Seller in the conduct
of the Sharon Business, and each such employee's address, date of birth, sex,
date of hire, current salary and all benefits (whether accrued or otherwise)
and any changes in compensation during the past three years. Exhibit 5.15
attached hereto contains true and correct copies of Seller's employee manual
and personnel policies applicable to the Sharon Business.
5.16. EMPLOYEE BENEFIT PLANS. Schedule 5.16 attached
hereto lists all "employee pension benefit" plans (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and all "employee welfare benefit" plans (as defined in Section 3(1) of ERISA)
(individually, a "Plan" and, collectively, the "Plans") maintained by Seller
for its Sharon Business
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employees. Each Plan has been maintained in all material respects in
accordance with its terms and with applicable law.
5.17. CUSTOMERS AND SUPPLIERS. Schedule 5.17 attached
hereto contains a true and complete list of the twenty-five (25) largest
customers ranked as to dollar volume (other than the names and respective sales
volume of individual customers, which information shall not be made available
to Buyer until five business days prior to the Closing), of the Seller's Sharon
Business during 1994 and the three (3) months ended on March 31, 1995, price
schedules with discount assignment matrix, rebate/allowance schedule and sales
by state as to each during such period. Schedule 5.17 attached hereto contains
a true and complete list of the ten largest suppliers of the Sharon Business
during 1994 and the three (3) months ended on March 31, 1995 with the amount of
purchases from each during such period. The relationship of Seller with Sharon
Business suppliers and customers is good, and Seller is not aware of any
intention of any such supplier or customer to terminate or modify any of such
relationships.
5.18. DISCLOSURE. Neither this Agreement (including the
Schedules and Exhibits attached hereto) nor any other document, certificate or
statement furnished to Buyer by or on behalf of Seller in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact; except that this Section 5.18 representation shall not apply to any
provisions of the Confidential Memorandum distributed by McDonald (as defined
in Section 5.19) other than the historical (but not projected) financial
information contained therein (including exhibits).
5.19. BROKERS. Neither Seller nor any of its officers,
directors or employees have employed any broker or finder in connection with
the transactions contemplated by this Agreement except for McDonald & Company
Securities, Inc. ("McDonald"). Seller shall indemnify and hold Buyer harmless
from any and all claims or losses relating to brokerage fees, commissions or
finder's fees owed or claimed to be owed to any broker or finder engaged or
claimed to be engaged by Seller (including McDonald).
5.20. TAX MATTERS. (a) Seller has filed within the time
and in the manner prescribed by law all tax returns and reports required to be
filed by it under the laws of the United States and each state or other
jurisdiction in which it conducts the Sharon Business activities requiring the
filing of tax returns or reports. Seller has paid or set up adequate reserves
in respect of all taxes for the periods covered by such returns.
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(b) There are no tax liens, whether imposed by the United
States, any state, local or other taxing authority, outstanding against any of
the Assets.
(c) All taxes and assessments that Seller is required to
withhold or to collect have been duly withheld or collected and all
withholdings and collections have either been duly and timely paid over to the
appropriate governmental authorities except to the extent such failure to
withhold, collect or pay would not have a material adverse effect on the Sharon
Business, or are, together with the payments due or to become due in connection
therewith, duly reflected on the Seller's financial statements in accordance
with generally accepted accounting principles.
5.21. ASSIGNED CONTRACTS. Each of the Assigned Contracts
constitutes a legal, valid, and binding obligation of Seller and of each other
party thereto and is enforceable in accordance with its terms, except as
limited by bankruptcy, insolvency or other similar laws of general application
relating to or affecting the enforcement of creditors rights generally and
principles of equity generally. Seller has performed all the obligations
required to be performed by it to date and is not in default or alleged to be
in default in any respect under any such Assigned Contracts, and there exists
no event, condition or occurrence which, after notice or lapse of time, or
both, would constitute such default by it of any of the foregoing. Seller is
not aware of any default by any other party to any such agreement, contract,
sales order, purchase order or other commitment.
5.22. LENDER CONSENTS. Seller has obtained all lender
consents in order for it to consummate the transactions contemplated by this
Agreement and, subject to the satisfaction of the conditions to Seller's
obligations herein contained, is otherwise ready, willing and able to
consummate the transactions contemplated by this Agreement.
5.23. MISCELLANEOUS. Attached as Schedule 5.23 is a
complete and accurate summary of all forms, artwork, mechanicals, merchandising
aids, records and insurance policies material to and/or necessary for the
conduct of the Sharon Business and also those of such items as are located
other than at Seller's Milford, Massachusetts location.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
----------------------------------------
Buyer hereby represents and warrants to Seller as follows:
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6.1. ORGANIZATION, GOOD STANDING AND POWER. Buyer is a
limited partnership duly organized, validly existing and in good standing under
the laws of the State of Rhode Island and has all requisite power, authority
and consents to enter into this Agreement, to perform the obligations hereunder
and to consummate the transactions contemplated hereby. The general partner of
the Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Rhode Island and is duly authorized to
execute this Agreement on behalf of the Buyer.
