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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: February 28, 1997
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(Date of the earliest event reported)
Home Products International, Inc.
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 0-17237 Applied for
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(State or other jurisdiction of (Commission I.R.S. Employer
Incorporation or organization) File Number) Identification No.)
4501 West 47th Street Chicago, IL 60632
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (773) 890-1010
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 28, 1997, pursuant to a Stock Purchase Agreement between the
Registrant and the stockholders of Tamor Corporation, a Massachusetts
corporation ("Tamor"), and the Agreement and Plan of Merger among the
Registrant, Housewares Sales, Inc., a Massachusetts corporation ("Housewares"),
and the stockholders of Housewares Sales, Inc., effective as of January 1,
1997, Housewares was merged into a wholly-owned merger subsidiary of the
Registrant and the Registrant, through the same acquisition subsidiary,
acquired 100% of the outstanding stock of Tamor. The acquisition subsidiary
then merged into Tamor and Tamor became a wholly owned direct subsidiary of the
Registrant. Total consideration was $42.6 million consisting of approximately
$27.8 million in cash, $2.4 million in common stock and the assumption of $12.4
million in short and long term debt. Tamor, a privately held corporation
headquartered in Leominster, Massachusetts, is a leading manufacturer of home
storage and organization products in the United States and the Registrant
intends to continue in the same activity.
The source of funds for the acquisition included cash of the Registrant as
well as part of the proceeds of a new $67 million credit agreement (including a
$20 million revolving credit agreement) completed with General Electric Capital
Corporation on February 27, 1997. The new credit agreement replaces the
Registrant's existing $8 million credit agreement.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a) Financial statements of business acquired.
It is impracticable to provide the required financial statements at the time
this Current Report on Form 8-K is being filed. Home Products
International, Inc. expects to be able to file this information within sixty
(60) days of March 15, 1997, the latest date on which this Current Report on
Form 8-K may be filed.
b) Pro forma financial information.
It is impracticable to provide the required financial statements at the time
this Current Report on Form 8-K is being filed. Home Products
International, Inc. expects to be able to file this information within sixty
(60) days of March 15, 1997, the latest date on which this Current Report on
Form 8-K may be filed.
c) Exhibits
See attached Exhibit Index.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Home Products International, Inc.
By /s/ James E. Winslow
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James E. Winslow
Executive Vice President and
Chief Financial Officer
Dated: March 12, 1997
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Exhibit Index
Exhibit 2.1 Agreement and Plan of Merger dated as of January
1, 1997 between the Registrant, Housewares and the Shareholders of
Housewares.
Exhibit 2.2 Stock Purchase Agreement made as of January 1,
1997 by the Registrant and the Shareholders of Tamor.
Exhibit 99.1 Press release dated March 4, 1997 announcing the
acquisition of Tamor.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") dated as of January 1,
1997, is made by and between Selfix, Inc., a Delaware corporation ("Buyer"),
Houseware Sales, Inc., a Massachusetts corporation ("Housewares"), Leonard J.
Tocci, an individual and shareholder of Housewares ("Seller") and Leanne
Whitney, Lynel Tocci, and Linnea Tocci, each individual shareholders of
Housewares (Seller, Leanne Whitney, Lynel Tocci and Linnea Tocci are
collectively referred to as the "Shareholders").
RECITALS
A. Housewares is in the business of marketing and selling bathware and
houseware products (the "Business").
B. The parties desire to effect a merger of Housewares into Buyer, subject to
the terms and conditions of this Agreement.
AGREEMENT
In consideration of the mutual covenants and promises contained herein and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Section 1:
"APPLICABLE CONTRACT"--any Contract (a) under which Housewares has or may
acquire any rights, (b) under which Housewares has or may become subject to any
obligation or liability, or (c) by which Housewares or any of the assets owned
or used by it is or may become bound.
"BALANCE SHEET"--as defined in Section 4.4.
"BEST EFFORTS"--the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is
achieved as expeditiously as possible.
