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):
February 6, 1995
Harrow Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-9440 52-1499045
(State or other jurisdiction (Commission (IRS Employer
of incorporation or File No. Identification No.
organization)
2627 East Beltline, S.E., Grand Rapids, Michigan 49546
(Address of principal executive offices)
(616)942-1440
(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Following the execution of an Asset Purchase Agreement dated
as of February 6, 1995 (the "Agreement") between Harrow Products,
Inc., a wholly-owned subsidiary of the Registrant ("Harrow
Products") and Milcor Limited Partnership, a Delaware limited
partnership ("Milcor"), Harrow Products completed the sale to
Milcor of substantially all of the assets of its Leigh Products
Division, including all of the issued and outstanding capital
stock of Leigh Metal Products Ltd., an Ontario corporation and
its wholly-owned subsidiary. Immediately prior to the
consummation of the transactions contemplated by the Agreement,
the real property held by the Canadian subsidiary was transferred
to an indirect subsidiary of Registrant. The determination of
the purchase price was a result of arms-length negotiation. It
is anticipated that the cash purchase price will be approximately
Six Million Eight Hundred Thousand Dollars ($6,800,000), plus the
aggregate amount of Accounts Payable, Accrued Expenses and
Accrued Taxes (as such terms are defined in the Agreement),
subject to adjustment pursuant to the terms of the Agreement
which will be based on an audited Closing Balance Sheet to be
prepared as of February 6, 1995. The sale is expected to result
in a gain.
There were no material relationships between Milcor and the
Company or any of its affiliates, directors, officers or
associates of any such director or officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Pro Forma Condensed Financial Information
The pro forma financial information shall be filed by
Registrant on Form 8 as soon as practicable, but not later than
April 22, 1995.
(b) Exhibits
Asset Purchase Agreement dated as of February 6, 1995,
between Harrow Products and Milcor.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the reporting person has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
HARROW INDUSTRIES, INC.
(Registrant)
February 21, 1995 By: /s/ Gary Humphreys
Gary Humphreys
Vice President/
Corporate Controller
ASSET PURCHASE AGREEMENT
DATED AS OF FEBRUARY 6, 1995
BETWEEN
HARROW PRODUCTS, INC., AS SELLER
AND
MILCOR LIMITED PARTNERSHIP, AS PURCHASER
TABLE OF CONTENTS
ARTICLE I
Purchase and Sale of Assets 1
1.1 Agreement to Purchase and Sell 1
1.2 Enumeration of Purchased Assets 2
1.3 Excluded Assets 4
ARTICLE II
Assumption and Discharge of Liabilities 5
2.1 Agreement to Assume and Discharge5
2.2 Description of Assumed Liabilities 6
2.3 Excluded Subsidiary Liabilities 7
2.4 No Expansion of Third Party Rights 7
ARTICLE III
Purchase Price. Manner of Payment and Closing 7
3.1 Purchase Price 7
3.2 Adjustment to the Purchase Price 8
3.3 Time and Place of Closing 8
3.4 Manner of Payment of the Purchase Price 8
3.5 Determination of Net Equity Value 9
3.6 Disputes Regarding Closing Balance Sheet 11
3.7 Allocation of Purchase Price 12
ARTICLE IV
Representations and Warranties 12
4.1 General Statement 12
4.2 Purchaser's Representations and Warranties 13
4.3 Seller's Representations and Warranties 14
ARTICLE V
Closing 41
5.1 Form of Documents 41
5.2 Purchaser's Deliveries 41
5.3 Seller's Deliveries 42
5.4 Joint Deliveries 45
ARTICLE VI
Post-Closing Agreements 45
6.1 Post-Closing Agreements45
6.2 Inspection of Records 45
6.3 Certain Assignments 46
6.4 Use of Trademarks; References to Seller 46
6.5 Employees 46
6.6 Back-Up 46
6.7 Accounts Receivable 47
6.8 Third Party Claims 47
6.9 Product Warranties 47
6.10 Sales and Transfer Taxes and Fees 48
6.11 Reproration of Real Estate Taxes 48
6.12 Covenant Not to Compete 48
6.13 Disclosure of Confidential Information 49
6.14 Injunctive Relief 51
6.15 Further Assurances 51
6.16 knowledge 51
ARTICLE VII
Indemnification52
7.1 General 52
7.2 Certain Definitions 52
7.3 Indemnification Obligations of Seller 52
7.4 Purchaser's Indemnification Covenants 54
7.5 Limitations on Seller's Indemnification Obligations 55
7.6 Limitations on Purchaser's Indemnification Obligations 57
7.7 Third Party Claims Procedures 57
ARTICLE VIII
Miscellaneous 60
8.1 Publicity 60
8.2 Notices 60
8.3 Expenses 62
8.4 Entire Agreement62
8.5 Non-Waiver 62
8.6 Counterparts 62
8.7 Severability 62
8.8 Applicable Law 62
8.9 Arbitration 63
8.10 Binding Effect; Benefit 63
8.11 Assignability 63
8.12 Amendments 63
8.13 Headings 63
8.14 Definitions64
EXHIBITS
Exhibit A - Opinion of Altheimer & Gray
Exhibit B - Opinion of Curtis, Mallet-Prevost, Colt & Mosle
Exhibit C - Opinion of Siskind, Cromarty, Ivey & Dowler
Exhibit D - Lease of Portion of Coopersville Real Estate
Exhibit E - Lease of Canadian Real Estate
SCHEDULES
Schedule 1.2(b) - Certain Computer Hardware
Schedule 1.2(k) - Certain Software
Schedule 1.3(c) - Excluded Contracts with Seller's
Affiliates
Schedule 1.3(d) - Certain Excluded Assets
Schedule 1.3(j) - Other Excluded Assets
Schedule 3.7 - Allocation of Purchase Price
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of February 6, 1995,
between HARROW PRODUCTS, INC., a Delaware corporation ("Seller"),
and MILCOR LIMITED PARTNERSHIP, a Delaware limited partnership
("Purchaser").
RECITALS
A. Seller, through its Leigh Products Division (the
"Division"), and Leigh Metal Products Ltd., an Ontario corporation
(the "Subsidiary"), a wholly-owned subsidiary of Seller, are
engaged in the business of manufacturing and distributing
registers, ventilation products, bath cabinets, mail boxes and
other related products (the "Business"). Seller and the Subsidiary
are each sometimes referred to herein as a "Company" and,
collectively, as the Companies.
B. Seller desires to sell to Purchaser substantially all of
Seller's assets and business of the Division, including all of the
issued and outstanding shares of capital stock of the Subsidiary,
and Purchaser desires to purchase said assets and business, all on
the terms and subject to the conditions contained in this
Agreement.
AGREEMENTS:
Therefore, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
Purchase and Sale of Assets
1.1 Agreement to Purchase and Sell. On the terms and subject
to the conditions contained in this Agreement, Purchaser agrees to
purchase from Seller, and Seller agrees to sell to Purchaser, all
of the assets, properties, rights and business as a going concern
as of the Closing Date (as herein defined), of whatever kind or
nature and wherever situated or located and whether reflected on
Seller's books and records or previously written-off or otherwise
not shown on Seller's books and records, of Seller which are used
in or relate to the conduct of the Business (other than the items
set forth in Section 1.3 (the "Excluded Assets")), free and clear
of any liens, claims, encumbrances, security interests, options,
proxies, voting trusts, voting agreements, pledges, charges,
escrows, rights of first refusal or first offer ("Encumbrances"),
other than Permitted Encumbrances (as herein defined). All of said
assets, properties, rights and business (other than the Excluded
Assets) are collectively referred to in this Agreement as the
"Purchased Assets".
1.2 Enumeration of Purchased Assets. The Purchased Assets
include, without limitation, the following items of the Division
which are used or useable in the conduct of the Business:
(a) all inventory (including, without limitation, raw
materials, work in process and finished goods) (collectively, the
"Inventory");
(b) all furniture, fixtures, equipment (including office
equipment), machinery, supplies, parts, computer hardware (to the
extent set forth on Schedule 1.2(b) attached hereto), tools, dies,
jigs, patterns, molds, automobiles and trucks (including those set
forth on Schedule 1.2(b)) and all other tangible personal property
(other than the Inventory) including, without limitation, any of
the foregoing which has been fully depreciated (collectively, the
"Equipment");
(c) that certain real property commonly known as 411 64th
Avenue, Coopersville, Michigan (the "Coopersville Real Estate"),
and all appurtenances, easements and other rights, buildings and
other improvements located thereon or relating thereto and used in
the conduct of the Business;
(d) all leasehold interests and leasehold improvements
created by all leases of personal property (including, without
limitation, automobiles used by Seller's officers and employees
employed by the Business) under which Seller is a lessee or lessor
(including those set forth on Schedule 1.2(d)) (all property which
Seller is leasing as lessee is referred to herein as the "Leased
Personalty");
(e) all trade accounts receivable, notes receivable,
negotiable instruments and chattel paper (collectively, the
"Accounts Receivable");
(f) all deposits and rights with respect thereto and all
rebates due from vendors;
(g) subject to Section 6.3, all contracts, claims and rights
(and benefits arising therefrom) with or against all persons
whomsoever (other than contracts which are specified in Section
1.3(e)), including, without limitation, all rights against
suppliers under warranties covering any of the Inventory or
Equipment and all Permits (as herein defined) and Environmental
Permits (as herein defined);
(h) all sales orders and sales contracts, purchase orders and
purchase contracts, quotations and bids;
(i) all intellectual property rights, including, without
limitation, patents and applications therefor, know-how, unpatented
inventions, trade secrets, secret formulas, business and marketing
plans, copyrights and applications there for, trademarks and
applications therefor, service marks and applications therefor,
trade names and applications therefor, trade dress, and names and
slogans used by the Business (including, without limitation, the
names "Leigh Products" and "Leigh Metal Products"), and all
goodwill associated with such intellectual property rights, other
than items of the foregoing description included within the assets
described in Section 1.3(d);
(j) all of the issued and outstanding shares of capital stock
of the Subsidiary, consisting of 1,999 common shares, no par value
(the "Subsidiary Shares");
(k) subject to Section 6.3 and except for contracts specified
in Section 1.3(e), all license agreements, sales representative and
sales agency agreements, distribution agreements, service
agreements, supply agreements, franchise agreements, computer
software and related software agreements and technical service
agreements (to the extent such license agreements, computer
software and related software agreements and technical service
agreements are set forth on Schedule 1.2(k));
(1) all customer lists, customer records and information;
(m) all books and records, including, without limitation,
blueprints, drawings and other technical papers, payroll, accounts
receivable and payable, inventory,.. maintenance, and asset history
records, ledgers, and books of original entry, all insurance
records and OSHA and EPA files; provided, however, that to the
extent any such books and records do not solely relate to the
Division, the Purchased Assets shall only include those which
primarily relate to the Division (as to which Seller may retain
copies) and Seller may retain any other such documents and shall
deliver copies thereof to Purchaser;
(n) all insurance policies and rights thereunder other than
those which constitute Excluded Assets;
(o) all rights in connection with prepaid expenses with
respect to the assets being sold hereunder;
(p) all letters of credit;
(q) to the extent set forth on Schedule 1.2(k), all computer
software, including all documentation and source codes with respect
to such software and, subject to Section 6.3, licenses and leases
of software;
(r) all sales and promotional materials, catalogues and
advertising literature; and
(s) subject to Section 6.3, all telephone numbers' and all
lock boxes to which the Division's account debtors remit payments.
1.3 Excluded Assets. Notwithstanding the enumeration of the
Purchased Assets set forth in Section 1.2, the Excluded Assets
shall consist of the following assets of Seller relating to the
Business:
(a) all of the Division's cash on hand and in banks, cash
equivalents (exclusive of letters of credit issued by customers of
the Division), and investments;
(b) the Division's checkbooks and cancel led checks;
(c) those contracts with Seller's Affiliates (as herein
defined) if any, set forth on Schedule 1.3(c) attached hereto;
(d) the personal property used as of the date hereof
primarily in connection with Seller's management information
services (MIS) department at the Coopersville Real Estate,
including, without limitation, that listed on Schedule 1.3(d)
attached hereto, exclusive of items of personal property set forth
on Schedules 1.2(b) and
(e) rights of Seller under (i) contracts and agreements with
the Division's employees, (ii) contracts and agreements exclusively
relating to Seller's management information services (MIS)
department at the Coopersville Real Estate, and (iii) that certain
Agreement for Purchase and Sale of Assets dated October 11, 1993
between Seller and Field Controls Division of Heico, Inc.;
(f) rights in and to claims and litigation (and in each case
benefits to the extent they arise therefrom) against third parties
to the extent such claims and litigation are not in any way related
to the Purchased Assets or the Assumed Liabilities (as herein
defined), and rights in and to claims and litigation (and benefits
to the extent they arise therefrom) that relate to Excluded Seller
Liabilities (as herein defined);
(g) insurance policies of Seller and rights in connection
therewith, except to the extent that prior to the Closing (as
herein defined), Purchaser elects, by written notice delivered to
Seller, to accept assignments of any of such insurance policies and
such policies relate solely to the Division or the Subsidiary;
(h) rights arising from any refunds due with respect to
insurance premium payments to the extent they relate to insurance
policies which constitute Excluded Assets; and
(i) the assets, if any, described on Schedule 1.3(i).
ARTICLE II
Assumption and Discharge of Liabilities
2.1 Agreement to Assume and Discharge. At the Closing,
Purchaser shall (i) assume and agree to discharge and perform when
due all of the liabilities of Seller (and only those liabilities of
Seller) with respect to the Business which are enumerated in
Section 2.2 (the "Assumed Liabilities"), and (ii) cause the
Subsidiary to discharge and perform when due all of the liabilities
of the Subsidiary not constituting Excluded Subsidiary Liabilities
(as herein defined). All claims against and liabilities and
obligations of Seller which are not specifically assumed by
Purchaser pursuant to Section 2.2, are collectively referred to
herein as the "Excluded Seller Liabilities." Seller shall pay and
discharge all of the Excluded Seller Liabilities in the ordinary
course of business consistent with Seller's past practices, and
shall hold Purchaser harmless from and against all of the Excluded
Seller Liabilities. The Excluded Seller Liabilities shall not
include the liabilities and obligations of Purchaser for which
Purchaser agrees to indemnify Seller pursuant to Section 7.4.
2.2 Description of Assumed Liabilities. The Assumed
Liabilities shall consist of the following, and only the following,
liabilities of Seller with respect to the Division:
(a) trade accounts payable as of the Closing Date to the
extent incurred in the ordinary course of business of the Division
and set forth on the books and records of the Division as of the
Closing Date or set forth on the Closing Balance Sheet (as herein
defined) (the "Accounts Payable");
(b) all accrued and unpaid expenses as of the Closing Date to
the extent incurred in the ordinary course of business of the
Division and set forth on the books and records of the Division as
of the Closing Date or set forth on the Closing Balance Sheet (the
"Accrued Expenses"), including, without limitation, accrued
salaries, gainsharing (without any implication that Purchaser would
be required to offer any gainsharing or similar program to its
employees following the Closing), wages and vacation pay with
respect to employees of the Division and expenses with respect to
temporary employees of the Division;
(c) liabilities and obligations of Seller under any purchase
order, sales order, lease, license, agency and distributorship
agreement or other agreement or commitment of any kind (w) by which
Seller is bound on the Closing Date, (x) which is assigned to
Purchaser pursuant to this Agreement, and (y) is either (i) set
forth on Schedule 4.3(u) of the Disclosure Schedule (as herein
defined) or (ii) was made in the ordinary course of business and is
not required to be set forth on the Disclosure Schedule (but, in
each case, only to the extent such liabilities and obligations
relate to performance after the Closing Date);
(d) liabilities and obligations of Seller under any Permits
and Environmental Permits which (x) are assigned or transferred to
Purchaser pursuant to the provisions hereof and (y) are either (i)
set forth on Schedule 4.3(w) or 4.3(ff) of the Disclosure Schedule
or (ii) were issued in the ordinary course of business and are not
required to be set forth on the Disclosure Schedule (but, in each
such case, only to the extent such liabilities and obligations
relate to performance after the Closing Date); and
(e) all liabilities with respect to real estate taxes as to
the Coopersville Real Estate which are accrued as of the Closing
Date, and all liabilities for FICA, payroll, withholding or other
employment-related taxes, sales and use taxes, to the extent set
forth in the Closing Balance Sheet, subject, however, to
reproration of real estate taxes as set forth in Section 6.11
hereof (the "Assumed Taxes"). To the extent Seller pays any of the
Assumed Taxes, Purchaser shall promptly reimburse Seller there for.