6.2. AUTHORITY. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary action on the part of
the Buyer. This Agreement has been duly and validly executed and delivered by
Buyer and is a valid and binding obligation of Buyer enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency, or other similar
laws of general application relating to or affecting the enforcement of
creditors' rights generally.
6.3. NO VIOLATION. Neither the execution, delivery and
performance of this Agreement, nor the consummation of the transactions
contemplated hereby, nor compliance by Buyer with any of the provisions hereof
will (a) conflict with or result in a breach of any provision of the Buyer's
partnership agreement, (b) cause a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions
or provisions of any agreement, instrument or obligation to which Buyer is a
party, or by which any of its properties or assets may be bound, in each case
excluding the Assets as to which no representation or warranty is made by Buyer
or (c) violate any statute, rule or regulation or judgment, order, writ,
injunction or decree of any court, administrative agency or governmental body.
6.4. NO FINANCING CONDITION. Buyer has available to it
financing sufficient in order for it to consummate the transactions
contemplated by this Agreement and, subject to the satisfaction of the
conditions to Buyer's obligations herein contained, is otherwise ready, willing
and able to consummate the transactions contemplated by this Agreement.
6.5. BROKERS. Buyer shall indemnify and hold Seller
harmless from any and all claims or losses relating to brokerage fees,
commissions or finder's fees owed or claimed to be owed to any broker or finder
engaged or claimed to be engaged by Buyer.
6.6. EMPLOYEES. Buyer intends to offer employment to most
of Seller's employees listed on Schedule 5.15 at wages and benefits
substantially comparable to those provided by Seller.
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6.7. LITIGATION. There is no suit, action or litigation or
administrative, arbitration or other proceeding or governmental investigation
pending or threatened which might affect Buyer's obligation to acquire the
Assets and to carry out the transactions contemplated by this Agreement.
ARTICLE VII
COVENANTS OF SELLER
--------------------
Seller hereby covenants and agrees with Buyer as follows:
7.1. CONDUCT OF BUSINESS UNTIL CLOSING DATE. Except as
permitted or required hereby or as Buyer may otherwise consent in writing,
between the date hereof and the Closing Date, Seller shall:
(a) operate the Sharon Business only in the usual, regular and
ordinary manner as such business was conducted prior to April 1, 1995 and use
its best efforts to preserve the Sharon Business relationships with customers,
suppliers, and others having business dealings with Sharon;
(b) maintain all of the Equipment in substantially the same condition
as it now is (ordinary wear and tear excepted), and, in the event that any of
such Equipment is materially damaged prior to the Closing Date and there is not
adequate insurance coverage to repair or replace the same, Seller shall, at
Buyer's option, restore such asset to its condition prior to such damage or pay
or credit to Buyer the amounts required to so restore it, in which event Buyer
shall assign to Seller or waive any rights to any insurance proceeds applicable
to such damage;
(c) maintain Sharon's books, records, accounts and insurance in the
usual, regular and ordinary manner, on a basis consistent with prior periods;
(d) perform all of Sharon's obligations (including the payment of tax
liabilities) without material default;
(e) promptly give Buyer written notice of any material damage to any
of the Assets; and
(f) not modify, change or terminate any of the Assigned Contracts
except in the ordinary course of business.
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7.2. ACCESS TO PROPERTIES AND RECORDS. Between the date
hereof and the Closing Date, Seller shall give to Buyer and to its counsel,
accountants, and other representatives reasonable access during normal business
hours to its and, subject to the execution of the form of indemnification
letter attached as Exhibit 4.4, Andersen's (as applicable) Sharon Business
properties, personnel, books, tax returns, work papers, contracts, commitments
and records and the right to make copies thereof. Seller shall furnish to
Buyer and such representatives all such additional documents and financial and
other information as Buyer or its representatives may from time to time
reasonably request and permit Buyer and such representatives to examine all
records and working papers of Seller and, subject to the execution of the form
of indemnification letter attached as Exhibit 4.4, of Andersen (as applicable),
relating to the preparation, review and audits of its financial statements and
tax returns.
7.3. ADVISE OF CHANGES. Between the date hereof and the
Closing Date, Seller shall advise Buyer promptly after the occurrence thereof
is known to Seller, in writing, of any fact which, if known at the date hereof,
would have been required to be set forth or disclosed in or pursuant to this
Agreement, and upon the giving of such notice the schedules hereto, to the
extent applicable, shall be deemed to incorporate the information specified in
such notice as if included therein on the date hereof.