"BOOKS AND RECORDS"--all books and records, including books of account, stock
record books and minute books, pertaining to Housewares or customers or
suppliers of Housewares.
"BREACH"--a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
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"BUYER"--as defined in the first paragraph of this Agreement.
"CLOSING"--as defined in Section 3.1.
"CLOSING DATE"--means the date on which the Tamor Transaction closes, or such
other date as Buyer and Seller shall mutually agree.
"CONSENT"--any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS"--all of the transactions contemplated by this
Agreement, including:
(a) the merger of Housewares into Buyer;
(b) the execution, delivery, and performance of the Employment Agreement and
the Noncompetition Agreements; and
(c) the performance by Buyer and Seller of their respective covenants and
obligations under this Agreement,
"CONTRACT"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding, including without limitation any Leases.
"DAMAGES"--as defined in Section 12.2.
"DISCLOSURE SCHEDULE"--a schedule attached hereto and made a part hereof which
sets forth the exceptions to the representations and warranties contained in
Section 4 hereof and certain other information called for by Section 4 hereof
and other provisions of this Agreement.
"EFFECTIVE DATE"-- as defined in Section 2.2.
"EMPLOYMENT AGREEMENT"--as defined in Section 3.2(a)(vi).
"ENCUMBRANCE"--any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any successor
law, and regulations and rules issued pursuant to that Act or any successor
law.
"FIXTURES AND EQUIPMENT"--all of the furniture, fixtures, furnishings,
machinery and equipment owned by Housewares and located in, at or upon the
Facilities plus all additions, replacements or deletions in the Ordinary Course
of Business.
"FACILITIES"--any Leasehold Estates, Leasehold Improvements or other interests
currently or formerly owned or operated by Housewares and any buildings,
plants, structures, or equipment
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(including motor vehicles, tank cars, and rolling stock) currently or formerly
owned or operated by Housewares.
"GAAP"--generally accepted United States accounting principles, applied on a
basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 4.4(b) were prepared.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license, permit, waiver,
or other authorization issued, granted, given, or otherwise made available by
or under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"GOVERNMENTAL BODY"--any:
(a) nation, state, county, city, town, village, district, or other jurisdiction
of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.
"INTELLECTUAL PROPERTY ASSETS" --includes (a) the name "Houseware Sales, Inc.,
all fictional business names, trading names, registered and unregistered
trademarks, service marks, and applications (collectively, "Marks"); (b) all
patents, patent applications, and inventions and discoveries that may be
patentable (collectively, "Patents"); (c) all copyrights in both published
works and unpublished works (collectively, "Copyrights"); (d) all rights in
mask works (collectively, "Mask Works"); and (e) all know-how, trade secrets,
confidential information, customer lists, software, technical information,
data, process technology, plans, drawings, and blue prints (collectively,
"Trade Secrets"); owned, used or licensed by the Housewares as licensee or
licensor.
"INVENTORY"--(a) all of Housewares' inventories within the Facilities held for
resale in the Ordinary Course of Business to Housewares' customers; (b) all
office supplies and similar materials located in the Facilities; and (c) all of
the raw materials, work in process, spare parts, finished products, wrapping,
supply and packaging items, employee uniforms and similar items, wherever
located in the Facilities.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and regulations
issued by the IRS pursuant to the Internal Revenue Code or any successor law.
"IRS"--the United States Internal Revenue Service or any successor agency, and,
to the extent relevant, the United States Department of the Treasury.
"KNOWLEDGE"--an individual will be deemed to have "Knowledge" of a particular
fact or other matter if:
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(a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
"LEASEHOLD ESTATES"--all of Houseware's rights and obligations as lessee under
the Leases.
"LEASEHOLD IMPROVEMENTS"--all of Houseware's leasehold improvements situated in
or on the property leased under the Leases.
"LEASES"--all of the leases listed on the Disclosure Schedule and all other
leases relating to Housewares which are not required to be scheduled pursuant
to this Agreement.
"LEGAL REQUIREMENT"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"MORTGAGES"--all deeds of trust, mortgages or other debt encumbrances.