2.3 Excluded Subsidiary Liabilities. Notwithstanding
Purchaser's acquisition of the Subsidiary Shares, for purposes of
this Agreement, all liabilities of the Subsidiary of any type,
whether accrued, fixed, contingent or otherwise (including, without
limitation, liabilities related to the employment of the
Subsidiary's employees), other than the liabilities expressly
retained by the Subsidiary described in this Section 2.3, shall be
deemed to be "Excluded Subsidiary Liabilities". For purposes of
this Agreement, following the consummation of the transactions
contemplated by this Agreement, the Subsidiary shall retain only
the following liabilities (collectively, the "Retained Subsidiary
Liabilities"): (i) liabilities of the Subsidiary reflected on the
Closing Balance Sheet, exclusive of the notes thereto, to the
extent reflected thereon, and (ii) liabilities arising under the
Pension Plan for Designated Employees of Leigh Metal Products Ltd.
Seller shall hold Purchaser and the Subsidiary harmless from and
against the Excluded Subsidiary Liabilities. Purchaser and the
Subsidiary shall hold Seller harmless from and against the Retained
Subsidiary Liabilities.
2.4 No Expansion of Third Party Rights. Neither the
assumption by Purchaser of the Assumed Liabilities, nor Seller's
indemnification of Purchaser and the Subsidiary with respect to the
Excluded Subsidiary Liabilities, shall expand the rights or
remedies of any third party against Purchaser or Seller as compared
to the rights and remedies which such third party would have had
against Seller had Purchaser not assumed the Assumed Liabilities,
or against the Subsidiary had Seller not so indemnified Purchaser
and the Subsidiary. Without limiting the generality of the
preceding sentence, neither the assumption by Purchaser of the
Assumed Liabilities, nor Seller's indemnification of Purchaser and
the Subsidiary with respect to the Excluded Subsidiary Liabilities,
shall create any third party beneficiary rights. '
ARTICLE III
Purchase Price. Manner of Payment and Closing
3.1 Purchase Price. Subject to adjustment pursuant to
Section 3.2, the "Purchase Price" of the Purchased Assets shall be
equal to Eight Million One Hundred Thousand Dollars ($8,100,000)
(the "Cash Portion"), plus the aggregate book amount of the
Accounts Payable, Accrued Expenses and Accrued Taxes.
3.2 Adjustment to the Purchase Price. The Purchase
Price shall be reduced by the amount by which Six Million Two
Hundred and Fifty Thousand Dollars ($6,250,000) exceeds the Net
Equity Value (as defined herein). As used in this Agreement, the
Net Equity Value shall be the amount by which (i) the aggregate
book amount of (A) the Purchased Assets, exclusive of the
Subsidiary Shares, plus (B) the Subsidiary's assets, exclusive of
the Canadian Real Estate (as defined in Section 4.3 (mm)), in each
case net of depreciation and amortization, exceeds (ii) the
aggregate book amount of (A) the Accounts Payable, Accrued Expenses
and Assumed Taxes, plus (B) the Retained Subsidiary Liabilities,
subject to the adjustments set forth in Section 3.5, all as
determined in accordance with this Article III and as shown on the
Closing Balance Sheet.
3.3 Time and Place of Closing. The transaction
contemplated by this Agreement shall be consummated (the "Closing")
at 10:00 a.m. at the offices of Altheimer & Gray, 10 South Wacker
Drive, Suite 4000, Chicago, Illinois, 60606, on the date hereof
(the "Closing Date"). The Closing shall be deemed to be effective
for all purposes under this Agreement as of 11:59 p.m., Central
Standard Time on the Closing Date at Chicago, Illinois (the
"Effective Time").
3.4 Manner of Pavement of the Purchase Price. For
purposes of the Closing, the parties shall make a good-faith
estimate of the Cash Portion (the "Estimated Cash Payment"), based
upon the most recent ascertainable financial information of the
Business. At the Closing:
(a) Purchaser shall assume the Assumed Liabilities; and
(b) Purchaser shall pay the Estimated Cash Payment to Seller,
by wire transfer to such account as Seller shall designate by
written notice delivered to Purchaser not later than three (3) days
prior to the Closing Date.
Following the Closing, the parties shall determine the final
Purchase Price, taking into account the adjustments required
pursuant to Section 3.5 and employing the procedures and criteria
set forth in Sections 3.5 and 3.6. If, based on the Purchase Price
as finally determined:
(c) the Cash Portion exceeds the Estimated Cash Payment,
Purchaser shall pay the excess to Seller;
(d) the Estimated Cash Payment exceeds the Cash Portion,
Seller shall pay the excess to Purchaser;
together with interest on such excess from the Closing Date to the
date of payment, at a rate of interest equal to the prime rate or
corporate base rate from time to time announced by Barclays
Business Credit, Inc. The payment required pursuant to the
preceding sentence shall be made within five (5) days of the final
determination of the Purchase Price pursuant to Section 3.5 and, if
applicable, Section 3.6.
3.5 Determination of Net Equity Value. The Net Equity
Value shall be determined from a statement which reflects only (a)
the Purchased Assets (to the extent required by generally accepted
accounting principles ("GAAP")), net of depreciation and
amortization, exclusive of the Subsidiary Shares, (b) the
Subsidiary's assets (to the extent required by GAAP), net of
depreciation and amortization, exclusive of the Canadian Real
Estate, (c) the Accounts Payable, Accrued Expenses and Assumed
Taxes, and (d) the Retained Subsidiary Liabilities, all as of the
Effective Time (the "Closing Balance Sheet"). The Closing Balance
Sheet shall be prepared by Seller and examined by Ernst & Young
(the "Accountants") at Seller's expense, and shall contain the
unqualified opinion of the Accountants, addressed to both Seller
and Purchaser. The Closing Balance Sheet shall be prepared in
accordance with GAAP, except as set forth in the remainder of this
Section 3.5, applied in a manner consistent with the accounting
principles applied in the preparation of the Financial Statements
(as herein defined) (to the extent the Financial Statements were
prepared in accordance with GAAP). Notwithstanding, or without
limitation, as the case may be, of the foregoing:
(a) the Closing Balance Sheet shall contain pro rata accruals
for utilities and like items, accrued salaries, wages, gainsharing
(if any) and vacation pay with respect to those employees of the
Companies who are employed in the conduct of the Business;
(b) Inventory shall be determined pursuant to a physical
count taken on January 30, 1995 and January 31, 1995 and rolled
forward to the Closing Date, and valued, on an item by item basis,
at the lower of the actual cost thereof or net realizable value (as
of the Closing Date) thereof, using the first in, first out method.
The net realizable value of inventory (including raw materials and
work-in-process) falling within the quantity categories set forth
below shall be deemed for purposes of this Agreement to be equal to
the cost of such inventory, reduced by the applicable percentage of
the cost of such inventory, as set forth below (the figure
resulting from such reduction being herein referred to as the
"Deemed NRV"); provided, however, that if the Deemed NRV exceeds
the actual net realizable value, the applicable inventory shall be
valued at the actual net realizable value.
Percentage
Quantity Discount
(i) Six months supply or 0%
less
(ii) Excess over six months 25%
supply, but less than
twelve months supply
(iii) Excess over twelve 50%
months supply, but less
than eighteen months
supply
(iv) Excess over eighteen 100%
months supply
All quantities as to which discounting shall be applied shall be
computed on the basis of historical usage or sales for the twelve
(12) month period immediately preceding the Closing;
(c) fixed assets of the Subsidiary shall be valued at $0; and
(d) the Closing Balance Sheet shall be prepared on the basis
that it is being prepared solely to be used in the computation of
the Purchase Price.
At Seller's option, Purchaser shall reconvey to Seller, at Seller's
expense, all of Purchaser's right, title and interest (or shall
cause the Subsidiary to do so) in any or all of the inventory
discounted 100%, once the Closing Balance Sheet becomes final and
binding upon the parties hereto pursuant to Section 3.6, by
delivering written notice to Purchaser specifying the applicable
inventory no later than ten (10) days after the Closing Balance
Sheet becomes final and binding, provided that Purchaser shall not
be required to retain any such inventory more than six (6) months
after the Closing Date, and may thereafter dispose of such
inventory in any manner it may elect. Seller shall be free to sell
or otherwise transfer any such reconveyed inventory at any price;
provided that Seller shall not use the Leigh name or any other
trade or service name or mark constituting a Purchased Asset in
connection with the sale or transfer of such inventory. In order
to effectuate the foregoing, Purchaser shall affix labels provided
by Seller (the cost of such labels to be borne by Seller) to the
inventory to be reconveyed. Seller shall cause the Closing Balance
Sheet to be delivered to Purchaser not later than forty-five (45)
days after the Closing Date. Seller shall cause the Accountants to
make available to Purchaser and Purchaser's accountants the
Accountants' work papers, and shall permit Purchaser and
Purchaser's accountants to observe the taking of the inventory.
3.6 Disputes Regarding Closing Balance Sheet. Disputes
with respect to the Closing Balance Sheet shall be dealt with as
follows:
(a) Purchaser shall have forty-five (45) days after receipt
of the Closing Balance Sheet and the accompanying Accountants'
opinion from Seller (the "Dispute Period") to dispute any of the
elements of or amounts reflected on the Closing Balance Sheet (a
"Dispute"). If Purchaser does not give written notice of a Dispute
within the Dispute Period to Seller (a "Dispute Notice"), the
Closing Balance Sheet shall be deemed to have been accepted and
agreed to by Purchaser in the form in which it was delivered by
Seller, and shall be final and binding upon the parties hereto. If
Purchaser has a Dispute, Purchaser shall give Seller a Dispute
Notice within the Dispute Period, setting forth in reasonable
detail the elements and amounts with which it disagrees. Within
thirty (30) days after delivery of such Dispute Notice, the parties
hereto shall attempt to resolve such Dispute and agree in writing
upon the final content of the disputed Closing Balance Sheet.
(b) If Purchaser and Seller are unable to resolve any Dispute
within the thirty (30) day period after Seller's receipt of a
Dispute Notice, the Chicago office of the certified public
accounting firm of Price Waterhouse (the "Arbitrating Accountant")
shall be engaged jointly by Seller and Purchaser as arbitrator
hereunder to settle such Dispute as soon as practicable. In the
event such firm is unwilling or unable to serve as the Arbitrating
Accountant, the parties hereto shall select by mutual agreement
another nationally recognized certified public accounting firm, who
is not rendering (and during the preceding two-year period has not
rendered) services to either Seller or Purchaser or any of their
respective Affiliates, to serve as the Arbitrating Accountant. In
connection with the resolution of any Dispute, the Arbitrating
Accountant shall have access to all documents, records, work
papers, facilities and personnel necessary to perform its function
as arbitrator. The Arbitrating Accountant's function shall be to
conform the Closing Balance Sheet to the requirements of Section
3.5. The arbitration before the Arbitrating Accountant shall be
conducted in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. The Arbitrating Accountant's
award with respect to any Dispute shall be final and binding upon
the parties hereto, and judgment may be entered on the award.
Seller and Purchaser shall each pay one-half of the fees and
expenses of the Arbitrating Accountant with respect to any Dispute.
Upon the resolution of all Disputes, the Closing Balance Sheet
shall be revised to reflect such resolution.
3.7 Allocation of Purchase Price. The Purchase Price
shall be allocated among the Purchased Assets in the manner
required by Section 1060 of the Code (as herein defined) and in
accordance with Schedule 3.7 hereto.
ARTICLE IV
Representations and Warranties
4.1 General Statement. The parties make the
representations and warranties to each other which are set forth in
this Article IV. All such representations and warranties and all
representations and warranties which are set forth elsewhere in
this Agreement and in any schedule (or attachment to such schedule)
or closing document delivered by a party hereto to the other party
pursuant to this Agreement or in connection herewith shall survive
the Closing (and none shall merge into any instrument of
conveyance) for the period set forth in Article VII, regardless of
any investigation or lack of investigation by any of the parties to
this Agreement. No specific representation or warranty shall limit
the generality or applicability of a more general representation or
warranty. All representations and warranties of Seller are made
subject to the exceptions which are noted in the schedule delivered
by Seller to Purchaser concurrently herewith and identified by the
parties as the "Disclosure Schedule", whether or not the text of
the relevant representations and warranties makes reference
thereto.
4.2 Purchaser's Representations and Warranties.
Purchaser represents and warrants to Seller that:
(a) Purchaser is a limited partnership duly organized,
existing and in good standing under the laws of the State of
Delaware.
(b) Purchaser has full power and authority to enter into and
perform its obligations arising under (x) this Agreement and (y)
all documents and instruments to be executed by Purchaser pursuant
to this Agreement (collectively, "Purchaser's Ancillary
Documents"). This Agreement has been, and Purchaser's Ancillary
Documents will be, duly executed and delivered by duly authorized
officers of Milcor Holdings, Inc., the general partner of
Purchaser. This Agreement and each of Purchaser's Ancillary
Documents constitute a valid and legally binding obligation of
Purchaser, enforceable against Purchaser in accordance with their
respective terms (except to the extent that enforcement may be
affected by laws relating to bankruptcy, reorganization, insolvency
and creditors' rights and by the availability of injunctive relief,
specific performance and other equitable remedies).
(c) No consent, authorization, order or approval of, or
filing or registration with, any governmental authority or other
person is required for the execution and delivery by Purchaser of
this Agreement and Purchaser's Ancillary Documents, and the
consummation by Purchaser of the transaction contemplated by this
Agreement and Purchaser's Ancillary Documents.
(d) Neither the execution and delivery of this Agreement and
Purchaser's Ancillary Documents by Purchaser, nor the consummation
by Purchaser of the transaction contemplated hereby or thereby,
will conflict with or result in a breach of any of the terms,
conditions or provisions of the Certificate of Limited Partnership
or the Amended and Restated Agreement of Limited Partnership of
Purchaser, or of any statute or administrative regulation, or of
any order, writ, injunction, judgment or decree of any court or
governmental authority or of any arbitration award binding upon
Purchaser.
(e) Purchaser is not a party to any unexpired, undischarged
or unsatisfied written or oral contract, agreement, indenture,
mortgage, debenture, note or other instrument under the terms of
which performance by Purchaser according to the terms of this
Agreement will be a default or an event of acceleration, or grounds
for termination, or whereby timely performance by Purchaser
according to the terms of this Agreement may be prohibited,
prevented or delayed (other than agreements and instruments with
Purchaser's lenders, as to which Purchaser has received waivers or
consents on or prior to the Closing Date].
4.3 Seller's Representations and Warranties. Seller
represents and warrants to Purchaser that, except as set forth in
the Disclosure Schedule:
CORPORATE
(a) Seller is a corporation duly organized, existing and in
good standing, under the laws of the State of Delaware. The
Subsidiary is a corporation duly organized, existing and in good
standing, under the laws of the Province of Ontario. Each of the
Companies has all necessary corporate power and authority to
conduct the Business as the Business is now being conducted.