7.4. CONDUCT. Except as permitted or required hereby or as
Buyer may otherwise consent in writing, Seller shall not enter into any
transaction, take any action, or fail to take any action, which would result in
any of the representations and warranties of Seller contained in this Agreement
or in any Schedule or Exhibit attached hereto not being true and correct in all
material respects at and as of the time immediately after such transaction has
been entered into or such event has occurred and on the Closing Date.
7.5. POST CLOSING FINANCIAL INFORMATION. Not later than
when Seller delivers to Buyer the Audited Inventory Schedule as provided in
Section 4.4(a) above, Seller shall deliver to Buyer (in no less detail than
provided in the comparable Financial Statements delivered pursuant to Section
5.4) (a) its Statement of Historical Contribution of the Sharon Division for
the period from January 1, 1995 to the Closing Date and Statement of Selected
Assets of the Sharon Division as of the Closing Date (including gross sales,
net sales, and gross margins and sales by state for the period from January 1,
1995 to the Closing Date), which shall (i) be prepared by Seller from
information contained in the books and records of Seller, (ii) present fairly,
in all material respects, the items listed therein, and (iii) for the dollar
amounts of the accounts included in the Statement of Historical Contribution
and Statement of Selected Assets of the Sharon Division, be in agreement, in
the case of the Statement of Historical Contribution with the dollar amounts of
such accounts included in
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AUDITPLSUM as of June 30, 1995, and in the case of the Statement of Selected
Assets with the dollar amounts of such accounts included in AUDITBSPEN as of
June 30, 1995, (b) its certificate in the form of Exhibit 7.5(b) attached
hereto, and (c) a copy of a letter from Andersen in the form of Exhibit 7.5(c)
attached hereto, with Footed Attachment I being said Statements of Contribution
and Selected Assets.
7.6. LEASE REPAIRS. Promptly following the Closing Seller
agrees to repair those items identified on Exhibit 7.6.
ARTICLE VIII
COVENANTS OF BUYER
8.1. COOPERATION. Buyer shall use its best efforts to
cause the transactions contemplated by this Agreement to be consummated,
provided that Buyer shall not be required to incur any additional expense to
obtain on behalf of Seller consents and authorizations of third parties or to
make any filings with and give any notices to third parties which may be
necessary or contemplated hereby on behalf of Seller.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to perform this Agreement are
subject to the satisfaction of the following conditions unless waived by
Seller.
9.1. AUTHORIZATION. All action necessary to authorize the
execution, delivery and performance of this Agreement by Buyer, and the
consummation of the transaction hereby shall have been duly and validly taken
by Buyer.
9.2. PAYMENT AND CLOSING DOCUMENTS. Seller shall have
received the Initial Payment and the assumption agreement of Buyer included in
the Bill of Sale, Assignment and Assumption Agreement.
9.3. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer contained in this Agreement and in any
Schedule or Exhibit hereto shall be true and accurate in all material respects
on and as of the Closing Date, with the same force and effect as if made on the
Closing Date, except as affected by transactions contemplated or permitted
hereby, and except that any such representation or warranty made as of a
specified date (other than the date of this Agreement) shall have been true and
accurate in all material respects on and as of such date.
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9.4. PERFORMANCE OF AGREEMENTS. Buyer shall have performed
and complied in all material respects with all covenants, obligations and
agreements to be performed and complied with by it on or before the Closing
Date pursuant to this Agreement or any Schedule or Exhibit hereto.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF BUYER
----------------------------------
The obligations of Buyer to perform its obligations under
this Agreement are subject to the satisfaction of the following conditions
unless waived by Buyer.
10.1. AUTHORIZATION. All corporate action necessary to
authorize the execution, delivery and performance of this Agreement by Seller,
and the consummation of the transactions hereby shall have been duly and
validly taken by Seller, and Seller shall have full corporate power and right
to sell the Assets as contemplated hereby.
10.2. CLOSING DOCUMENTS. Buyer shall have received the
instruments of conveyance and transfer and other closing documents specified in
Section 3.2 hereof.
10.3. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in this Agreement and in any
Schedule or Exhibit hereto shall be true and accurate in all material respects
on and as of the Closing Date, with the same force and effect as if made on the
Closing Date, except as affected by transactions contemplated or permitted
hereby, and except that any such representation or warranty made as of a
specified date (other than the date of this Agreement) shall have been true and
accurate in all material respects on and as of such date.
10.4. PERFORMANCE OF AGREEMENTS. Seller shall have
performed and complied in all material respects with all covenants, obligations
and agreements to be performed and complied with by it on or before the Closing
Date pursuant to this Agreement or any Schedule or Exhibit hereto.
ARTICLE XI
OTHER COVENANTS AND AGREEMENTS
------------------------------
11.1. SALES SERVICE CONTRACT. Subsequent to the Closing,
the Seller shall provide and the Buyer shall pay for the services as provided
in the contract attached hereto as Exhibit 11.1 (the "Sales Service Contract").