"NONCOMPETITION AGREEMENT"--as defined in Section 3.2(a)(v).
"ORDER"--any award, decision, injunction, judgment, order, ruling, subpoena, or
verdict entered, issued, made, or rendered by any court, administrative agency,
or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person and
is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) such action is not required to be authorized by the board of directors
of such Person (or by any Person or group of Persons exercising similar
authority); and
(c) such action is similar in nature and magnitude to actions customarily
taken, without any authorization by the board of directors (or by any Person or
group of Persons exercising similar authority), in the ordinary course of the
normal day-to-day operations of other Persons that are in the same line of
business as such Person.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of incorporation
and the bylaws of a corporation; (b) the partnership agreement and any
statement of partnership of a general partnership; (c) the limited partnership
agreement and the certificate of limited partnership of a
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limited partnership; (d) any charter or similar document adopted or filed in
connection with the creation, formation, or organization of a Person; and (e)
any amendment to any of the foregoing.
"PERSON"--any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"PLAN"--as defined in Section 4.13.
"PROCEEDING"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"RELATED PERSON"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control
with such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor, or
trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material Interest;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse, (iii) any other natural person
who is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
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defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 10% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 10% of the outstanding equity securities or
equity interests in a Person.
"REPRESENTATIVE"--with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"SECURITIES ACT"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SELLER"--as defined in the first paragraph of this Agreement.
"SHAREHOLDERS" --as defined in the first paragraph of this Agreement.
"SUBSIDIARY"--with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Seller.
"TAMOR TRANSACTION"--the execution, delivery and performance of that certain
Stock Purchase Agreement of even date herewith between Buyer, Tamor Plastic
Corp., a Massachusetts corporation ("Tamor") and each of Tamor's individual
stockholders, and all other agreements related to such Stock Purchase
Agreement.
"TAX RETURN"--any return (including any information return), report, statement,
schedule, notice, form, or other document or information filed with or
submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.
"THREATENED"--a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
SECTION 2. THE PLAN OF MERGER
SECTION 2.1 THE MERGER/SURVIVING CORPORATION. On the Closing Date and subject
to the performance of the terms and conditions of this Agreement, and in
accordance with the Delaware Business Corporation Law ("DBCL"), Housewares
shall be merged with and into Buyer or a wholly owned corporate Subsidiary of
Buyer designated by Buyer and Buyer or the
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corporate Subsidiary designated by it shall be the surviving corporation and
shall continue its corporate existence under the laws of the State of Delaware
("Merger"). At the Closing of the Merger, the separate existence of Housewares
shall cease and all previously issued shares of Houseware's stock shall be
canceled. In the event that Buyer designates a wholly owned corporate
Subsidiary to be merged with Housewares, Buyer shall remain fully liable for
all the liabilities and obligations as provided in this Agreement.
SECTION 2.2 EFFECTIVENESS OF MERGER/EFFECTIVE DATE. The Merger shall be
effected by: (a) Board of Director resolutions authorizing the plan of merger;
(b) Seller's and Housewares' approval of the plan of merger; and (c) filing of
articles of merger, to which this Agreement shall be annexed, with both the
Secretary of State of Delaware in accordance with the DBCL and the Secretary of
State of Massachusetts in accordance with the Massachusetts Business
Corporation Law ("Articles of Merger"). The merger shall be deemed effective
at the time of filing of the Articles of Merger with the Secretary of State of
Delaware and the Secretary of State of Massachusetts, which articles shall be
filed contemporaneously on or about the Closing Date. Notwithstanding anything
contained herein to the contrary, however, the parties agree that the effective
date and time of this Agreement shall be 1:00 a.m., January 1, 1997 (the
"Effective Date").
SECTION 2.3 DISTRIBUTION OF ACCOUNTS RECEIVABLE, CASH ETC. TO SELLER. Seller
agrees to cause Housewares to distribute all Housewares' cash, cash
equivalents, certificates of deposit, notes receivable, loans receivable and
accounts receivable generated up to and including the Effective Date
(collectively, the "Distributed Assets") out of Housewares to Seller before
1:00 a.m. on the Effective Date.