(b) Each of the Companies has qualified as a foreign
corporation, and is in good standing, under the laws of all
jurisdictions where the nature of the Business or the nature or
location of its assets which are used in the Business requires such
qualification, except where the failure to so qualify would not
have a material adverse effect on the Business. All jurisdictions
in which the Companies are qualified as a foreign corporation are
set forth in the Disclosure Schedule.
(c) Seller has full corporate power and authority to enter
into and perform its obligations arising under (x) this Agreement
and (y) all documents and instruments to be executed by Seller
pursuant to this Agreement (collectively, "Seller's Ancillary
Documents"). This Agreement has been, and Seller's Ancillary
Documents will be, duly executed and delivered by duly authorized
officers of Seller. This Agreement and each of Seller's Ancillary
Documents constitute a valid and legally binding obligation of
Seller, enforceable against Seller in accordance with their
respective terms (except to the extent that enforcement may be
affected by laws relating to bankruptcy, reorganization, insolvency
and creditors' rights and by the availability of injunctive relief,
specific performance and other equitable remedies).
(d) No consent, authorization, order or approval of, or
filing or registration with, any governmental authority or other
person is required for the execution and delivery by Seller of this
Agreement and Seller's Ancillary Documents and the consummation by
Seller of the transaction contemplated by this Agreement and
Seller's Ancillary Documents.
(e) Neither the execution and delivery of this Agreement and
Seller's Ancillary Documents by Seller, nor the consummation by
Seller of the transaction herein and therein contemplated, will
conflict with or result in a breach of any of the terms, conditions
or provisions of the companies' respective Certificate or Articles
of Incorporation or By-laws, or of any statute or administrative
regulation, or of any order, writ, injunction, judgment or decree
of any court or any governmental authority or of any arbitration
award binding upon Seller or the Business.
(f) True and complete copies of the Companies' respective
Certificate or Articles of Incorporation and all amendments
thereto, and the By-laws as amended and currently in force, have
been furnished for inspection by Purchaser. True and complete
copies of the Subsidiary's stock records, corporate minute books
and records have been furnished for inspection by Purchaser. Said
stock records accurately reflect all share transactions and the
current stock ownership of the Subsidiary. Except as set forth in
the Disclosure Schedule, the corporate minute books and records of
the Subsidiary contain true and complete copies of all resolutions
adopted by the sole stockholder or the board of directors of the
Subsidiary and any other action formally taken by them respectively
as such.
(g) Harrow Products, Inc. (Delaware), a Delaware corporation,
is the record and beneficial owner of all of the issued and
outstanding capital stock of Seller. Harrow Products, Inc.
(Delaware) has no subsidiaries engaged in the Business other than
Seller, or subsidiaries which are suppliers or customers of the
Business. Seller has no subsidiaries engaged in the Business other
than the Subsidiary, or which are suppliers or customers of the
Business. Neither Harrow Products, Inc. (Delaware) nor Seller own,
directly or indirectly, any capital stock or other equity
securities of any corporation or other entity engaged in, or which
is a customer or supplier of, the Business, or have any direct or
indirect equity interest in, or operate, manage or otherwise
control, any business which engages in, or which is a customer or
supplier of, the Business, other than Harrow Products, Inc.
(Delaware) 's ownership of Seller and Seller's ownership of the
Subsidiary, and except for the business of Seller's H.B. Ives
Division described in Section 6.12(b).
(h) The authorized capital stock of the Subsidiary consists
of a single class of an unlimited number of shares of common stock,
no par value, of which 1,999 shares are issued and outstanding.
There are no shares of capital stock of the Subsidiary of any other
class authorized, issued or outstanding. All of the issued and
outstanding Subsidiary Shares have been val idly issued, are fully
paid and nonassessable, and are owned beneficially and of record by
Seller free and clear of all Encumbrances. There are no
outstanding subscriptions, options, warrants, rights (including
preemptive rights), calls, convertible securities or other
agreements or commitments of any character relating to the issued
or unissued capital stock or other securities of the Subsidiary
obligating the Subsidiary to issue any securities of any kind.
Seller is not indebted to the Subsidiary.
FINANCIAL
(i) Each Company's books, accounts and records (with respect
to the Business, in the case of Seller) are, and have been,
maintained in such Company's usual, regular and ordinary manner, in
accordance with generally accepted accounting practices, and all
material transactions to which each Company is or has been a party
(with respect to the Business, in the case of Seller) are properly
reflected therein.
(j) Complete and accurate copies of the balance sheets,
statements of income and retained earnings, statements of cash
flows, and notes to financial statements (together with any
supplementary information thereto) of the Business, all as of and
for the years ended November 27, 1994, November 28, 1993 and
November 29, 1992, and as of and for the one month period ended
January 1, 1995, respectively, are contained in the Disclosure
Schedule. All such financial statements are referred to herein
collectively as the "Financial Statements". The Financial
Statements fairly present the financial position of the Business as
of the respective dates thereof, and the results of operations and
cash flows of the Business for the respective periods covered by
said statements, in accordance with GAAP, consistently applied and
in the case of the financial statements for the one month period
ended January 1, 1995, subject to normal year end audit adjustment.
The Disclosure Schedule contains complete and correct copies of all
attorney's responses to audit inquiry letters with respect to the
Business and all management letters from the Accountants with
respect to the Business for the last five (5) fiscal years.
(k) To Seller's knowledge, none of the trade receivables
which are reflected on the Financial Statements or which arose
subsequent to January 1, 1995, including, without limitation, the
Accounts Receivable, is or was subject to any counterclaim or set-
off. All of such trade receivables arose out of bona fide, arms-
length transactions for the sale of goods or performance of
services, and all such trade receivables and notes receivable are
good and collectible (or have been collected) in the ordinary
course of business using normal collection practices at the
aggregate recorded amounts thereof, less the amount of applicable
reserves for doubtful accounts and allowances, and discounts. All
such reserves, allowances and discounts, were and are adequate and
consistent in extent with reserves, allowances and discounts
previously maintained by the Business in the ordinary course of
business. Adequate provision has been timely made in the Financial
Statements with respect to doubtful accounts, and the Financial
Statements reflect all discounts, returns and allowances granted by
Seller or the Subsidiary, as the case may be, with respect to the
periods covered thereby. Since January 1, 1995, there has not been
a material change in the aggregate amount of trade receivables of
the Business or the aging thereof. The Business has no outstanding
sales on consignment, sales on approval, sales on return or
guaranteed sales.
(l) Except as set forth in the Disclosure Schedule, all
inventory which is held for sale or resale, consists of items of a
quantity and quality historically useable and/or saleable in the
normal course of business, except for items of obsolete and slow-
moving material and materials which are below standard quality, all
of which have been written down to estimated net realizable value
on an item by item basis, in accordance with Section 3.5(b), or
will be reflected on the Closing Balance Sheet as having been so
written down. With the exception of items of below standard quality
which have been written down to their estimated net realizable
value, the inventory of Seller and the Subsidiary is free from
defects in materials and/or workmanship. The supply of spare parts
in the inventory of Seller and the Subsidiary, the product mix of
such inventory and the raw materials and work in process necessary
to convert to finished goods is not materially out of balance in
relation to the sales experience of the Business during the past
five years and is consistent with Seller's expectations of the
demands of the customers of the Business. Since January 1, 1995,
there has not been a material change in the level of the inventory
of Seller (solely with respect to the Business) and the Subsidiary.
(m) Neither Company (with respect to the Business, in
the case of Seller), has any obligation or liability of any nature
whatsoever (direct or indirect, matured or unmatured, absolute,
accrued, contingent or otherwise), whether or not required by GAAP
to be provided or reserved against on a balance sheet (all the
foregoing herein collectively being referred to as the
"Liabilities") except for:
(i) Liabilities provided for or reserved against in the
Financial Statements;
(ii) Liabilities which have been incurred by the
Companies subsequent to January I, 1995, in the ordinary course of
business and consistent with past practice;
(iii) Liabilities under the executory portion of any
written purchase order, sales order, lease, agreement or commitment
of any kind by which either Company is bound and which was entered
into in the ordinary course of business and consistent with past
practice;
(iv) Liabilities under the executory portion of Permits
(as herein defined), Environmental Permits (as herein defined),
licenses and governmental directives and agreements issued to, or
entered into by, either Company in the ordinary course of its
business; and
(v) Liabilities listed in the Disclosure Schedule.
(n) Seller and the Subsidiary each have good and
marketable title to, and the corporate power to sell, the Purchased
Assets and the Subsidiary's assets, respectively, free and clear of
any Encumbrances, except for the following encumbrances "Permitted
Encumbrances"): (i) statutory liens for Taxes not yet due, (ii)
liens of carriers, warehousemen, mechanics and materialmen incurred
in the ordinary course of business for sums not yet due; (iii)
liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance
and other types of social security; and (iv) conditions,
restrictions and easements of record which are set forth on the
Disclosure Schedule. No unreleased mortgage, trust deed, chattel
mortgage, security agreement, financing statement or other
instrument encumbering any of the Purchased Assets or the
Subsidiary's assets, other than instruments reflecting or creating
the Permitted Encumbrances, has been recorded, filed, executed or
delivered.
(o) The Disclosure Schedule contains a true and correct
list and description (including coverages, deductibles and
expiration dates) of all insurance policies which are owned by the
Companies relating to the conduct of the Business or which name
either of the Companies as an insured and which pertain to the
Purchased Assets or the Subsidiary's assets, the Business, or the
Companies' employees who are employed in the. conduct of the
Business. In the three (3) year period ending on the date hereof,
neither Company (solely with respect to the Business in the case of
Seller) has received any written notice from, or on behalf of, any
insurance carrier issuing such policies, to the effect that
insurance rates will hereafter be substantially increased (except
to the extent that insurance rates may be increased for all
similarly situated risks), that there will hereafter be no renewal
of an existing policy, or that material alteration of any Purchased
Asset or asset of the Subsidiary, purchase of additional equipment,
or material modification of any method of conducting the Business,
will be required or is suggested.
(p) The Disclosure Schedule describes each: (i) business
relationship relating to or in connection with the conduct of the
Business (excluding employee compensation and other ordinary
incidents of employment) existing on the date of this Agreement
between (x) either Company, and (y) any present or former officer,
director, stockholder or Affiliate of either Company, any present
or former known spouse, ancestor or descendant of any of the
aforementioned persons or any trust or other similar entity for the
benefit of any of the foregoing persons (all such persons and
trusts encompassed by this clause (y) being sometimes collectively
referred to herein as the "Related Parties" and individually as a
"Related Party"); (ii) transaction relating to or in connection
with the conduct of the Business occurring between November 28,
1993 and the date of this Agreement between either Company and any
Related Party; and (iii) amount owing by or to any of the Related
Parties, respectively, to or from either Company relating to or in
connection with the conduct of the Business as of the date of this
Agreement. No property or interest in any property (including,
without limitation, designs and drawings concerning machinery)
which relates to and is or will be necessary or useful in the
present operation of the Business, is presently owned by or leased
by or to any Related Party. Prior to the Closing Date, all amounts
due and owing to or from either by or to any of the Related Parties
(excluding employee compensation and other ordinary incidents of
employment) relating to or in connection with the conduct of the
Business shall be paid in full. Except for the business of
Seller's H.B. Ives Division described in Section 6.12(b), neither
the Companies nor, to Seller's knowledge, any Related Party, has an
interest, directly or indirectly, in any business, corporate or
otherwise, which is in competition with the Business in the United
States, Canada or Mexico. As used herein, an "Affiliate" is any
person or entity which controls a party to this Agreement, which
that party controls, or which is under common control with that
party. In the case of Seller, an Affiliate shall include Harrow
Products, Inc. (Delaware], Harrow Industries, Inc. and Harrow
Corporation. "Control" means the power, direct or indirect, to
direct or cause the direction of the management and policies of a
person or entity through voting securities, contract or otherwise.
(q) (i) For the purposes of this Agreement, the term
"Taxes" means all Federal, state, provincial, local, foreign and
other net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, lease, service,
service use, capital, goods and services, withholding, payroll,
employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatever, together with any
interest and any penalties, additions to tax or additional amounts
with respect thereto, and the term "Tax" means any one of the
foregoing Taxes; the term "Returns" means all returns,
declarations, reports, statements and other documents required to
be filed in respect of Taxes, and the term "Return" means any one
of the foregoing Returns; and the term "Code" means the Internal
Revenue Code of 1986, as amended (all citations to the Code, or to
the Treasury Regulations promulgated thereunder, shall include any
amendments or any substitute or successor provisions thereto).
(ii) All Returns required to be filed on or prior to the
date hereof (A) by Seller, pertaining to the Assumed Taxes, or (B)
by the Subsidiary, have been filed or an extension relating thereto
has been obtained. As of the time of filing, the foregoing Returns
correctly reflected the facts regarding the income, business,
assets, operations, activities, status or other matters of either
Company or any other information required to be shown thereon, and,
except as set forth on the Disclosure Schedule, no extension of
time within which to file any such Return has been requested or
granted.
(iii) With respect to all amounts in respect of (A)
Assumed Taxes imposed upon Seller, or (B) Taxes imposed upon the
Subsidiary, or for which either such Company is liable, whether to
taxing authorities (as, for example, under law) or to other persons
or entities (as, for example, under tax allocation agreements),
with respect to all taxable periods or portions of periods ending
on or before the Closing Date, all applicable tax laws and
agreements have been complied with in all material respects, and
all such amounts required to be paid by such Company, to taxing
authorities or others have been paid or reserved for on the
Financial Statements in accordance with GAAP.
(iv) None of the Purchased Assets (A) is property which
is required to be treated as being owned by any other person
pursuant to the so-Cal led "safe harbor lease" provisions of former
section 168(f) (8) of the Code; (B) directly or indirectly secures
any debt the interest on which is tax exempt under section 103(a)
of the Code; or (C) is "tax exempt use property" within the meaning
of Section 168(h) of the Code.
(v) Seller is not a person other than a United States
person within the meaning of the Code.
(vi) Neither Company (in the case of Seller, with respect
to the Business) has participated in any tax sharing or other
arrangement whereby such Company in determining its income,
revenues, receipts, gain, loss, or any net operating loss or other
tax loss, net capital loss, investment tax credit, foreign tax
credit, charitable deduction or any other credit or tax attribute
which could reduce taxes (including, without limitation, deductions
and credits relating to alternative minimum taxes) (collectively,
"Tax Assets"), has taken into account or included any income,
revenues, receipts, gain, loss, asset, liability, or Tax Assets of
any other person (or vice versa);
(vii) Neither Company (in the case of Seller, with
respect to the Business) is currently under any contractual
obligation to pay the tax obligations of, or with respect to
transactions relating to, any other person or to indemnify any
other person with respect to any tax;
(viii) Neither Company (in the case of Seller, with
respect to the Business) is subject to any (A) claims, audits,
actions, suits, proceedings, or, to Seller's knowledge,
investigations with respect to any tax or assessment for which any
such Company could be liable, and (B) requests for rulings in
respect of any tax or any proposed transaction pending before any
governmental authority responsible for the imposition of any tax.