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11.2. RETENTION OF, AND ACCESS TO, RECORDS. In connection
with any matter relating to any period prior to, or any period ending on, the
Closing Date, Buyer shall, upon reasonable notice by Seller, permit Seller and
its representatives full access at all reasonable times to the books and
records of Seller which shall have been transferred to Buyer pursuant to
Section 1.1(g) hereof. In connection with any matter relating to any period
prior to, or any period ending on, the Closing Date, Seller shall, upon
reasonable notice by Buyer, permit Buyer and its representatives full access at
all reasonable times to the books and records retained by Seller pursuant to
Section 1.2(h) hereof. Neither party shall dispose of their retained Sharon
Business books and records during the seven-year period beginning on the
Closing Date without first notifying the other party and delivering to such
other party any such records which are requested by such other party within 30
days after receipt of such notice.
11.3. COVENANT NOT TO COMPETE OR TO SOLICIT OR TERMINATE
EMPLOYEES. (a) Seller covenants and agrees that it shall not for a period of
three (3) years following the Closing Date, and shall ensure that any successor
or affiliate (except that Product Merchandisers, Inc., a corporation
wholly-owned by Seller ("PMI"), shall not be bound by or affected by this
Section 11.3 as to the designated territories as provided in the PMI Agreement
as defined in Section 11.11 hereof) shall not for a period of three (3) years
following the Closing Date, directly or indirectly, compete with Buyer in the
distribution of fasteners in North America (including without limitation the
United States, Mexico, Canada and Puerto Rico) or acquire any equity interest
greater than 1% in any business or organization which, directly or indirectly,
competes with Buyer in such business.
(b) Seller covenants and agrees that without the Buyer's
prior written consent it shall not, and shall ensure that its successors and
affiliates shall not: (i) hire any of the Sharon Business employees
referenced on Schedule 5.15 for a period of one (1) year following termination
of such employee's employment; or (ii) terminate the employment of any of its
employees whose names appear on Schedule 11.3 for a period of ninety (90) days
following the Closing Date.
(c) Buyer covenants and agrees that without Seller's prior
written consent it shall not, and shall ensure that its successor and
affiliates shall not, hire any of Seller's employees for a period of one year
following termination of such employee's employment.
(d) The parties hereto agree that damages at law,
including, but not limited to, monetary damages, will be an insufficient remedy
to Buyer and Seller respectively in the event that the restrictive covenants of
subparagraphs (a), (b) and (c) of this Section 11.3 are violated and that, in
addition to any remedies or rights that may be available to Buyer and Seller
respectively, all of which other
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remedies or rights shall be deemed to be cumulative, retained by Buyer and
Seller respectively and not waived by the enforcement of any remedy available
hereunder, including, but not limited to, the right to sue for monetary
damages, Buyer and Seller shall also be entitled, upon application to a court
of competent jurisdiction, to obtain injunctive relief, to enforce the
provisions of this Section 11.3 as well as an equitable accounting of all
profits or benefits arising out of any such violation, all of which shall
constitute rights and remedies to which Buyer and Seller may be entitled.
11.4. ESCROW AGREEMENT. To secure Buyer's rights under
this Agreement, on the Closing Date, Buyer, Seller, and Fleet National Bank or
some other mutually acceptable escrow agent (the "Escrow Agent") shall enter
into the Escrow Agreement (the "Escrow Agreement"), in the form attached hereto
as Exhibit 11.4.
11.5. EMPLOYEES BENEFITS. Except for those obligations
assumed by Buyer pursuant to Schedule 2.1(a) attached hereto, Seller shall be
responsible for the payment of all salaries, related costs (such as for federal
and state payroll taxes and workers compensation) and benefits (including, but
not limited to, vacation, and holiday pay) of Seller's employees accrued
through the Closing and shall retain all obligations and liabilities (i) under
any medical, dental, long-term disability and life insurance plans covering
Seller's employees for occurrences (whether or not reported) through the
Closing, (ii) for workers compensation claims for its employees that are
pending as of the Closing, and (iii) under the Worker Adjustment and Retraining
Notification Act (29 USC 2101). With respect to employees of Seller hired by
Buyer, such employees shall be immediately eligible for participation and
benefits (without regard to pre-existing conditions, if any) under Buyer's
health and medical benefit plans.
11.6. ACCOUNTS RECEIVABLE. All checks or other proceeds
received by Buyer in payment of accounts receivable due the Seller arising from
sales prior to the Closing shall be immediately turned over to the Seller in
the form received. All checks or other proceeds received by Seller in payment
of accounts receivable due the Buyer arising from sales subsequent to the
Closing shall be immediately turned over to the Buyer in the form received.