SECTION 2.4 ACCOUNTS PAYABLE/ACCOUNTS RECEIVABLE.
(a) Seller agrees to pay or discharge or cause to be paid or discharged
at the time they become due and payable, all debts, obligations and liabilities
of Housewares incurred or accrued prior to and including the Effective Date by
Housewares.
(b) Buyer and Seller agree that any payments received by either after the
Effective Date related to Housewares or the Business (except with respect to
the Distributed Assets), or any refunds received by either party after the
Effective Date relating to Housewares or the Business (except with respect to
the Distributed Assets) shall be the sole property of Buyer and, if received by
Seller, shall be delivered to Buyer as soon as practicable after such receipt
by Seller.
SECTION 2.5 CONSIDERATION. In consideration for entering into the Merger and
executing the Noncompetition Agreement, Buyer shall make distributions as
follows:
(a) Cash Amount. At the Closing, Buyer shall pay to the Seller the sum
of Three Million Five Hundred and Fifty Thousand Dollars ($3,550,000) as the
cash portion of the purchase price; and
(b) Shares of Buyer. At the Closing, Buyer shall issue to Seller four
hundred and eighty thousand (480,000) shares of Buyer's common stock (the
"Merger Shares") duly issued and authorized, fully paid and non-assessable with
other rights to be defined herein, and as follows:
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(i) A certificate or certificates representing the number of whole Merger
Shares into which Housewares stock has been converted shall be issued by Buyer;
and
(ii) On the Closing Date, all shares of Housewares stock shall be
canceled.
SECTION 2.6 PRORATIONS OF UTILITIES AND TAXES/RENTS.
(a) Utilities and Taxes. On the Closing Date, or as promptly as
practicable following the Closing Date, but in no event later than sixty (60)
days thereafter, the real and personal property taxes, water, gas, electricity
and other utilities, common area maintenance reimbursements to lessors, local
business or other license fees or taxes, merchants association dues and other
similar periodic charges made to Housewares shall be prorated between Buyer and
Seller retroactively as of the Effective Date. To the extent practicable,
utility meter readings for the Facilities shall be determined as of the
Effective Date. If the real property tax rate for the current tax year is not
established by the Effective Date, the prorations shall be made on the basis of
the rate in effect for the preceding tax year. All such prorations shall be
based on the most recent available assessed value of any Facility prior to the
Effective Date.
(b) Rents. Seller shall cause Housewares to prepay minimum or basic rent
under the Leases through the end of the calendar month in which the Effective
Date occurs. Payments of percentage rents, if any, due under the provisions of
the Leases shall be adjusted to the Effective Date.
SECTION 2.7 TRANSFER TAXES. Buyer and Seller shall be equally responsible for
any documentary transfer taxes and any sales, use or other taxes imposed by
reason of the Merger provided hereunder and any deficiency, interest or penalty
asserted with respect thereto.
SECTION 3. THE CLOSING
SECTION 3.1 THE CLOSING. The Closing of the purchase and sale provided for
in this Agreement (the "Closing") will take place at the offices of Seller's
counsel at Leominster, Massachusetts at 10:00 a.m. local time on the Closing
Date.
SECTION 3.2 DELIVERIES AND ACTIONS TAKEN UPON CLOSING.
(a) Deliveries by Seller. At the Closing, the Seller shall deliver to
Buyer the following:
(i) noncompetition agreement in the form attached hereto as Exhibit
3.2(a) executed by Seller ("Noncompetition Agreement");
(ii) an employment agreement in the form attached hereto as Exhibit
3.2(b) executed by Seller ("Employment Agreement");
(iii) a certificate executed by Seller representing and warranting to
Buyer that each of Seller's representations and warranties in this Agreement is
accurate in all respects as of the date of the Balance Sheet, the date of this
Agreement and is accurate in all respects as of the Closing Date as if made on
the Closing Date; and
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(iv) such other instruments and documents as shall be reasonably
requested by Buyer prior to the Closing Date to consummate the Contemplated
Transactions.