CONDUCT OF BUSINESS
(r) Since November 27, 1994, neither Company has, with
respect to the Business:
(i) sold, assigned, leased, exchanged, transferred or
otherwise disposed of any of its assets or property (including
sales and transfers to Related Parties), except for (A) sales of
inventory in the usual and ordinary course of business in
accordance with the past practices of the Business, and (B) cash
applied in payment of such Company's liabilities in the usual and
ordinary course of business in accordance with the past practices
of the Business and (C) assets with an aggregate value of less than
$2,500;
(ii) suffered any casualty, damage, destruction or loss,
or any material interruption in use, of any material assets or
property (whether or not covered by insurance), on account of fire,
flood, riot, strike or other hazard or Act of God;
(iii) (A) written off any equipment or other tangible
personal property as unusable or obsolete or for any other reason,
except in the ordinary course of business and not involving a
write-off of more than $2500 in the aggregate, and, except as to
inventory, as described in Section 4.3(l), or (B) transferred any
asset to any Affiliate;
(iv) made or suffered any material change in the conduct
or nature of any aspect of the Business, whether made in the
ordinary course of business or not or whether or not the change had
a material adverse effect on the business activities or financial
condition of the Business (the foregoing representation and
warranty shall not be deemed to be breached by virtue of the entry
of Seller into this Agreement or its consummation of the
transaction contemplated hereby);
(v) waived any right or cancelled or compromised any
debt or claim, other than in the ordinary course of business;
(vi) paid (or been paid by) any Related Party, or charged
(or been charged by) any Related Party, for (A) goods sold or
services rendered by or to the Business, or (B) corporate overhead
expenses, management fees, legal or accounting fees, capital
charges, or similar charges or expenses, on a basis which is either
more or less favorable to the Business than the basis which would
be employed by a party who is not a Related Party;
(vii) made (or committed to make) capital expenditures in
an amount which exceeds $25,000 for any item or $100,000 in the
aggregate;
(viii) paid any dividend or made any distribution to its
stockholder(s);
(ix) increased the compensation payable to any employee;
(x) paid or incurred any management or consulting fees;
(xi) hired any employee who has an annual salary in
excess of $30,000, or employees with aggregate annual salaries or
wages in excess of $100,000;
(xii) terminated any employee having an annual salary or
wages in excess of $30,000 or employees with aggregate annual
salaries or wages in excess of $100,000;
(xiii) borrowed any money or issued any bonds,
debentures, notes or other corporate securities evidencing money
borrowed;
(xiv) made any change in accounting methods or
principles not disclosed in the notes to the Financial Statements;
or
(xv) without limitation by the enumeration of any of the
foregoing, entered into any transaction other than in the usual and
ordinary course of business (the foregoing representation and
warranty shall not be deemed to be breached by virtue of the entry
by Seller into this Agreement or its consummation of the
transaction contemplated hereby).
(s) Neither Company has suffered or been threatened with
(and Seller has no knowledge of any facts which are reasonably
likely to cause or result in) any material adverse change in the
business, operations, assets, liabilities or financial condition of
the Business, including, without limiting the generality of the
foregoing, the existence or threat of any labor dispute, or any
material adverse change in, or loss of, any relationship between
Seller and any of the key employees of the Business.
(t) Except as set forth in the Disclosure Schedule,
since November 29, 1992, no "Significant Customer" (as herein
defined) has terminated its business relationship with the
Business, and Seller has no knowledge that a significant Customer
has threatened to hereafter terminate its business relationship
with the Business or to limit or alter its business relationship
with the Business in any material respect. Seller has no knowledge
of any intention of or indication by a "Significant Supplier" (as
herein defined) to terminate its business relationship with the
Business or to limit or alter its business relationship with the
Business in any material respect. As used herein, "Significant
Customer" means any customer of the Business which purchased
$50,000 or more of goods from either Company in any of the fiscal
years ended November 27, 1994, November 28, 1993 or November 29,
1992. As used herein, "Significant Supplier" means any supplier of
the Business from whom either Company has purchased $50,000 or more
of goods during either of the years ended November 27, 1994 or
November 28, 1993 for use in the Business.
CONTRACTS
(u) Neither Company is, with respect to the Business, a
party to, or bound by, or the issuer, beneficiary or recipient of,
any undischarged written or oral:
(i) contract for the employment for any period of time
whatsoever, or in regard to the employment, or restricting the
employment, of any employee of such Company;
(ii) consulting agreement;
(iii) collective bargaining agreement;
(iv) plan, policy or contract or arrangement providing
for bonuses, options, deferred compensation, retirement payments,
severance benefits, profit sharing, medical and dental benefits or
the like;
(v) contract for the purchase of equipment, inventory,
or other materials having a price under any such contract in excess
of $25,000 per annum;
(vi) contract for the sale of any equipment, inventory or
other assets in excess of $2,500, except for sales of inventory in
the ordinary course of business;
(vii) contract or agreement restricting in any manner
either Company's right to compete with any other right to sell to
or purchase from any other person or to employ any person, the
right of any other party to compete with the Business, or the
ability of such person or entity to employ any of such Company's
employees employed in the conduct of the Business;
(viii) secrecy or confidentiality agreement;
(ix) contract of agency, representation, distribution,
dealership or franchise which cannot be cancelled by such Company
without payment or penalty upon notice of thirty (30) days or less;
(x) contract for the advertisement, display or promotion
of any products or services which cannot be cancel led by such
Company without payment or penalty upon notice of thirty (30) days
or less;
(xi) service contract affecting any of the Purchased
Assets or any asset of the Subsidiary where the annual service
charge is in excess of $25,000 and has an unexpired term as of the
Closing Date in excess of thirty (30) days;
(xii) contract, order, pricing agreement or quotation for
the sale of goods or the performance of services which, if
performed by such Company in accordance with its terms, could only
be performed by such Company with a gross profit margin of 18% or
less, or which could not be performed within the time limits or
other terms therein provided or, when actually performed, would
result in an obligation (contractual or otherwise] to pay damages
or penalties;
(xiii) guaranty, performance, bid or completion bond,
or surety or indemnification agreement;
(xiv) contract with any railroad or other
transportation company;
(xv) lease or sublease, either as lessee or sublessee,
lessor or sublessor, of real or personal property or intangibles,
where the lease or sublease provides for an annual rent in excess
of $25,000 and has an unexpired term as of the Closing Date in
excess of thirty (30) days;
(xvi) contracts for the purchase, sale, or removal
(as the case may be) of electricity, gas, water, telephone, coal,
sewage, power or other utility service;
(xvii) contract for the treatment or disposal of
Hazardous Materials (as herein defined);
(xviii) industrial security clearance;
(xix) contract not specifically enumerated above which
provides for the receipt or expenditure by Purchaser after such
assignment of more than $25,000, except agreements for the sale of
goods in the rendering of services by such Company in the ordinary
course of business.
All contracts, leases, subleases and other instruments referred to
in this Section 4.3(u), and all other contracts or instruments to
which either Company is a party or by which it is bound and which
relate to the Business, are in full force and binding upon the
parties thereto. No default by either Company has occurred
thereunder and, to the best of Seller's knowledge, no default by
the other contracting parties has occurred thereunder. No event,
occurrence or condition exists which, with the lapse of time, the
giving of notice, or both, would become a default by either Company
or to Seller's knowledge, the contracting party thereunder. Neither
Company has released or waived any of its rights under any
contract, lease, sublease or other instrument which relates to the
Business. All of Seller's agreements with sales agents and sales
representatives are terminable by Seller upon not more than thirty
(30) days notice.
(V) Neither Company is a party to, or bound by, any
unexpired, undischarged or unsatisfied written or oral contract,
agreement, indenture, mortgage, debenture, note or other instrument
under the terms of which performance by such Company according to
the terms of this Agreement will be a default or an event of
acceleration, or grounds for termination, or whereby timely
performance by such Company according to the terms of this
Agreement may be prohibited, prevented or delayed.
(W) The Disclosure Schedule contains a true and correct copy
of every license, permit, registration, governmental approval and
consent applied for, pending by, issued or given to either Company
(with respect to the Business, in the case of Seller), and every
agreement with governmental authorities (federal, state, local or
foreign) entered into by either Company with respect to the
Business, which is in effect or has been applied for or is pending,
exclusive of Environmental Permits (as herein defined) (the
"Permits"). The Permits constitute all licenses, permits,
registrations, approvals, agreements and consents (other than
Environmental Permits) which are required in order for the
Companies to conduct the Business as presently conducted, except
where the failure to obtain any such Permit would not require the
payment of $2,500 or more or otherwise adversely affect the
Business.
EMPLOYEES
(x) (i) Neither Seller nor any affiliate of Seller (other than
the Subsidiary) as determined under Code section 414(b), (c), (m)
or (o) ("ERISA Affiliate") maintains, administers or contributes
to, nor do the employees of Seller or any ERISA Affiliate (other
than the Subsidiary) employed in the conduct of the Business
receive or expect to receive as a condition of employment, benefits
pursuant to any: employee pension benefit plan (as defined in
Section 3(2) of the Employment Retirement Income Security Act of
1974, as amended ("ERISA")) ("Plan"), including, without I
imitation, any multiemployer plan as defined in Section 3(37) of
ERISA ("Multiemployer Plan"); employee welfare benefit plan (as
defined in Section 3(l) of ERISA) ("Welfare Plan"); or bonus,
deferred compensation, stock purchase, stock option, severance
plan, salary continuation, vacation, sick leave, fringe benefit,
incentive, insurance, welfare or plan, policy, practice or similar
arrangement ("Employee Benefit Plan"); other than those plans
described in the Disclosure Schedule.
(ii) All Plans, Welfare Plans and Employee Benefit Plans
and any related trust agreements or annuity contracts comply in all
material respects with and are operated in all material respects in
accordance with each applicable provision of ERISA, the Code
(including, without limitation, the requirements of Code section
401(a) to the extent any Plan is intended to conform to that
section), other Federal statutes, state law (including, without
limitation, state insurance law) and the regulations and rules
promulgated pursuant thereto or in connection therewith. Neither
Seller nor any ERISA Affiliate (other than the Subsidiary) has any
notice or knowledge of any violation of any of the foregoing by any
Plan, Welfare Plan, or Employee Benefit Plan. Each Welfare Plan
which is a group health plan (within the meaning of section 5000(b)
(1) of the Code) complies in all material respects with and has
been maintained and operated in accordance with each of the
requirements of section 162(k) of the Code as in effect for years
beginning prior to 1989, section 4980B of the Code for years
beginning after December 31, 1988 and Part 6 of subtitle B of Title
I of ERISA. Except as set forth on the Disclosure Schedule, a
favorable determination as to the qualification under the Code of
each of the Plans and each amendment thereto has been made by the
Internal Revenue Service ("IRS"), each trust funding Welfare Plans
or Plans is and has been tax-exempt and each Plan and related trust
agreement remain qualified under the Code.
(iii) Neither Seller nor any ERISA Affiliate (other than
the Subsidiary) has incurred any material liability to the Pension
Benefit Guaranty Corporation ("PBGC") as a result of the voluntary
or involuntary termination of any Plan which is subject to Title IV
of ERISA. here is currently no active filing by Seller or any
ERISA Affiliate (other than the Subsidiary) with the PBGC (and no
proceeding has been commenced by the PBGC) to terminate any Plan
which is subject to Title IV of ERISA and which has been maintained
or funded, in whole or in part, by Seller or any ERISA Affiliate
(other than the Subsidiary).
(iv) There are no pending or, to Seller's knowledge,
threatened claims against any of the Plans, Welfare Plans, or
Employee Benefit Plans by any employee or beneficiary covered under
any Plans, Welfare Plans or Employee Benefit Plans or otherwise
involving any Plan, Welfare Plan or Employee Benefit Plan (other
than routine claims for benefits].
(v) With respect to each Plan which is a Multiemployer
Plan covering employees of Seller or any ERISA Affiliate (other
than the Subsidiary): (y) neither Seller nor such ERISA Affiliate
would incur any withdrawal liability (as defined in Section 3(37)
of ERISA) on a complete withdrawal from each such Plan as of the
Closing Date, under applicable laws and conditions of each such
Plan and the applicable provisions of law without regard to any
limitation, reduction or adjustment of liability under Title IV of
ERISA or any plan provision based on Title IV of ERISA; (z) neither
Seller nor any ERISA Affiliate (other than the Subsidiary) has made
or suffered a "complete withdrawal" or a "partial withdrawal", as
such terms are respectively defined in Sections 4203 and 4205 of
ERISA;
(Y) (i) Except as set forth in the Disclosure Schedule, the
Subsidiary is not a party to, and has no liability with respect to,
any employee benefit, welfare, bonus, pension, profit sharing,
deferred compensation, stock option, retirement, hospitalization
insurance, medical and dental insurance, disability insurance,
vacation pay, severance pay or any other material employee benefit
plan, policy, practice or arrangement related to the employees or
former employees which are currently maintained or were maintained,
at any time in the last five calendar years (herein referred to
collectively as "Canadian Plans").
(ii) Seller has furnished to Purchaser a true and correct
copy of all Canadian Plans as listed in the Disclosure Schedule, as
amended to the date hereof, together with all related
documentation, including without limitation, funding agreements,
actuarial reports, funding and financial information and plan
summaries, booklets and personnel manuals, and there have been no
material changes in the financial condition of any such plan from
that stated in the documentation so supplied. Al I employee data
provided is substantially true and correct. Except for those
amendments previously furnished to Purchaser, no amendments have
been made to the Canadian Plans and no improvements to the Canadian
Plans have been promised by Seller or the Subsidiary or, to
Seller's knowledge, any other person or entity. No insurance
policy requires or any other contract or agreement affecting the
Canadian Plans requires or permits a retroactive increase in
premiums or payments due thereunder.
(iii) All of the Canadian Plans have been established,
registered, qualified, invested and administered, in all material
respects, in accordance with all applicable laws, regulations,
orders or other legislative, administrative or judicial
promulgations (herein referred to as "Applicable Laws"). None of
the Canadian Plans enjoy any special tax status under the Income
Tax Act (Canada) or under other applicable legislation, nor have
any advance tax rulings been sought or received in respect of the
Canadian Plans. The Canadian Plan is fully funded and, except for
obligations thereunder to the sole remaining participant, all
obligations regarding the Canadian Plans have been satisfied and
there are no outstanding defaults or violations by any party
thereto, or any taxes owing under any Canadian Plans, on both an
ongoing and a plan termination basis. All contributions of
premiums required to be made by the Subsidiary under the terms of
the Canadian Plans or by Applicable Laws have been made in all
material respects in accordance with Applicable Laws and the terms
of the Canadian Plans, and the Subsidiary has no liability (other
than liabilities accruing after the date hereof in accordance with
the express terms of the Canadian Plans, in the ordinary course of
business) with respect to any of the Canadian Plans. All of the
Canadian Plans which are subject to actuarially-based funding
requirements are fully funded or fully insured on both an ongoing
and solvency basis pursuant to the actuarial assumptions and
methodology contained in the going concern actuarial valuation
report most recently filed with the provincial pension authorities
as of the date hereof. To Seller's knowledge, the level of
insurance reserves under each of the Canadian Plans which is an
insured plan is reasonable under the circumstances known to Seller
and is sufficient to provide for all incurred but unreported
claims. There have been no improper withdrawals or transfers of
assets from the Canadian Plans or the funds relating thereto, and
the Subsidiary has not been in breach of any fiduciary obligation
with respect to the administration of the Canadian Plans or the
funding media relating thereto.
(iv) None of the Canadian Plans, nor any related
funding medium thereunder, is subject to any pending investigation,
examination or other proceeding, action or claim initiated by any
governmental agency or instrumentality of which Seller is aware,
or by any other party of which Seller is aware, and there exists no
state of facts of which Seller is aware which after notice or lapse
of time or both could reasonably be expected to give rise to any
such investigation, examination or other proceeding, action or
claim or to affect the registration of any of the Canadian Plans.
Further, should any matter arise which could affect the
registration of any of the Canadian Plans, Seller shall take such
actions, upon Purchaser's request, as are reasonably necessary to
cause the Subsidiary to take in a timely fashion all steps required
to ensure the registration is not affected.