11.7. FURTHER ASSURANCES. Seller, from time to time after
the Closing, at Buyer's request, shall execute, acknowledge and deliver to
Buyer such other instruments of conveyance and transfer and shall take such
other actions and execute and deliver such other documents (including records),
certifications and further assurances as Buyer may request in order to vest
more effectively in Buyer or to put Buyer more fully in possession of, any of
the Assets, or to better enable Buyer to complete, perform or discharge any of
the Assumed Obligations or to carry on the former Sharon Business; provided,
that, in no event shall Seller be obligated to incur
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any liability for the payment of or pay any money in connection with such
efforts unless Buyer shall have previously agreed to reimburse Seller therefor.
11.8. BULK SALES LAW. Buyer hereby waives compliance by
Seller with any applicable bulk sales or bulk transfer law and Seller hereby
agrees that the provisions of Article XII shall apply to any losses, damages,
costs, charges or expenses which Buyer may sustain as a consequence of Seller
not complying with such bulk sales or bulk transfer laws.
11.9. PHOENIX FACILITY. Seller and Buyer will enter into
the form of Sublease with respect to the Phoenix facility attached hereto as
Exhibit 11.9 (the "Phoenix Sublease").
11.10. DATA PROCESSING SERVICES. Seller and Buyer will
enter into the form of Data Processing Services Agreement attached hereto as
Exhibit 11.10 (the "Data Processing Services Agreement").
11.11. PMI AGREEMENT. Buyer and PMI shall enter into the
form of Order Solicitation Agreement attached hereto as Exhibit 11.11 (the "PMI
Agreement").
11.12. MAKE RECORDS AVAILABLE. From and after the Closing
Date, Buyer and Seller will make available to the other, from time to time as
Buyer or Seller may reasonably request, copies of such of the books and records
transferred to Buyer by Seller, in the case of requests by Seller, or the books
and records of the Sharon Division retained by Seller, in the case of requests
by Buyer, pursuant to this Agreement as may be reasonably required to enable
Buyer or Seller, as the case may be to defend against or assert claims, and to
handle tax and financial audits.
ARTICLE XII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
--------------------------------------------
12.1. SURVIVAL OF REPRESENTATIONS. All representations and
warranties contained in this Agreement made by either party hereto, except for
those contained in Sections 5.14(d) and 5.20, shall survive until the second
anniversary of the Closing and shall terminate on such date; provided, however,
that the representations and warranties of Seller relating to taxes contained
in Section 5.20 hereof shall survive for the applicable statute of limitations
period, and that indemnification pursuant to Section 12.2(a)(vi) hereof shall
be for Damages claimed within six (6) months following the Closing.
12.2. INDEMNIFICATION. (a) Subject to the terms and
conditions of this Article XII, Seller hereby agrees to indemnify, defend and
hold harmless
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Buyer from and against any and all liabilities, judgments, claims, settlements,
losses, damages, fees, liens, penalties, obligations and expenses (including,
without limitation, reasonable attorneys, accountants, and other professional
fees and expenses) (collectively, "Damages"), to the extent in excess of
$50,000 in the aggregate (the "Basket") (subject to (iii) below), actually
incurred or suffered by Buyer, arising from, by reason of or in connection
with:
(i) any breach of any representation or warranty of Seller contained
in this Agreement (including the Schedules and Exhibits attached hereto), or
in any certificate, instrument or agreement delivered by Seller pursuant
hereto or in connection with the transactions contemplated hereby;
(ii) any failure by Seller to comply in all respects with any
covenant or agreement contained in this Agreement;
(iii) any liabilities or obligations of, or claims against, Seller or
Buyer, relating to Seller's business (whether absolute, accrued, contingent or
otherwise and whether a contractual, employee, tax or any other type of
liability, obligation or claim, including without limitation, the pending OSHA
claim (inspection no. 100975945) at the Milford, Massachusetts facility) which
are not assumed by Buyer pursuant to this Agreement, which shall be dollar for
dollar and not subject to the Basket;
(iv) non-compliance with the provisions of the "bulk sales
laws" of any jurisdiction which may be applicable to the transactions
contemplated hereby;
(v) failure to obtain any consent as required under the Assumed
Contracts or Leases to the extent Buyer elects to close absent such consent; and
(vi) credits granted by Buyer in favor of any customers for any
defective inventory sold by Seller to such customers prior to the Closing Date.
Provided, however, that Seller shall not be liable for
Damages hereunder in excess of the Purchase Price, except for environmental and
products liability claims relating to the conduct of the Sharon Business by
Seller prior to the Closing Date which shall not be subject to this limitation
as to Damages.