(b) Deliveries by Buyer. At the Closing, Buyer shall deliver to Seller
the following:
(i) the cash portion of the purchase price by bank cashier's or certified
check or by wire transfer to an account specified by Seller;
(ii) certificates representing the Merger Shares;
(iii) the Employment Agreement executed by Buyer; and
(iv) a certificate executed by Buyer representing and warranting to
Seller that each of Buyer's representations and warranties in this Agreement
is accurate in all respects as of the date of this Agreement and is accurate in
all respects as of the Closing Date as if made on the Closing Date.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller (but not any of the other Shareholders) hereby represents and warrants
to Buyer as follows:
SECTION 4.1 ORGANIZATION AND GOOD STANDING.
(a) Part 4.1 of the Disclosure Schedule contains a complete and accurate
list for Housewares of its name, its jurisdiction of incorporation, other
jurisdictions in which it is authorized to do business, and its capitalization.
Shareholders are the only shareholders of Housewares. Housewares is a
corporation duly organized, validly existing, and in good standing under the
laws of the Commonwealth of Massachusetts, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all
its obligations under Applicable Contracts. Housewares is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by
it, requires such qualification. Housewares has no Subsidiaries.
(b) Seller has delivered to Buyer copies of the Organizational Documents
of Housewares, as currently in effect.
SECTION 4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of
Seller and Housewares, enforceable against Seller and Housewares in accordance
with its terms. Upon the execution and delivery by Seller, as applicable, of
the Employment Agreement and the Noncompetition Agreement (collectively, the
"Seller's Closing Documents"), the Seller's Closing Documents will constitute
the legal, valid, and binding obligations of Seller, enforceable against Seller
in accordance with their respective terms. Seller and Housewares have the
absolute and unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the
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Seller's Closing Documents, as applicable, and to perform their respective
obligations under this Agreement and the Seller's Closing Documents, as
applicable.
(b) Except as set forth in Part 4.2 of the Disclosure Schedule, neither
the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of Housewares, or (B) any resolution
adopted by the board of directors or the stockholders of Housewares;
(ii) contravene, conflict with, or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which Housewares or the Business, may be
subject;
(iii) contravene, conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by Housewares or that otherwise relates to the
Business;
(iv) to the Knowledge of Seller, cause any of the assets owned by
Housewares to be reassessed or revalued by any taxing authority or other
Governmental Body;
(v) contravene, conflict with, or result in a violation or breach of any
provision of, or give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; or
(vi) result in the imposition or creation of any Encumbrance upon or with
respect to any of the assets owned or used by Housewares.
Except as set forth in Part 4.2 of the Disclosure Schedule, Seller and
Housewares are not or will not be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
SECTION 4.3 CAPITALIZATION. The authorized equity securities of Housewares
consists of 1,000 shares of common stock, with no par value, of which 100
shares are issued and outstanding. Shareholders are and will be on the Closing
Date the record and beneficial owners and holders of all of such shares, free
and clear of any Encumbrances. No legend or other reference to any purported
Encumbrance appears upon any certificate representing equity securities of
Housewares. All of the outstanding equity securities of Housewares have been
duly authorized and validly issued and are fully paid and nonassessable. There
are no Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of Housewares. None of the outstanding equity
securities or other securities of Housewares was issued in violation of the
Securities Act or any other Legal Requirement. Housewares does not own, or has
no Contract to acquire, any equity securities or other securities of any Person
or any direct or indirect equity or ownership interest in any other business.
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SECTION 4.4 TITLE TO ASSETS, ETC.