(v) The Subsidiary has reserved the right to amend,
modify or terminate each of the Canadian Plans, subject to approval
required by applicable Laws.
(vi) Except for registered pension plans or group
registered retirement savings plans, none of the Canadian Plans
provides benefits to retired employees.
(vii) No employee or former employee of the Subsidiary
will become entitled to any bonus, retirement, severance, job
security or similar benefit enhancements of such benefits solely as
a result of the transactions contemplated hereby.
(viii) To the knowledge of Seller, there are no unfair
labor practice complaints, labor disputes, work stoppages, or union
organization efforts, or threats of the foregoing, or pending or
threatened proceedings under the Ontario Human Rights Code,
Employment Standards Act, Workers Compensation Act, or any other
employment-related legislation applicable in Ontario directed
against any of the operations of the Business.
(Z) With respect to employees of the Companies (with
respect to the Business, in the case of Seller):
(i) there is no pending or, to Seller's knowledge,
threatened unfair labor practice charges or employee grievance
charges;
(ii) there is no request for union representation, labor
strike, dispute, slowdown or stoppage actually pending or, to the
best of Seller's knowledge, threatened against or directly
affecting either Company;
(iii) no grievance or arbitration proceeding arising out
of or under collective bargaining agreements is pending and Seller
has no knowledge of any existing claims therefor;
(iv) except as set forth on the Disclosure Schedule, the
employment of each of such employees is terminable at will without
cost to either Company except for payments required under the
Plans, Welfare Plans, Employee Benefit Plans and Canadian Plans and
payment of accrued salaries or wages and vacation pay. No employee
or former employee has any right to be rehired by either Company
prior to such Company hiring a person not previously employed by
such Company. Except as required by Section 4980B of the Code with
respect to Seller, neither Company (in the case of Seller, with
respect to the Business) has any liability to provide medical
benefits to former employees of such Company or their spouses or
dependents
(v) the Disclosure Schedule contains a true and complete
list of all full and part time employees who are employed by the
Companies as of January 31, 1995 (other than temporary employees),
and said list correctly reflects their salaries, wages, other
compensation (other than benefits under the Plans, Welfare Plans,
Employee Benefit Plans and Canadian Plans), dates of employment and
positions;
(vi) Seller has complied with the notice and any other
requirements of the Worker Adjustment Retraining Notification Act
within the time period required therein, in view of the Closing
Date, and all other applicable federal, state and local laws
pertaining to employees of the Business of Seller who may be
affected by the transactions contemplated hereby. Prior to the
Closing Date, the Subsidiary gave written notice to each of the
Subsidiary's employees as to the termination of their employment by
the Subsidiary, effective immediately prior to the Closing Date, in
the form required under the Ontario Employment Standards Act.
LITIGATION AND CLAIMS
(aa) There is no litigation or proceeding, in law or in
equity, and there are no proceedings or governmental investigations
before any commission or other administrative authority, pending,
or, to the best of Seller's knowledge, threatened, against either
Company or their Affiliates with respect to or affecting or arising
out of the Business, directly or indirectly, or with respect to the
consummation of the transaction contemplated hereby, or the use of
the Purchased Assets or the Subsidiary's assets (whether used by
Purchaser after the Closing or by either Company prior thereto).
(bb) Seller has no knowledge of any facts which, if known by
a potential claimant or governmental authority, would give rise to
a claim or proceeding which, if asserted or conducted with results
unfavorable to either Company, would have a material adverse effect
on the business, operations, assets, liabilities or financial
condition of the Business, or the consummation of the transaction
contemplated hereby, or the use of the Purchased Assets or the
Subsidiary's assets (whether by Purchaser after the Closing or by
either Company prior thereto).
(cc) Neither Company has made any oral or written warranties
with respect to the quality or absence of defects of the products
or services which it has sold or performed in the conduct of the
Business which are in force as of the date hereof, except for those
warranties which are described in the Disclosure Schedule. There
are no material claims pending or, to the best of Seller's
knowledge, reasonably anticipated or threatened against either
Company with respect to the quality of or absence of defects in
such products or services. The Disclosure Schedule sets forth a
summary, which is accurate in all material respects, of returns of
defective products of the Business during the period beginning
November 28, 1993 and ending on the date hereof, and the aggregate
dollar amount of credits and allowances for defective products
given to customers during said period. Seller has no knowledge or
reason to believe that the percentage of products sold and services
performed by either Company in the conduct of the Business for
which warranties are presently in effect and for which warranty
adjustments can be expected during unexpired warranty periods which
extend beyond the Closing Date will be higher than the percentage
of such products and services which such Company has sold and
performed in the conduct of the Business for which warranty
adjustments have been required in the past. Neither Company has
been required to pay direct, incidental, or consequential damages
to any person in connection with any of such products or services
at any time during the three (3) year period preceding the date
hereof.
(dd) Except as set forth on the Disclosure Schedule, neither
Company is a 'party to, or bound by, any decree, order or
arbitration award (or agreement entered into in any administrative,
judicial or arbitration proceeding with any governmental authority)
with respect to the properties, assets, personnel or business
activities of the Business.
(ee) Neither Company is, with respect to the Business, in
violation in any material respect of, or delinquent in any material
respect in respect to, any decree, order or arbitration award or
law, statute, or regulation of or agreement with, or Permit from,
any federal, state, provincial, county, or local governmental
authority (or to which the properties, assets, personnel, business
activities of the Business, the Coopersville Real Estate or the
Canadian Real Estate are subject or to which it, itself, with
respect to the Business, is subject), including, without
limitation, laws, statutes and regulations relating to equal
employment opportunities, fair employment practices, occupational
health and safety, wages and bonuses, and discrimination.
ENVIRONMENTAL MATTERS
(ff) Both of the Companies, with respect to the Business, and
the Business (including, without limitation, the Purchased Assets
and the Subsidiary's assets) are in compliance in all material
respects with all Environmental Laws (as herein defined) and
Environmental Permits (as herein defined). A copy of any notice,
citation, inquiry or complaint which either Company has received in
the past three years of any alleged violation of any Environmental
Law or Environmental Permit relating to the Business (and currently
in Seller's possession) is contained in the Disclosure Schedule,
and all violations alleged in said notices have been corrected.
The Companies possess all material Environmental Permits which are
required for the operation of the Business, and are in compliance
in all material respects with the provisions of all such
Environmental Permits. Copies of all currently effective
Environmental Permits issued to the Companies with respect to the
conduct of the Business are contained in the Disclosure Schedule.
(gg) Except as set forth in the Disclosure Schedule, there has
been no storage, treatment, generation, transportation or Release
(as herein defined) of any Hazardous Materials (as herein defined)
with respect to the Business by either company or, to Seller's
knowledge, its predecessors in interest, or by any other person or
entity for which either Company is or may be held responsible, at
any Facility (as herein defined) or any Offsite Facility (as herein
defined) in violation of, or which could give rise to any
obligation under, Environmental Laws.
(hh) The Disclosure Schedule sets forth a complete list of all
Containers (as herein defined) that are now present at, or have
heretofore been removed from, the Coopersville Real Estate or the
Canadian Real Estate. All Containers which have been heretofore
removed from the Coopersville Real Estate or the Canadian Real
Estate have been removed in accordance with all then applicable
Environmental Laws. To the best of Seller's knowledge, the
underground storage tank previously located at and removed from the
Coopersville Real Estate was only used for storing heating oil for
consumptive use at the Coopersville Real Estate.
(ii) For the purposes of this Agreement:
(i) "Containers" means above-ground and underground
storage tanks;
(ii) "Environmental Laws" means all federal, state,
provincial, and local statutes, regulations, ordinances, rules,
regulations and policies, all court orders and decrees and
arbitration awards, and the common law, in effect as of the Closing
Date, which pertain to environmental matters or contamination of
any type whatsoever. Environmental Laws include, without
limitation, those relating to: manufacture, processing, use,
distribution, treatment, storage, disposal, generation or
transportation of Hazardous Materials; air, soil, surface or ground
water or noise pollution; Releases; protection of wildlife,
endangered species, wetlands or natural resources; Containers;
health and safety of employees and other persons; and notification
requirements relating to the foregoing;
(iii) "Environmental Permits" means licenses, permits,
registrations, governmental approvals, agreements and consents
which are required under or are issued pursuant to Environmental
Laws;
(iv) "Facility" means any facility as defined in the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. section 9601, et as amended and reauthorized ("CERCLA");
(v) "Hazardous Materials" means: pollutants,
contaminants, pesticides, petroleum and petroleum products,
radioactive substances, solid wastes or hazardous or extremely
hazardous, special, dangerous or toxic wastes, substances,
chemicals or materials within the meaning of or regulated by any
Environmental Law, including without limitation any (i) "hazardous
substance" as defined in CERCLA, and (ii) any "hazardous waste" as
defined in the Resource Conservation and Recovery Act, 42 U.S.C.,
section 6902 et as amended and reauthorized ("RCRA")
(vi) "Offsite Facility" means any Facility which is not
presently, and has not heretofore been, owned, leased or occupied
by either Company with respect to the Business;
(vii) "Release" means any spill, discharge, leak,
emission, escape, injection, dumping, or other release or
threatened release of any Hazardous Materials into the environment,
whether or not notification or reporting to any governmental agency
was or is, required, including, without limitation, any Release
which is subject to CERCLA.
REAL ESTATE
(jj) Seller has full corporate power and authority to sell the
Coopersville Real Estate. The Disclosure Schedule accurately sets
forth the street address and legal description of the Coopersville
Real Estate. Seller holds good and marketable fee simple title to
the Coopersville Real Estate, subject only to real estate taxes not
delinquent and to covenants, conditions, restrictions and'
easements of record, none of which makes title to the Coopersville
Real Estate unmarketable and none of which are violated by Seller.
Neither the Coopersville Real Estate nor the Canadian Real Estate
is subject to any leases or tenancies. Except as described in the
Disclosure Schedule, none of the improvements comprising the
Coopersville Real Estate or the Canadian Real Estate or the
businesses conducted by Seller or the Subsidiary thereon, including
the Business, are in material violation of any federal, state,
provincial, county or municipal use or occupancy restriction,
limitation, condition or covenant of record or any federal, state,
provincial, county, or municipal zoning or building law, code or
ordinance or public utility easement. To the best of Seller' s
knowledge, no material expenditures are required to be made for the
repair or maintenance of any improvements on the Coopersville Real
Estate.
(kk) Each facility located on the Coopersville Real Estate is
served by gas, electricity, water, sewage and waste disposal and
other utilities adequate to operate such facility at its historical
rate of production, and none of the utility companies serving any
such facility has threatened Seller with any reduction in service.
Such utilities either enter the Coopersville Real Estate through
adjoining public streets or, if they pass through adjoining private
land, do so in accordance with valid, permanent public or private
easements which, following the Closing, will inure to the benefit
of Purchaser, its successors and assigns. All of said utilities
are installed and operating and all installation and connection
charges have been paid for in full.
(ll) There are no condemnation proceedings pending or, to the
best of Seller's knowledge, threatened with respect to any portion
of the Coopersville Real Estate. There is no tax assessment (in
addition to the normal, annual general real estate tax assessment)
pending or, to the best of Seller's knowledge, threatened with
respect to any portion of the Coopersville Real Estate.
(mm) Prior to the Closing, the Subsidiary has transferred to
Seller or its designee all right, title and interest of the
Subsidiary in and to that certain real property commonly known as
101 Brookside St., London, Ontario, including, without limitation,
the buildings and improvements thereon, exclusive of any trade
fixtures or other items of personal property located at such real
property (collectively, the "Canadian Real Estate"). The
Disclosure Schedule contains true and complete copies of all
material documents executed and delivered in connection with such
transaction. The transfer of the Canadian Real Estate has been
effected in such a way as to not result in any liability, cost,
fee, tax, expense or obligation to the Subsidiary or Purchaser, and
shall not result in a reduction of the Subsidiary's unused non-
capital losses and unused tax credits which may be carried forward
to less than $230,000, after giving affect to any liability owing
to Revenue Canada or Revenue Ontario.
(nn) To Seller's knowledge, the building and other facilities
located on the Coopersville Real Estate are in good condition and
repair and are free of any patent structural or engineering defects
(regardless of whether latent or patent). The continued
maintenance and operation of the Coopersville Real Estate as
currently maintained and operated is not dependent on facilities
located at other property, and the continued maintenance and
operation of any other property is not dependent on facilities
located on the Coopersville Real Estate.
INTELLECTUAL PROPERTY
(oo) Except for those assets which are Excluded Assets, the
Disclosure Schedule identifies all of the following, if any, which
are used in the Business or in which either Company claims any
ownership rights in connection with the Business: (i) all
trademarks, service marks, slogans, trade names, trade dress and
the like (collectively with the associated goodwill of each,
"Trademarks"), together with information regarding all
registrations and pending applications to register any such rights;
(ii) all common law Trademarks; (iii) all proprietary formulations,
manufacturing methods, know-how and trade secrets which are
material to the Business; (iv) all patents on and pending
applications to patent any technology or design; (v) all
registrations of and applications to register copyrights; and (vi)
all licenses of rights in computer software, Trademarks, patents,
copyrights, unpatented formulations, manufacturing methods and
other know-how, whether to or by either Company, which are not
Excluded Assets. The rights required to be rescheduled are
referred to herein collectively as the "Intellectual Property."
(pp) (i) Seller or the Subsidiary, as the case may be, is the
owner of or duly licensed to use each Trademark and its associated
goodwill and each copy of computer software included within the
Purchased Assets; (ii) each Trademark registration exists and has
been maintained in good standing; (iii) each patent and application
included in the Intellectual Property exists, is owned by or
licensed to Seller or the Subsidiary, as the case may be, and has
been maintained in good standing; (iv] each copyright registration
exists and is owned by Seller or the Subsidiary, as the case may
be; (v) to the best of Seller's knowledge, no other firm,
corporation, association or person claims the right to use in
connection with similar or closely related goods and in the same
geographic area, any mark which is identical or confusingly similar
to any of the Trademarks; (vi) Seller has no knowledge of any claim
or any reason to believe that any third party asserts ownership
rights in any of the Intellectual Property; (vii) Seller has no
knowledge of any claim or any reason to believe that Seller's or
the Subsidiary's use of any Intellectual Property infringes any
right of any third party; and (viii) Seller has no knowledge or any
reason to believe that any third party is infringing any of
Seller's or the Subsidiary's rights in any of the Intellectual
Property.
GENERAL
(qq) Neither of the Companies nor, to the best of Seller's
knowledge, any of their current officers, directors, employees,
agents or representatives has made, directly or indirectly, with
respect to the Business, any bribes or kickbacks, illegal political
contributions, payments from corporate funds not recorded on the
books and records of the Companies, payments from corporate funds
to governmental officials, in their individual capacities, for the
purpose of affecting their action or the action of the government
they represent, to obtain favorable treatment in securing business
or licenses or Co obtain special concessions, or illegal payments
from corporate funds to obtain or retain business. Without
limiting the generality of the foregoing, neither Company has, with
respect to the Business, directly or indirectly made or agreed to
make (whether or not said payment is lawful) any payment to obtain,
or with respect to, sales other than usual and regular compensation
to its employees and sales representatives with respect to such
sales.
(rr) The Purchased Assets and the Subsidiary's assets are
adequate to conduct the Business as it is presently being
conducted.
(ss) The Equipment and Leased Personalty, and the Subsidiary's
tangible personal property, are in good operating condition and
repair (ordinary wear and tear excepted). To Seller's knowledge,
the Equipment, Leased Personalty and the Subsidiary's tangible
personal property are free of any latent structural or engineering
defects or any patent structural or engineering defects.