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(b) Subject to the terms and conditions of this Article
XII, Buyer hereby agrees to indemnify, defend and hold harmless Seller from and
against any and all Damages actually incurred or suffered by Seller, arising
from, by reason of or in connection with:
(i) any material breach of any representation or warranty of Buyer
contained in this Agreement (including the Schedules and Exhibits attached
hereto), or in any certificate, instrument or agreement delivered by Buyer
pursuant hereto or in connection with the transactions contemplated hereby;
(ii) any failure by Buyer to comply in all material respects with any
covenant or agreement contained in this Agreement;
(iii) any failure of Buyer to pay, perform and discharge when due the
Assumed Obligations and Buyer's share of the Shared Liabilities; and
(iv) any liabilities or obligations of, or claims against, Seller or
Buyer, relating to Buyer's business and arising by reason of acts or omissions
of Buyer occurring after the Closing Date, which shall be dollar for dollar and
not subject to the Basket.
12.3. CONDITIONS OF INDEMNIFICATION GENERALLY. The
respective obligations and liabilities of Seller, on the one hand, and Buyer,
on the other hand (the "indemnifying party"), to the other (the "party to be
indemnified") under Section 12.2 hereof (including with respect to claims
resulting from the assertion of liability by third parties) shall be subject to
the following terms and conditions:
(a) the amount of any Damages incurred by the party to be indemnified
shall be reduced by the net amount the party to be indemnified recovers (after
deducting all attorneys' fees, expenses and other costs of recovery) from any
insurer or other party liable for such Damages, and the party to be indemnified
shall use reasonable efforts to effect such recovery and shall promptly pay to
the indemnifying party any insurance subsequently received by the party to be
indemnified with respect to Damages already paid by the indemnifying party;
(b) in connection with any such indemnification, the party to be
indemnified will cooperate with all reasonable requests of the indemnifying
party;
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(c) no party to be indemnified shall seek indemnification
under this Article XII until the date all unreimbursed claims under
this Article XII (except as otherwise provided in Section 12.2(a)(iii)
hereof) shall exceed the Basket, in which case the party to be
indemnified shall be entitled to indemnity for the full amount of such
unreimbursed claims;
(d) the indemnification and reimbursement obligations set
forth in this Article XII shall expire on the second anniversary of
the Closing as to any claim not asserted by such date, except as
otherwise provided in Section 12.1 hereof, and except as to
representations and warranties that survive longer pursuant to such
Section 12.1 (with such indemnification and reimbursement obligations
to expire when such representations and warranties terminate); and
(e) the party to be indemnified shall provide (except with
respect to notice of claims resulting from the assertion of liability
by third parties, which shall be subject to the terms and conditions
of Section 12.4 hereof) prompt notice to the indemnifying party of any
Damages for which indemnification may be provided under Section 12.2
hereof.
12.4. CONDITIONS OF INDEMNIFICATION FOR THIRD PARTY CLAIMS.
The obligations and liabilities of any indemnifying party to the party to be
indemnified under Section 12.2 hereof with respect to claims resulting from the
assertion of liability by third parties shall be subject to the following terms
and conditions:
(a) within 20 days after receipt of notice of commencement
of any action or the assertion in writing of any claim by a third
party, the party to be indemnified shall give the indemnifying party
written notice thereof together with a copy of such claim, process or
other legal pleading; PROVIDED, HOWEVER, that the failure so to notify
the indemnifying party shall not discharge the indemnifying party of
its obligations hereunder except in the event such failure to notify
adversely affects such indemnifying party; and
(b) the indemnifying party shall have the right to
undertake the defense of such third party action by representatives of
its own choosing, and shall have the right to compromise or settle the
same; PROVIDED, HOWEVER, in the event that the indemnifying party, by
the 30th day after receipt of notice of any such claim does not elect
to defend against such claim, the party to be indemnified will (upon
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further notice to the indemnifying party) have the right to undertake
the defense, compromise or settlement of such claim on behalf of and
for the account and risk of the indemnifying party, provided that the
indemnifying party shall be given written notice at least 15 days
prior to the effectiveness of any such proposed settlement or
compromise, subject to the right of the indemnifying party to assume
the defense of such claim at any time prior to settlement,
compromise or final determination thereof.
(c) no party shall be entitled to indemnification hereunder
to the extent that the party seeking such indemnification (i) had
knowledge of the matter giving rise to the purported claim for
indemnification prior to the Closing Date and (ii) failed to provide
to the party from whom indemnification is being sought written notice
of such matter prior to the Closing Date.
ARTICLE XIII
TERMINATION
-----------
13.1. TERMINATION. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time on or prior to the Closing Date.
(a) by the written mutual consent of Buyer and Seller;
(b) by Buyer if any of the conditions set forth in
Article X of this Agreement have become incapable of fulfillment on or before
the Closing Date;
(c) by Seller if any of the conditions set forth in
Article IX of this Agreement have become incapable of fulfillment on or before
the Closing Date; or
(d) by Sellers or by Buyer if any action, suit, or
proceeding before any court or other governmental body or agency has been
instituted to restrain, modify, or prohibit the transactions contemplated
hereby, and either Sellers or Buyer deems it inadvisable for that reason to
proceed with such transaction.