(tt) Neither Company has attempted to dissuade any present
employees, representatives or agents of either Company who are
employed in the conduct of the Business from becoming associated
with Purchaser.
(uu) The representations and warranties of Seller in this
Agreement, and all representations, warranties and statements of
either Company contained in any schedule (or attachment to such
schedule) or closing document delivered pursuant hereto or in
connection herewith, do not omit to state a material fact necessary
in order to make the representations, warranties or statements
contained herein or therein not misleading.
(vv) The Disclosure Schedule contains complete and accurate
copies of all documents attached thereto. The information
contained in the Disclosure Schedule is complete and accurate.
ARTICLE V
Closing
5.1 Form of Documents. At or before the Closing (except as
set forth in Section 5.3(s)), the parties shall deliver the
documents, and shall perform the acts, which are set forth in this
Article V. All documents which Seller shall deliver shall be in
form and substance reasonably satisfactory to Purchaser and
Purchaser's counsel. All documents which Purchaser shall deliver
shall be in form and substance reasonably satisfactory to Seller
and Seller's counsel.
5.2 Purchaser's Deliveries. Purchaser shall execute and/or
deliver to Seller all of the following:
(a) the Estimated Cash Payment;
(b) a certified copy of Purchaser's Certificate of
Limited Partnership;
(c) a certificate of good standing of Purchaser, issued
not earlier than ten (10) days prior to the Closing Date by the
Secretary of State of Delaware;
(d) an incumbency and specimen signature certificate
with respect to the officers of Purchaser's general partner
executing this Agreement and Purchaser's Ancillary Documents on
behalf of Purchaser;
(e) a certified copy of resolutions of the board of
directors of Purchaser's general partner, authorizing the
execution, delivery and performance of this Agreement and
Purchaser's Ancillary Documents;
(f) the written opinion of Altheimer & Gray, counsel to
Purchaser, addressed to Seller, in substantially the form of
Exhibit A attached hereto;
(g) an assumption agreement, duly executed by Purchaser,
under which Purchaser assumes the Assumed Liabilities; and
(h) without limitation by the specific enumeration of
the foregoing, all other documents required from Purchaser to
consummate the transaction contemplated hereby.
5.3 Seller's Deliveries. Seller shall deliver to Purchaser
physical possession of all tangible Purchased Assets, and shall
execute (where applicable in recordable form] and/or deliver or
cause to be executed and/or delivered to Purchaser all of the
following:
(a) certified copies of the Certificate or Articles of
Incorporation and By-laws of the Companies;
(b) (i) certificates of good standing of Seller, issued
not earlier than ten (10) days prior to the Closing Date by the
Secretaries of State of Delaware and Michigan, and (ii) a
certificate of status of the Subsidiary issued not earlier than ten
(10) days prior to the Closing Date by the Minister of Consumer and
Commercial Relations, Province of Ontario;
(c) an incumbency and specimen signature certificate
with respect to the officers of Seller executing this Agreement and
Seller's Ancillary Documents on behalf of Seller;
(d) a certified copy of resolutions of (i) Seller's
board of directors (in Seller's own capacity and as sole
shareholder of the Subsidiary] authorizing the execution, delivery
and performance of this Agreement and Seller's Ancillary Documents,
and (ii) the Subsidiary's board of directors authorizing the sale
of the Subsidiary Shares, as required under the Subsidiary's
Articles of Incorporation;
(e) certificates representing all outstanding Subsidiary
Shares duly endorsed in blank or with duly executed stock powers
attached;
(f) a bill of sale, executed by Seller, conveying all of
the Inventory, Equipment and other tangible personal property
included in the Purchased Assets to Purchaser, free and clear of
all liens, claims, encumbrances and security interests other than
Permitted Encumbrances and containing the warranties of title set
forth in this Agreement;
(g) an assignment to Purchaser, executed by Seller, of
all of the Purchased Assets (other than the Inventory, Equipment,
and the Coopersville Real Estate], along with the original
instruments (if any) representing, evidencing or constituting such
Purchased Assets, free and clear of all liens, claims, encumbrances
and security interests other than Permitted Encumbrances and
containing the warranties of title set forth in this Agreement. To
the extent necessary in the opinion of Purchaser's counsel, Seller
shall also execute and deliver (in recordable form where required)
separate assignments of any of the Purchased Assets, and where
applicable, in the form required by the applicable governmental
agencies, insurance companies, customers, lessors, and other
parties with whom the assignments must be filed;
(h) the written opinion of Curtis, Mallet-Prevost, Colt
& Mosle, counsel to Seller, addressed to Purchaser, in
substantially the form of Exhibit B attached hereto, and the
written opinion of Siskind, Cromarty, Ivey & Dowler, counsel to the
Subsidiary, addressed to Purchaser, substantially in the form of
Exhibit C attached hereto;
(i) (A) UCC-1, UCC-2, Federal and State tax lien,
bankruptcy and seven (7) year judgment searches with respect to
Seller for the State of Michigan and the counties thereof in which
a portion of the Business is conducted, and (B) PPSA, Supreme
Court, District Court and Bankruptcy Court searches with respect to
the Subsidiary for the Province of Ontario and the counties thereof
in which a portion of the Business is conducted, and patent,
trademark and copyright searches with respect to the Companies, all
prepared by search companies reasonably satisfactory to Purchaser,
and dated not earlier than fifteen (15] days prior to the closing
Date;
(j) the written resignations, effective as of the
Closing Date, of each of the directors and officers of the
Subsidiary;
(k) the minute books and stock records of the Subsidiary;
(l) releases of all liens and other encumbrances and
security interests held by Barclays Business Credit Inc., in any of
the Purchased Assets or the Subsidiary's assets, including, without
limitation, UCC-3 termination statements;
(m) a general warranty deed (subject only to Permitted
Encumbrances), a certificate in compliance with the Foreign
Investment in Real Property Tax Act ("FIRPTA") certifying that
Seller is not a person or entity subject to withholding under
FIRPTA, an ALTA statement and all other documents required by the
title insurance company issuing the policy referred to in
subsection (o) with respect to the Coopersville Real Estate
executed by Seller, together with any necessary transfer
declarations;
(n) an owner's title insurance policy (ALTA Owner's
Policy Form-1992)) with respect to the Coopersville Real Estate,
insuring Purchaser and issued as of the Closing Date by a title
insurance company reasonably satisfactory to Purchaser, in such
amount(s) as may be reasonably satisfactory to Purchaser, showing
fee simple title thereto to be vested in Purchaser, subject only to
Permitted Encumbrances, with extended coverage over all general
exceptions, a zoning endorsement in the form of ALTA endorsement
Form 3.1, a creditors' rights endorsement (provided that Purchaser
delivers an acceptable property appraisal to such title insurance
company) and any and all other endorsements reasonably requested by
Purchaser or any lender of Purchaser;
(o) a survey of the Coopersville Real Estate, dated not
earlier than six months prior to the Closing Date, prepared by a
licensed surveyor, and certified to Purchaser, Purchaser's
lender(s] and the title insurance company as having been prepared
in accordance with American Land Title Association land survey
standards, and showing all easements, access ways and showing
material improvements to be within lot, sidelot, rearlot and
setback lines, and showing no encroachments onto the Coopersville
Real Estate;
(p) to the extent obtained, all necessary consents for the
assignment of contracts, leases, purchase orders, sales orders,
Permits and Environmental Permits which are to be assigned to
Purchaser or alternate arrangements with respect thereto, all as
reasonably acceptable to Purchaser;
(q) certificates of title or origin (or like documents) with
respect to all vehicles included in the Purchased Assets and other
Equipment for which a certificate of title or origin is required in
order for title thereto to be transferred to Purchaser;
(r) all clearance certificates or similar types of documents
which may be required by any federal, state, provincial or other
taxing authority in order to relieve the Purchaser of any
obligation to withhold any portion of the Purchase Price;
(s) a notification under the Investment Canada Act, if
applicable, to be filed within thirty (30) days of the Closing; and
(t) without limitation by the specific enumeration of the
foregoing, all other documents reasonably required from Seller to
consummate the transaction contemplated hereby.
5.4 Joint Deliveries. At the Closing, the parties shall
execute and deliver, or cause to be executed and delivered, to each
other, all of the following:
(a) a lease of that portion of the Coopersville Real
Estate presently devoted primarily to the conduct of Seller's
management information services (MIS] operations, between
Purchaser, as lessor, and Seller, as lessee, in substantially the
form of Exhibit D attached hereto;
(b) a lease of that portion of the Canadian Real Estate
not presently leased to third parties (as described therein),
between Seller or its designee, as lessor, and the Subsidiary, as
lessee, in substantially the form of Exhibit E attached hereto; and
(c) all legally required transfer tax declarations
concerning the Purchased Assets.
ARTICLE VI
Post-Closing Agreements
6.1 Post-Closing Agreements. From and after the Closing, the
parties shall have the respective rights and obligations which are
set forth in the remainder of this Article VI.
6.2 Inspection of Records. Seller and Purchaser shall each
make their respective books and records (including work papers in
the possession of their respective accountants] available for
inspection by the other party, or by its duly accredited
representatives, for reasonable business purposes at all reasonable
times during normal business hours, for a seven (7) year period
after the Closing Date, with respect to all transactions of the
Business occurring prior to and those relating to the Closing, the
historical financial condition, assets, liabilities, operations and
cash flows of the Business, or the Assumed Liabilities. As used in
this Section 6.2, the right of inspection includes the right to
make extracts or copies. The representatives of a party inspecting
the records of the other party shall be reasonably satisfactory to
the other party.
6.3 Certain Assignments. Any other provision of this
Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to transfer or assign, or a transfer or
assignment of, any claim, contract, lease, Permit, Environmental
Permit, commitment, sales order or purchase order, or any benefit
arising thereunder or resulting therefrom, if an attempt at
transfer or assignment thereof without the consent required or
necessary for such assignment, would constitute a breach thereof or
in any way adversely affect the rights of Purchaser or Seller
thereunder. If such a consent or agreement to transfer or assign
is not obtained for any reason, Purchaser and Seller shall
cooperate in any arrangement Purchaser may reasonably request to
provide for Purchaser, to the extent practicable, the benefits
under such claim, contract, lease, Permit, Environmental Permit,
commitment or order.
6.4 Use of Trademarks; References to Seller. Seller shall
cease to use and shall not license or permit any third party to use
the names "Leigh Products, "Leigh Metal Products", or any name,
slogan, logo or trademark which is similar or deceptively similar
to any of the Trademarks, for any purpose, including, without
limitation, for purposes of the sale of any inventory reconveyed to
Seller pursuant to Section 3.5. Purchaser may refer to the Business
as formerly being Seller's. Within six (6) months following the
Closing Date, Purchaser shall cease using any packaging or other
materials included within the Purchased Assets containing any
visible reference to Seller or any of its Affiliates.
6.5 Employees. Purchaser shall not be obligated to offer
employment to any employee of Seller, but Purchaser shall have the
right to employ employees of Seller employed in the Business as of
the Closing Date, on terms and conditions established by Purchaser
in its sole discretion. For a period of two (2) years commencing
on the Closing Date, Seller shall not take any actions which are
calculated to persuade any salaried, technical or professional
employees, representatives or agents of Purchaser to terminate
their association with Purchaser.
6.6 Back-Up. Seller shall, at Purchaser's request, furnish
such detailed back-up material with respect to the Purchased Assets
or the subsidiary's assets, the historical financial statements of
the Business, the Closing Balance Sheet, the Financial Statements
and the Assumed Liabilities as are in Seller's possession or are
reasonably available to Seller.
6.7 Accounts Receivable. In the event Seller shall receive
any instrument of payment of any of the Accounts Receivable or the
accounts receivable of the Subsidiary, Seller shall deliver it
within three (3) days to Purchaser or the Subsidiary, as the case
may be, by wire transfer as to any cash received, endorsed where
necessary, without recourse, in favor of Purchaser or the
Subsidiary, as the case may be. At the request of Purchaser,
Seller shall assist Purchaser in the collection of Accounts
Receivable, at no expense to Seller.
6.8 Third Party Claims. The parties shall cooperate with
each other with respect to the defense of any claims or litigation
made or commenced by third parties subsequent to the Closing Date
which are not subject to the indemnification provisions contained
in Article VII, provided that the party requesting cooperation
shall reimburse the other party for the other party's reasonable
out-of-pocket costs and expenses of furnishing such cooperation.
6.9 Product Warranties. Purchaser will accept returns of
products of the Business shipped by Seller on and prior to the
Closing Date, or which constitute finished goods inventory on the
Closing Date, which are defective or which fail to conform to the
customer's order in accordance with the following provisions (but
Purchaser does not hereby assume any liability to any third party
claimant or, except as provided in this Section 6.9 and Article
VII, to Seller]. Purchaser shall notify Seller of each such return,
specifying the customers, products and shipment orders involved and
stating whether any consequential damages are claimed to have been
suffered. If such products are defective or fail to conform to the
customer's order, Purchaser shall, at its option, repair or replace
the defective or nonconforming products in accordance with the
Business' practices in effect at the time of shipment. Purchaser
will repair, rather than replace, such products whenever it is
economically and technically practical to do so. In the event of
any such repair Seller shall promptly reimburse Purchaser for
Purchaser's direct costs therefor, an allocable share of
manufacturing overhead, and shipping costs from and to the
customer. In the case of replacement, Seller shall promptly
reimburse Purchaser for an amount equal to Purchaser's direct
manufacturing cost for the replaced item, including an allocable
share of manufacturing overhead in connection therewith, and for
shipping costs to and from the customer. Payments with respect to
products which can be resold by Purchaser shall be made to Seller
not later than thirty (30] days after the date on which Purchaser
returns any such returned products to inventory, as to which
Purchaser shall provide Seller notice within ten (10) days of so
returning such products to inventory. Seller shall reimburse
Purchaser for its reasonable out-of-pocket costs (including freight
out) of handling and disposing of such defective or nonconforming
products which are unsuitable for repair or sale to other
customers. At Seller's request, Purchaser shall provide Seller
with all reasonable information and documentation in Purchaser's
possession that would be helpful to Seller in filing damage claims
with any shipper of such products. Seller shall have reasonable
access to the returned non-conforming or defective products to
verify such non-conformance or defect, and Purchaser shall provide
Seller with a statement of all such returned non-conforming or
defective products. Purchaser shall mark individual items of
inventory completed by it following the Closing (of the type
included within the Purchased Assets] in such a way that items of
such inventory can be distinguished from items shipped by Seller
prior to the Closing Date or which constituted finished goods
inventory as of the Closing Date.
6.10 Sales and Transfer Taxes and Fees. Seller shall pay when
due from assets other than the Purchased Assets, all sales taxes
and/or use taxes, recording fees, personal property title
application fees, patent and trademark assignment registration
fees, real property transfer taxes and fees and all other taxes and
fees on transfer of the Purchased Assets arising by virtue of the
sale of the Purchased Assets to Purchaser, regardless of whether
the liability for said taxes or fees is imposed by law upon Seller
or upon Purchaser.
6.11 Reproration of Real Estate Taxes. Within 30 days after
the date on which the real estate taxes for 1995 and 1994 with
respect to the Coopersville Real Estate become ascertainable, the
parties shall reprorate such taxes to the closing Date, and if the
reprorated amount is different than the amount thereof as accrued
as of the Closing Date and reflected on the Closing Balance Sheet,
an adjusting payment in the amount of the difference shall be paid
to the party entitled thereto.