If this Agreement is terminated in a manner permitted by
subsections (a)-(d) of this Section 13.1 (other than, in the case of (b) or
(c), where the non-fulfillment of the terminating party's closing conditions
results from the breach of this Agreement by Seller, in the case of (c), or by
Buyer, in the case of (b)), and the transactions contemplated hereby are not
consummated as described above, this Agreement will become void and of no
further force and effect, and
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neither of the parties hereto will have any liability to the other party in
respect of a termination of this Agreement.
ARTICLE XIV
DISPUTE RESOLUTION
------------------
14.1. ARBITRATION. Except for disputes in respect of the
determination of the Closing Inventory Valuation, which disputes shall be
resolved in accordance with the provisions of Section 4.4(c) hereof, if from
time to time there is a dispute or disputes arising under, out of or in
connection with the making, the performance or the execution of this Agreement
or any agreements contemplated hereby or the performance of its or their
respective terms, including the indemnification provisions included herein, and
the aggregate dollar amount of such dispute or disputes is greater than
$50,000, then such dispute(s) shall be submitted to the American Arbitration
Association in Providence, Rhode Island for arbitration. Any such arbitration
shall be conducted in accordance with the principles set forth in this Article
XIV and the rules of the American Arbitration Association or such other
principles as to which the parties may then mutually agree.
14.2. DEMAND FOR ARBITRATION. Upon written demand of
either party, the parties shall meet and attempt to appoint a single
arbitrator. If the parties are unable to agree on a arbitrator, or if one of
the parties fails to meet within ten (10) days of a written demand being
forwarded, then either party may apply to have the arbitrator appointed by the
American Arbitration Association.
14.3. QUALIFICATIONS. The arbitrator selected to act
hereunder shall be qualified by education or training to pass upon the
particular question or questions in dispute. No arbitrator shall be an
officer, director, employee, agent or consultant of either party or any of its
respective affiliates.
14.4. DECISIONS FINAL. The decision of the arbitrator
shall be in writing and signed by the arbitrator and shall be final and binding
upon the parties as to any question or questions so submitted to arbitration
and the parties shall be bound by such decision and perform the terms and
conditions thereof. Any such decision shall be enforceable as a final judgment
in any court of competent jurisdiction.
14.5. COMPENSATION OF ARBITRATOR. The compensation and
expenses of the arbitrator (unless determined by the arbitrator to be payable
by the non-prevailing party or in some other manner) shall be paid in equal
proportions by Buyer and Seller. Furthermore, any out- of-pocket expenses
incurred by either party to obtain the appointment of an arbitrator pursuant to
Section 14.2 hereof shall be shared equally by Buyer and Seller.
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14.6. PERFORMANCE TO CONTINUE. All performance required by
either party under this Agreement shall continue during arbitration
proceedings.
14.7. AGREEMENT CONTROLLING. The arbitrator shall not
amend, but shall only be authorized to interpret the provisions of, this
Agreement. In all respects not provided for elsewhere in this Section 14, the
rules of the American Arbitration Association shall govern any dispute
hereunder submitted to arbitration. If there is a conflict between the
provisions of this Agreement and such rules, the provisions of this Agreement
shall prevail.
ARTICLE XV
MISCELLANEOUS
-------------
15.1. EXPENSES; TRANSFER TAXES. All fees, costs and
expenses incurred by the parties in connection with, relating to or arising out
of the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, legal and accounting fees and expenses, shall be borne by the party
incurring same. Any sales and use taxes and any registration, recording or
transfer taxes which may be payable in connection with the transactions
contemplated by this Agreement shall be borne by Seller. Buyer shall furnish
Seller with all applicable sales tax exemption certificates. All costs
incurred in obtaining consents or approvals of third parties to the transfer
and assignment of the Leases and the Assigned Contracts, and all costs of
complying with any conditions imposed by such third parties in order to obtain
such consents or approvals, shall be borne by Seller.
15.2. PARTIES IN INTEREST. No party may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party. This Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the respective successors, heirs, legal
representatives, and assigns of the parties hereto. This Agreement constitutes
an agreement between the parties hereto and none of the agreements, covenants,
representations or warranties contained herein shall be for the benefit of any
third party not a party to this Agreement, except as expressly permitted
herein.
15.3. ENTIRE AGREEMENT; AMENDMENTS. This Agreement
(including the Schedules and Exhibits attached hereto), and the other writings
referred to herein or delivered pursuant hereto contain the entire
understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to the subject matter hereof except for the agreement set
forth on Exhibit 15.3 attached hereto. This Agreement may be amended only by a
written instrument duly executed by the parties.
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15.4. HEADINGS. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
15.5. NOTICES. All notices, claims, certificates,
requests, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally, by facsimile
or mailed (by registered or certified mail, return receipt requested and
postage prepaid) as follows:
If to Seller, to:
American Consumer Products, Inc.