6.12 Covenant Not to Compete. As an inducement for Purchaser
to enter into this Agreement, Seller agrees that:
(a) from and after the Closing and continuing for the
lesser of five (5) years from the Closing Date or the longest time
permitted by applicable law, neither Seller nor any of its
Affiliates shall do any one or more of the following, directly or
indirectly:
(i) engage or participate, anywhere in the United
States, Canada or Mexico, as an owner, partner, shareholder,
consultant or (without I imitation by the specific enumeration of
the foregoing) otherwise in the business of the manufacture or
distribution of registers, ventilation products, bath cabinets,
mail boxes and other related products; or
(ii) solicit any customer of Purchaser which has been a
customer of Seller or its Affiliates with respect to the Business
within the past five (5] years, to purchase from any source other
than Purchaser any product or service pertaining to the Business as
conducted on the Closing Date which could be supplied by Purchaser.
The foregoing covenant shall not be deemed to prevent Seller or any
of its Affiliates from doing business with any of their respective
customers which are customers of the Business, in any business
other than that described in Section 6.12 (a) (i).
(b) Seller and its Affiliates recognize that the territorial,
time and scope limitations set forth in this Section 6.12 are
reasonable and are required for the protection of Purchaser and in
the event that any such territorial, time or scope limitation is
deemed to be unreasonable by a count of competent jurisdiction,
Purchaser and Seller agree to the reduction of either or any of
said territorial, time or scope limitations to such an area, period
Or scope as said court shall deem reasonable under the
circumstances. For purposes of this Section 6.12, the business of
Seller's H.B. Ives Division, the manufacture and sale of bath
accessories (not including medicine cabinets], door closers, door
knockers, kick plates and viewers, shall not be deemed to be in
competition with the Business.
6.13 Disclosure of Confidential Information.
(a) As a further inducement for Purchaser to enter into this
Agreement, Seller agrees that for five (5) years after the Closing
Date, Seller shall, and shall cause its Affiliates to, hold in
strictest confidence, and not, without the prior written approval
of Purchaser, use for their own benefit or the benefit of any party
other than Purchaser or disclose to any person, firm or corporation
other than Purchaser (other than as required by law) any Division
Information (as defined herein) regarding the Business. Intending
that the term shall be broadly construed to include anything
protectible under applicable law, "Division Information" means all
information, and all documents and other tangible items which
record information, which at the time or times concerned is
protectible as a trade secret under applicable law, including,
without limitation, the following especially sensitive types of
information with respect to the Business:
(i) product development and marketing plans and
strategies;
(ii) unpublished drawings, manuals, know-how, production
techniques, proprietary formulas, research in progress, and the
like;
(iii) the identity, purchase and payment patterns of, and
special relations with, customers;
(iv) the identity, net prices and credit terms of, and
special relations with, suppliers; and
(v) proprietary software and business records, to the
extent included within the Purchased Assets.
Division Information shall not include information of the foregoing
description (1) which was in the public domain, (2) which is
disclosed to Seller by a third party-not having a duty to not
disclose such information, and (3] information as to which
disclosure is required by law. Seller shall advise Purchaser of
any request, including a subpoena or similar legal inquiry to
disclose any such Division Information, so that Purchaser can seek
appropriate legal relief.
(b) Purchaser agrees that for five (5) years after the Closing
Date, Purchaser shall, and shall cause its Affiliates to, hold in
strictest confidence, and not, without the prior written approval
of Seller, use for their own benefit or the benefit of any party
other than Seller or disclose to any person, firm or corporation
other than Seller (other than as required by law) any Harrow
Information (as defined herein]. Intending that the term shall be
broadly construed to include anything protectible under applicable
law, "Harrow Information" means all information pertaining to the
business of Harrow other than the Business, and all documents and
other tangible items which record information of such type, if any,
which at the time or times concerned is protectible as a trade
secret under applicable law, and was disclosed to Purchaser in
connection with Purchaser's due diligence and the consummation of
the transactions contemplated by this Agreement. Harrow
Information shall not include information of the foregoing
description (1) which was in the public domain, (2) which is
disclosed to Purchaser by a third party not having a duty to not
disclose such information, and (3) information as to which
disclosure is required by law. Purchaser shall advise Seller of any
request, including a subpoena or similar legal inquiry to disclose
any such Harrow Information, so that Seller can seek appropriate
legal relief.
6.14 Injunctive Relief. The parties hereto specifically
recognize that any breach of Sections 6.12 or 6.13 will cause
irreparable injury to Purchaser (in the case of Sections 6.12 and
6.13(a)) or Seller (in the case of Section 6.13(b))and that actual
damages may be difficult to ascertain, and in any event, may be
inadequate. Accordingly (and without limiting the availability of
legal or equitable, including injunctive, remedies under any other
provisions of this Agreement), the parties hereto agree that in the
event of any such breach, Purchaser or Seller, as the case may be,
shall be entitled to injunctive relief in addition to such other
legal and equitable remedies that may be available. In the event
that the absence of such limitation is deemed to be unreasonable by
a court of competent jurisdiction, the parties hereto agree and
submit to the imposition of such a limitation as said court shall
deem reasonable.
6.15 Further Assurances. The parties shall execute such
further documents, and perform such further acts, as may be
necessary to transfer and convey the Purchased Assets to Purchaser,
on the terms herein contained, and to otherwise comply with the
terms of this Agreement and consummate the transaction contemplated
hereby.
6.16 Knowledge. For purposes of this Agreement, "knowledge of
Seller" or "Seller's knowledge" or words of similar import shall
mean the actual knowledge, after due inquiry, of Larry Adams, John
Hogan, Betsy Raymond, Robert Hoagland, Don Fenstermacher, D. James
Toppen, K.C. Vaughn, Tom Taylor, Mike Howe, Anthony Balestro,
Michael McIntyre and Ted Bowles; provided, however, that Messrs.
Taylor and McIntyre shall only be included within this definition
with respect to Sections 4.3(s) and 4.3 (t). In addition,
information contained in the books and records of the Subsidiary
shall be deemed known to Seller for purposes of this Agreement.
ARTICLE VII
Indemnification
7.1 General. From and after the Closing, the parties shall
indemnify each other as provided in this Article VII. No
specifically enumerated indemnification obligation with respect to
a particular subject matter as set forth below shall limit or
affect the applicability of a more general indemnification
obligation as set forth below with respect to the same subject
matter.
7.2 Certain Definitions. As used in this Agreement, the
following terms shall have the indicated meanings:
(a) "Damages" shall mean all liabilities, demands,
claims, actions or causes of action, regulatory, legislative or
judicial proceedings or investigations, assessments, levies,
losses, fines, penalties, damages, costs and expenses, including,
without limitation: (i) reasonable attorneys', accountants',
investigators', and experts' fees and expenses, sustained or
incurred in connection with the defense or investigation of any of
the foregoing; and (ii) costs and expenses reasonably incurred to
bring the Purchased Assets and the Business into compliance with
Environmental Laws in effect on the Closing Date.
(b) "Indemnified Party" shall mean a party hereto who is
entitled to indemnification from another party hereto pursuant to
this Article VII;
(c) "Indemnifying Party" shall mean a party hereto who
is required to provide indemnification under this Article IX to
another party hereto;
(d) "Third Party Claim" shall mean any claim, action,
suit, proceeding, investigation or like matter which is asserted or
threatened by a party other than the parties hereto, their
successors and permitted assigns, against any Indemnified Party or
to which an Indemnified Party is subject.
7.3 Indemnification Obligations of Seller. Seller shall
indemnify, save and keep harmless Purchaser, the Subsidiary and
their respective successors and permitted assigns (collectively,
the "Purchaser Indemnitees") against and from all Damages sustained
or incurred by any of them resulting from or arising out of or by
virtue of:
(a) any inaccuracy in or breach of any representation and
warranty made by Seller in this Agreement or in any closing
document delivered to Purchaser in connection with this Agreement;
(b) any breach by Seller of, or failure by Seller to
comply with, any of its covenants or obligations under this
Agreement (including, without limitation, its obligations under
this Article VII);
(c) (i) the failure to discharge when due any liability
or obligation constituting an Excluded Seller Liability, or any
claim against Purchaser with respect to any such liability or
obligation or alleged liability or obligation, or (ii) the
existence of any Excluded Subsidiary Liability;
(d) any employee pension benefit plan (as defined by
Section 3(2) of ERISA) or any employee welfare benefit plan (as
defined in Section 3(l) of ERISA) which Seller or an ERISA
Affiliate has at any time maintained or administered or to which
Seller or any ERISA Affiliate has at any time contributed
(including, without limitation, any liability for health
continuation requirements under Code Section 4980B or Part 6 of
Subtitle B of Title I of ERISA and any liability arising pursuant
to Title IV of ERISA for plan termination, withdrawal or partial
withdrawal from any multiemployer plan, or any lien to enforce any
Title IV liability);
(e) any benefits accrued pursuant to any Plan, Welfare
Plan or Employee Benefit Plan (other than the Canadian Plan] at or
prior to the Closing Date, other than benefits payable under
insurance policies, if any, constituting Purchased Assets;
(f) any action or failure to act, in whole or in part, at
or prior to the Closing Date with respect to any Plan, Welfare Plan
or Employee Benefit Plan (other than the Canadian Plan); or
(g) without being limited by the foregoing paragraphs (a)
through (f), and without regard to whether any one or more of the
items listed in this paragraph (g) may be disclosed in the
Disclosure Schedule or otherwise known to Purchaser as of the date
hereof or the closing Date:
(i) any generation, transportation, storage,
treatment or Release of any Hazardous Materials arising in
connection with the conduct of the Business occurring on or prior
to the Closing Date (including without I imitation those that
allegedly result in, or result in, any Release or treatment of
Hazardous Materials after the Closing Date] regardless of when
liability is asserted, at' (x) any Facility, regardless of whether
either Company owned, operated or leased such Facility at the time
any such activity occurred, or (y) any Offsite Facility with regard
to any Hazardous Materials with which either Company was involved
in any way at any time
(ii) any discharges to or from storm, ground or
surface waters or wetlands, and any air emissions or pollution,
which result from or are caused by activities, events, conditions
or occurrences with respect to the Business on or prior to the
Closing Date;
(iii) the exposure of and resulting consequences to
any persons, including, without limitation, employees of either
Company, to any Hazardous Materials created, generated, processed,
handled or originating on or prior to the Closing Date at a
Facility or otherwise used by either of the Companies or their
predecessors in the conduct of the Business or contained in or
constituting a part of merchandise of the Business sold by either
Company or its predecessors; or
(iv) any violation of, obligation imposed by, or
claim under, any Environmental Law as a result of activities,
events, conditions or occurrences related to the Business prior to
the Closing Date, regardless of when the violation, obligation or
claim arises or is asserted.
7.4 Purchaser's Indemnification Covenants. Purchaser shall
indemnify, save and keep harmless Seller and its successors and
permitted assigns (collectively, the "Seller Indemnitees") against
and from all Damages sustained or incurred by any of them resulting
from or arising out of or by virtue of:
(a) any inaccuracy in or breach of any representation
and warranty made by Purchaser in this Agreement or in any closing
document delivered to Seller in connection with this Agreement;
(b) any breach by Purchaser of, or failure by Purchaser
to comply with, any of its covenants or obligations under this
Agreement (including, without limitation, its obligations under
this Article VII);
(c) Purchaser's failure to pay, discharge and perform
any of the Assumed Liabilities when due;
(d) the Subsidiary's failure to pay, discharge and
perform any of the Retained Subsidiary Liabilities; or
(e) any Third Party Claims to the extent caused by the
acts or omissions of Purchaser or the Subsidiary after the Closing
Date and not constituting an Excluded Seller Liability or Excluded
Subsidiary Liability as the case may be, including, without
limitation, Damages which arise out of Purchaser's or the
Subsidiary's operation of the Business after the Closing Date; or
(f) any violation by Purchaser of any federal, state or
local employment statute, rule or regulation, or any wrongful act,
and all other claims of tortious conduct, in any case associated
with the hiring, failure to hire and employment of individuals by
Purchaser; provided that as to any employee of Seller employed by
Purchaser upon or shortly after the Closing Date, Purchaser shall
be liable for any severance obligations arising as a result of
Purchaser's subsequent termination of such employee, to the extent
of such severance obligations under applicable law, without regard
to the type or extent of any benefits or rights such individuals
may have had against Seller.
7.5 Limitations on Seller's Indemnification Obligations.
Seller's obligations pursuant to the provisions of Section 7.3 are
subject to the following limitations, as well as the procedures set
forth in Section 7.7:
(a) the Purchaser Indemnitees shall not be entitled to
recover under Section 7.3(a) until the total amount which Purchaser
would recover under Section 7.3(a), but for this Section 7.5(a),
equals or exceeds $117,500, in which event the Purchaser
Indemnitees shall be entitled to recovery for the first dollar and
all amounts in excess thereof, and, thereafter, no additional claim
or claims may be brought unless and until the aggregate amount of
such claims brought at any particular time equals or exceeds
$5,000, in which event the Purchaser Indemnitees shall be entitled
to recovery for the first dollar of such additional claims and all
amounts in excess thereof;
(b) except as set forth in Section 7.5 (d) and Section
7.5(e), the Purchaser Indemnitees shall not be entitled to recover
under Section 7.3(a) unless a claim has been asserted by written
notice specifying the details of the alleged misrepresentation or
breach of warranty, delivered to Seller on or before August 6,
1996;
(c) except as set forth in Sections 7.5(d) and 7.5(e),
the Purchaser Indemnitees shall not be entitled to recover under
7.3(b) through 7.3(f) based upon a breach by Seller of, or failure
by Seller to comply with, any of its covenants or obligations under
Sections 2.1 and 2.3 of this Agreement; unless a claim has been
asserted by written notice, specifying the details of the alleged
breach or failure to comply, delivered to Seller on or prior to
August 6, 1997;
(d) the Purchaser Indemnitees shall not be entitled to
recover under the indemnification provisions of Section 7.3 with
respect to any liabilities of the Subsidiary for Taxes which
constitute Excluded Subsidiary Liabilities, unless and until a
claim has been asserted by written notice, specifying the details
of the claim, on or before the last day of the longest applicable
limitations period under applicable law;
(e) the Purchaser Indemnitees shall not be entitled to
recover under the indemnification provisions of Section 7.3 as
follows:
(i) with respect to a misrepresentation or breach
of warranty under Section 4.3 (ee] (as to any liability under
Environmental Laws or pertaining to Environmental Matters),
Sections 4.3 (ff), (gg) or (hh); or
(ii) due to the existence of any liability (A)
relating to the existence or absence of any Environmental Permit
required under applicable Environmental Law as of the Closing Date,
(B) arising or existing due to a breach of Section 6.17, or (C)
under Section 7.3(g); unless a claim has been asserted by written
notice, specifying the details of the breach, on or before February
6, 2005; and
(f) Seller shall have no liability under the
indemnification provisions set forth in this Article VII for
liabilities or deficits for which related reserves (e.g.
receivables reserves for receivables and inventory reserves for
inventory) are established on the Closing Balance Sheet unless and
until all such related reserves provided in the Closing Balance
Sheet have been applied to offset such liabilities or deficits.
7.6 Limitations on Purchaser's Indemnification Obligations.
Purchaser's obligations pursuant to the provisions of Section 7.4
are subject to the following limitations, as well as the procedures
set forth in Section 7.7:
(a) the Seller Indemnitees shall not be entitled to
recover under Section 7.4(a) until the total amount which Seller
would recover under Section 7.4(a), but for this Section 7.6,
equals or exceeds $117,500, in which event the Seller Indemnitees
shall be entitled to recovery for the first dollar and all amounts
in excess thereof, and, thereafter, no additional claim or claims
may be brought unless and until the aggregate amount of such claims
brought at any particular time equals or exceeds $5,000, in which
event the Seller Indemnitees shall be entitled to recovery for the
first dollar of such additional claims and all amounts in excess
thereof; and
(b) the Seller Indemnitees shall not be entitled to
recover under Section 7.4 unless a claim has been asserted by
written notice, specifying the details of the alleged
misrepresentation, breach of warranty or other breach or failure to
comply, delivered to Purchaser on or prior to August 6, 1997.