31100 Solon Road
Solon, Ohio 44139
Attn: Stephan W. Cole
Fax No. (216) 248-8051
With a copy to:
Thompson, Hine and Flory
1100 National City Bank Building
Cleveland, Ohio 44114
Attn: Richard E. Streeter, Esquire
Fax No. (216) 566-5583
If to Buyer, to:
Pawtucket Fasteners, Inc.
327 Pine Street
Pawtucket, RI 02862
Attn: David M. Hirsch
Fax No. (401) 725-0817
With a copy to:
Roberts, Carroll, Feldstein & Peirce
Ten Weybosset Street
Providence, RI 02903
Attn: Edward D. Feldstein, Esquire
Fax No. (401) 521-1328
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or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been given, in the case of personal
delivery, on the date of delivery, and in the case of mailing or facsimile
delivery, on the day on which the piece of mail containing such communication
is received if such receipt in the case of a facsimile is prior to the close of
business, i.e. 5:00 p.m. on a business day.
15.6. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
15.7. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Rhode Island.
15.8. WAIVERS. Any party to this Agreement may, by written
notice to the other party, waive any provision of this Agreement. 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.
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15.9. NO DISCLOSURE OF AGREEMENT; PRESS RELEASES. Except
as required by law or the rules and regulations of the Securities Exchange
Commission or any securities exchange, neither Buyer nor Seller shall disclose
the Purchase Price or other terms and conditions of this Agreement to anyone
other than their employees, accountants, lenders and agents involved in the
negotiation and preparation of this Agreement, without obtaining the prior
written consent of the other parties to this Agreement. The parties shall
mutually agree upon the language of any press releases issued in connection
with the execution of this Agreement and shall consult with each other
regarding the language and timing of issuance of any press release regarding
the consummation of the transactions contemplated hereby.
15.10. DEFINITION OF KNOWLEDGE. When used in this
Agreement, the phrase "to the best of Seller's knowledge" or similar language,
means the actual knowledge of Stephan W. Cole, Richard F. Bern, Joel M. Falck,
Cynthia L. Burmeister, and Diana Gilman, without giving effect to imputed
knowledge.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered on the date first above written.
WITNESS: SELLER:
------
AMERICAN CONSUMER PRODUCTS, INC.
/s/Mark Alperin By: /s/Stephan W. Cole
- ------------------------------- ---------------------------------
Stephan W. Cole, President
BUYER:
-----
PAWTUCKET FASTENERS, L.P.
By PAWTUCKET FASTENERS, INC.,
its General Partner
/s/Mark Alperin By: /s/David M. Hirsch
- ------------------------------- ---------------------------------
David M. Hirsch, President
<PAGE> 1
EXHIBIT 99
June 23, 1995
Page 1 of 2
AMERICAN CONSUMER PRODUCTS, INC.
ANNOUNCES THE SALE OF ITS
SHARON FASTENER DIVISION
American Consumer Products, Inc., Solon, Ohio, announced today that it
has sold substantially all of the assets of its Sharon Fastener division to
Pawtucket Fasteners, L.P. of Pawtucket, Rhode Island.
Originally established in 1949, Sharon is a well-known name in the
hardware industry and offers a wide range of nut, bolt and screw products sold
in package sizes designed for the needs of do-it-yourself consumers and
contractors.
Sharon's products will continue to be sold and serviced by ACPI's
chain sales managers, national field sales force and telemarketing department
and distributed to hardware, mass merchandise and DIY retailers across the
United States.
American Consumer Products, Inc. will receive a net cash purchase
price of approximately $6,900,000 and will retain Sharon Fastener accounts
receivable. In the fiscal year ended December 31, 1994, the Sharon Fastener
division generated revenues of approximately $12,900,000.
Stephan W. Cole, President of American Consumer Products, Inc., said,
"The divestiture of the Sharon Fastener division will enable the Company to
focus on the operation of its remaining businesses, including the rollout of
its new Cole(R) key duplicating program and the implementation of its new
operating systems."
Pawtucket Fasteners, L.P. manufactures and distributes industrial
fasteners through its Bell, Stillwater and Atlas divisions and consumer
fasteners through its Philstone division. Pawtucket's products are sold
primarily to industrial and hardware distributors across the United States and
Canada. Founded in 1882, Pawtucket Fasteners is one of the oldest operating
fastener companies in the United States.
<PAGE> 2
June 23, 1995 Page 2 of 2
American Consumer Products manufactures and distributes consumer
hardware products through its Cole division and pet products through its Warren
Pet division. The Company's products are sold primarily to hardware, mass
merchandise and DIY retailers across the United States. 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.
The Company's shares are traded on the over-the-counter National
Market System under the NASDAQ symbol ACPI.
Contact: Mr. Stephan W. Cole, President
American Consumer Products, Inc.
31100 Solon Road
Solon, Ohio 44139