7.7 Third Party Claims Procedures.
(a) If either party shall receive notice of a Third
Party Claim, the party receiving the notice of the Third Party
Claim shall notify the other party of its existence, within thirty
(30) days of receiving such notice (i) setting forth with
reasonable specificity the facts and circumstances of which such
party has received notice, and, if the party giving such notice is
an Indemnified Party, (ii) specifying the basis hereunder upon
which the Indemnified Party's claim for indemnification is
asserted; provided, however, that failure by the Indemnified Party
to give such notice shall not relieve Indemnifying Party from any
liability it shall otherwise have pursuant to this Agreement except
to the extent Indemnifying Party is actually prejudiced by such
failure. Upon the giving of any such notice, the remaining
provisions of this Section 7.7 shall apply.
(b) The Indemnifying Party shall have a period of twenty
(20) days from the date of receipt of any notice from the
Indemnified Party within which to respond thereto. If the
Indemnifying Party does not respond within such twenty (20) day
period, the Indemnifying Party shall be deemed to have accepted
responsibility for such indemnity. The indemnification period
provided for herein shall be tolled for a particular claim for the
period beginning on the date the Indemnifying Party receives
written notice of that claim until the final resolution of such
claim.
(c) Subject to the remainder of this Section 7.7(c), the
Indemnifying Party shall have the right, at its option, to be
represented by counsel of its choice and to assume the defense or
otherwise control the handling of any claim, suit, judgment or
matter for which indemnity is sought, which is set forth in any
notice sent by the Indemnified Party, by notifying the Indemnified
Party in writing to such effect within twenty (20) days of receipt
of such notice. If the Indemnifying Party does not give timely
notice in accordance with the preceding sentence, the Indemnifying
Party shall be deemed to have given notice that it does not wish to
control the handling of such claim, suit or judgment. The
Indemnified Party shall have the right to be represented by counsel
at its own expense in any contest, defense, litigation or
settlement conducted by the Indemnifying Party, provided that the
Indemnified Party shall be entitled to reimbursement therefor if
the Indemnifying Party shall lose its right to contest, defend,
litigate and settle the Third Party Claim as provided in the
preceding sentence. In the event the Indemnifying Party elects (by
notice in writing within such twenty (20) day period) to assume the
defense of or otherwise control the handling of any such claim,
suit, judgment or matter for which indemnity is sought, the
Indemnifying Party shall indemnify and hold harmless the
Indemnified Party from and against any and all Damages associated
with the Third Party Claim or the defense thereof, notwithstanding
the fact that the Indemnifying Party may not have been so liable to
the Indemnified Party had the Indemnifying Party not elected to
assume the defense of or to otherwise control the handling of such
claim, suit, judgment or other matter.
(d) All expenses (including without limitation attorneys'
fees] incurred by the Indemnifying Party in connection with the
foregoing shall be paid by the Indemnifying Party. Notwithstanding
the foregoing, in connection with any settlement negotiated by an
Indemnifying Party, no Indemnified Party shall be required by an
Indemnifying Party to (x) enter into any settlement that does not
include as an unconditional term thereof the delivery by the
claimant or plaintiff to the Indemnified Party of a release from
all liability in respect of such claim or litigation, (y) enter
into any settlement that attributes by its terms liability to the
Indemnified Party or (z) consent to the entry of any judgment that
does not include as a term thereof a full dismissal of the
litigation or proceeding with prejudice. No failure by an
Indemnifying Party to acknowledge in writing its indemnification
obligations under this Article VII shall relieve it of such
obligations to the extent they exist. If an Indemnified Party is
entitled to indemnification against a Third Party Claim, and the
Indemnifying Party fails to accept a' tender of, or assume, the
defense of a Third Party Claim pursuant to this Section 7.7, or if,
in accordance with the foregoing, the Indemnifying Party shall lose
its right to contest, defend, litigate and settle such a Third
Party Claim, the Indemnified Party shall have the right, without
prejudice to its right of indemnification hereunder, in its
discretion exercised in good faith and upon the advice of counsel,
to contest, defend and litigate such Third Party Claim, and may
settle such Third Party Claim, either before or after the
initiation of litigation, at such time and upon such terms as the
Indemnified Party deems fair and reasonable, provided that at least
ten (10] days prior to any such settlement, written notice of its
intention to settle is given to the Indemnifying Party. If,
pursuant to this Section 7.7, the Indemnified Party so contests,
defends, litigates or settles a Third Party Claim, for which it is
entitled to indemnification hereunder as hereinabove provided, the
Indemnified Party shall be reimbursed by the Indemnifying Party for
the reasonable attorneys' fees and other expenses of defending,
contesting, litigating and/or settling the Third Party Claim which
are incurred from time to time, forthwith following the
presentation to the Indemnifying Party of itemized bills for said
attorneys' fees and other expenses.
(e) The parties shall cooperate in the defense of any
such claim or litigation and each shall make available all books
and records which are relevant in connection with such claim or
litigation.
(f) Any and all amounts determined from time to time to
be paid by the Indemnifying Party by reason of the indemnity
obligations under this Article VII or any exhibit, schedule or
certificate delivered herewith shall be paid to the Indemnified
Party in cash, on demand.
(g) Any claim for indemnification under this Agreement
which does not result from the assertion of a Third Party Claim
shall be asserted by written notice given by the Indemnified Party
to the Indemnifying Party. The Indemnifying Party shall have a
period of thirty (30) days within which to respond thereto. If the
Indemnifying Party does not respond within such thirty (30) day
period, the Indemnifying party shall be deemed to have accepted
responsibility for such indemnity, and shall have no further right
to contest the validity of such claim. If the Indemnifying Party
does respond within such thirty (30] day period and reject such
claim in whole or in part, the Indemnified Party shall be free to
pursue such remedies as may be available to it under applicable
law.
(h) The Indemnifying Party shall not be entitled to
require that any action be brought against any other person before
action is brought against it hereunder by the Indemnified Party but
shall be subrogated to any right of action to the extent that it
has paid or successfully defended against any Third Party Claim.
ARTICLE VIII
Miscellaneous
8.1 Publicity. Except as otherwise required by law, press
releases and other publicity concerning this transaction shall be
made only with the prior agreement of the Seller and Purchaser.
8.2 Notices. All notices required or permitted to be given
hereunder shall be in writing and may be delivered by hand, by
facsimile, by nationally recognized private courier, or by United
States mail. Notices delivered by mail shall be deemed given three
(3) business days after being deposited in the United States mail,
postage prepaid, registered or certified mail, return receipt
requested. Notices delivered by hand, by facsimile, or by
nationally recognized private carrier shall be deemed given on the
first business day following receipt; provided, however, that a
notice delivered by facsimile shall only be effective if such
notice is also delivered by hand, or deposited in the United States
mail, postage prepaid, registered or certified mail, on or before
two (2) business days after its delivery by facsimile. All notices
shall be addressed as
follows:
If to Seller
Addressed to
Harrow Products, Inc.
2627 East Beltline, S.E.
Grand Rapids, Michigan 49546
Attention: Larry L. Adams, President
Telecopier: (616) 942-2170
with a copy to
Curtis, Mallet-Prevost, Colt & Mosle
101 Park Avenue
New York, New York 10178-0061
Attention: John N. Marden, Esq.
Telecopier: (212) 697-1559
If to Purchaser
Addressed to
Applied Industrial Materials Corporation
One Parkway North
Deerfield, Illinois 60015
Attention: Wayne C. Kocourek
Telecopier: (708) 940-0811
and to
Milcor Limited Partnership
1150 N. Cable Road
Lima, Ohio 45802
Attention: Richard C. Liden, President
Telecopier: (419) 227-1060
with a copy to
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Attention: David W. Schoenberg, Esq.
Telecopier: (312) 715-4800
and/or to such other respective addresses and/or addressees as
may be designated by notice given in accordance with the
provisions of this Section 8.3.
8.3 Expenses. Except as set forth in Section 6.10 and
Article VII, each party hereto shall bear all fees and expenses
incurred by such party in connection with, relating to or arising
out of the execution, delivery and performance of this Agreement
and the consummation of the transaction contemplated hereby,
including, without limitation, financial advisors', investment
banker's, broker's, attorneys', accountants' and other professional
fees and expenses; it being understood that Seller shall pay all
fees and expenses of the Accountants in connection with the
preparation of the Closing Balance Sheet.
8.4 Entire Agreement. This Agreement and the instruments to
be delivered by the parties pursuant to the provisions hereof
constitute the entire agreement between the parties. Each exhibit,
schedule and the Disclosure Schedule, shall be considered
incorporated into this Agreement. Any amendments, or alternative
or supplementary provisions to this Agreement, must be made in
writing and duly executed by an authorized representative or agent
of each of the parties hereto.
8.5 Non-Waiver. The failure in any one or more instances of
a party to insist upon performance of any of the terms, covenants
or conditions of this Agreement, to exercise any right or privilege
in this Agreement conferred, or the waiver by said party of any
breach of any of the terms, covenants or conditions of this
Agreement, shall not be construed as a subsequent waiver of any
such terms, covenants, conditions, rights or privileges, but the
same shall continue and remain in full force and effect as if no
such forbearance or waiver had occurred. No waiver shall be
effective unless it is in writing and signed by an authorized
representative of the waiving party.
8.6 Counterparts. This Agreement may De executed in multiple
counterparts, each of which shall be deemed to be an original, and
all such counterparts shall constitute but one instrument.
8.7 Severability. The invalidity of any provision of this
Agreement or portion of a provision shall not affect the validity
of any other provision of this Agreement or the remaining portion
of the applicable provision.
8.8 Applicable Law. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation,
construction, effect and in all other respects by the internal laws
of the State of Michigan applicable to contracts made in that
State.
8.9 Arbitration. Either party shall submit a dispute arising
under the indemnification provisions contained herein (other than
a dispute regarding the matters described in clauses (i) and (ii]
of Section 7.5(d) or other environmental matters) to a panel of
three (3) arbitrators chosen pursuant to the rules of the American
Arbitration Association. The parties hereto hereby submit and
consent to the jurisdiction of the American Arbitration Association
for any such dispute. Any arbitration hereunder shall take place
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and an award rendered by the arbitrators
shall be final and binding and judgment upon the award rendered by
the arbitrators may be entered in any court having jurisdiction
thereof. Discovery in connection with such arbitration shall be
conducted in accordance with the Federal Rules of Civil Procedure,
and the Federal Rules of Evidence shall be applicable to any such
arbitration.
8.10 Binding Effect; Benefit. This Agreement shall inure to
the benefit of and be binding upon the parties hereto, and their
successors and permitted assigns. Nothing in this Agreement,
express or implied, shall confer on any person other than the
parties hereto, and their respective successors and permitted
assigns any rights, remedies, obligations or liabilities under or
by reason- of this Agreement.
8.11 Assignability. This Agreement shall not be assignable by
either party without the prior written consent of the other party,
except that at or prior to the Closing Purchaser may assign its
rights and delegate its duties under this Agreement to an Affiliate
and may assign its rights under this Agreement to its lenders for
collateral security purposes, and after the Closing Purchaser may
assign its rights and delegate its duties under this Agreement to
any third party in connection with the sale of the Business or the
sale of substantially all of Purchaser's assets (including the
Business), provided that Purchaser shall give written notice to
Seller prior to any such assignment, and provided further that no
such assignment shall in any way diminish the rights and remedies
or increase -the liabilities of Seller. No such assignment shall
relieve Purchaser of any of its liabilities under this Agreement. -
8.12 Amendments. This Agreement shall not be modified or
amended except pursuant to an instrument in writing executed and
delivered on behalf of each of the parties hereto.
8.13 Headings. The headings contained in this Agreement are
for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.
8.14 Definitions. The following terms are defined in the
following sections of this Agreement:
Defined Term Where Found
Accountants 3.5
Accounts Payable 2.2(a)
Accounts Receivable 1.2(e)
Accrued Expenses 2.2(b)
Affiliate 4.3(p)
Applicable Laws 4.3(y)
Arbitrating Accountant 3.6(b)
Assumed Liabilities 2.1
Assumed Taxes 2.2(e)
Business Recital A
Canadian Plans 4.3(y)
Canadian Real Estate 4.3(mm]
Cash Portion 3.1
CERCLA 4.3(ii)(iv)
Closing 3.3
Closing Balance Sheet 3.5
Closing Date 3.3
Code 4.3(q)(i)
Company Recital A
Containers 4.3(ii)(iv)
Control 4.3(p)
Coopersville Real Estate 1.2(c)
Damages 7.2(a)
Deemed Value 3.5(b)
Disclosure Schedule 4.1
Dispute 3.6(a)
Dispute Notice 3.6(a)
Dispute Period 3.6(a)
Division Recital A
Division Information 6.13(a)
Effective Time 3.3
Employee Benefit Plan 4.3(x)(i)
Environmental Laws 4.3(ii)(ii]
Environmental Permits 4.3(ii)(iii)
Equipment 1.2(b)
ERISA 4.3(x)(i)
ERISA Affiliate 4.3(x) (i)
Estimated Cash Payment 3.4
Excluded Assets 1.1
Excluded Seller Liabilities 2.1
Excluded Subsidiary Liabilities 2.3
Facility 4.3(ii)(iv]
Financial Statements 4.3(j)
FIRPTA 7.3(n)
GAAP 3.5
Harrow Information 6.13(b]
Hazardous Materials 4.3(ii](v]
Indemnified Party 9.2(b)
Indemnifying Party 9.2(c]
Intellectual Property 4.3(oo]
Inventory 1.2 (a]
IRS 4.3(x](ii]
Leased Personalty 1.2(d)
Liabilities 4.3(m)
Encumbrances 1.1
Multiemployer Plan 4.3(x)(i]
Net Equity Value 3.2
Offsite Facility 4.3(ii)(vi)
PBGC 4.3(x) (iii]
Permits 4.3(w)
Permitted Encumbrances 4.3(n)
Plan 4.3(x)(i)
Purchase Price 3.1
Purchased Assets 1.1
Purchaser Preamble
Purchaser Indemnitees 7.3
Purchaser's Ancillary Documents 4.2(b)
RCRA 4.3(ii](v)
Related Party 4.3(p)
Release 4.3(ii](vii]
Retained Subsidiary Liabilities 2.3
Return 4.3(q)(i)
Returns 4.3(q](i]
Seller Preamble
Seller Indemnitees 7.4
Seller's Ancillary Documents 4.3(c)
Seller's knowledge 6.16
Significant Customer 4.3(t)
Significant Supplier 4.3(t)
Subsidiary Recital A
Subsidiary Shares 1.2(j)
Tax 4.3(q](i)
Tax Assets 4.3(q) (vi]
Taxes 4.3(q)(i]
Third Party Claim 9.2(d)
Trademarks 4.3(oo]
Welfare Plan 4.3(x)(i]
Unless otherwise specified herein, all references to dollars
shall be references to U.S. dollars.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
SELLER:
HARROW PRODUCTS, INC.
By: /s/ Betsy Raymond
Its: Vice President
PURCHASER:
MILCOR LIMITED PARTNERSHIP
By: MILCOR HOLDINGS, INC.,
its general partner
By: /s/ Wayne Kocourek
Its: Executive Vice President
SCHEDULE 3.7
TO ASSET PURCHASE AGREEMENT
1. The portion of the Purchase Price allocated to the
Subsidiary's Shares shall be equal to the tax basis of the
Subsidiary's assets minus the tax basis of the Retained Subsidiary
Liabilities, as of the Closing Date.