(a) Part 4.4 of the Disclosure Schedule contains a complete and accurate
list of all Facilities. Seller has delivered or will make available to Buyer
copies of the deeds and other instruments (as recorded) by which Housewares
acquired such Facilities, and copies of all title insurance policies, opinions,
abstracts, and surveys in the possession of the Seller and Housewares and
relating to such Facilities. Housewares owns all the properties and assets
(whether real, personal, or mixed and whether tangible or intangible) that it
purports to own located in the Facilities owned or operated by Housewares or
reflected as owned in the Books and Records, including all of the properties
and assets reflected in the Balance Sheet (except for assets held under and
personal property sold since the date of the Balance Sheet in the Ordinary
Course of Business), and all of the properties and assets purchased or
otherwise acquired by Housewares since the date of the Balance Sheet (except
for personal property acquired and sold since the date of the Balance Sheet in
the Ordinary Course of Business and consistent with past practice), which
subsequently purchased or acquired properties and assets (other than Inventory
and short-term investments) are listed on Part 4.4 of the Disclosure Schedule.
(b) All material properties and assets reflected in the Balance Sheet are
free and clear of all Encumbrances and are not subject to, with respect to all
such properties and assets, (i) Mortgages or security interests shown on the
Balance Sheet as securing specified liabilities or obligations, with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists; (ii) Mortgages or security interests incurred in
connection with the arms length purchase of property or assets after the date
of the Balance Sheet (such Mortgages or security interests limited to the
property or assets so acquired), with respect to which no default (or event
that, with notice or lapse of time or both, would constitute a default) exists,
and (iii) liens for current taxes not yet due. Housewares has performed all
obligations required to be performed by it with respect to any of its leased
assets through the Effective Date. There are no pending or threatened
condemnation proceedings relating to any of the Facilities.
SECTION 4.5 CONDITION AND SUFFICIENCY OF ASSETS. The demised premises and,
except for molds that are substantially fully depreciated, Fixtures and
Equipment of Housewares are structurally sound, are in good operating condition
and repair, and are adequate for the uses to which they are being put, and none
of such demised premises or, except for molds that are substantially fully
depreciated, Fixtures and Equipment is in need of maintenance or repairs except
for ordinary, routine maintenance and repairs that are not material in nature
or cost. The demised premises and, except for molds that are substantially
fully depreciated, Fixtures and Equipment are sufficient for the continued
conduct of the Business after the Closing in substantially the same manner as
conducted prior to the Closing.
SECTION 4.6 FINANCIAL STATEMENTS.
Seller has delivered or will deliver to Buyer: (a) unaudited balance sheets of
Housewares as at September 30, 1996 in each of the years 1994 through 1995, and
the related audited statements of income, changes in stockholders' equity, and
cash flow for each of the fiscal years then ended, (b) an unaudited balance
sheet of Housewares as at September 30, 1996 (including the notes thereto, the
"Balance Sheet"), and the related unaudited statements of income, changes in
stockholders' equity, and cash flow for the fiscal year then ended, and
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(c) and the unaudited statement of income, changes in stockholders' equity and
cash flow of Housewares for the year ended December 31, 1996, including in each
case the notes thereto. Such financial statements and notes fairly present the
financial condition and the results of operations, changes in stockholders'
equity, and cash flow of Housewares at the respective dates of and for the
periods referred to in such financial statements, all in accordance with GAAP;
the financial statements referred to in this Section 4.6 reflect the consistent
application of such accounting principles throughout the periods involved. No
financial statements of any Person other than Housewares are required by GAAP
to be included in the financial statements of Housewares. The financial
projections delivered by Seller to Buyer have been prepared by Housewares and
represent a good faith estimate of the financial results of the Housewares for
the periods shown.
SECTION 4.7 BOOKS AND RECORDS
The Books and Records of Housewares, all of which have been made available to
Buyer, are complete and correct and have been maintained in accordance with
sound business practices, including the maintenance of an adequate system of
internal controls. The minute books of the Housewares contain accurate and
complete records of all meetings held of, and corporate action taken by, the
stockholders, the Boards of Directors, and committees of the Boards of
Directors of Housewares, and no meeting of any such stockholders, Board of
Directors, or committee has been held for which minutes have not been prepared
and are not contained in such minute books. At the Closing, all of those books
and records will be in the possession of Housewares.
SECTION 4.8 ACCOUNTS RECEIVABLE.
All accounts receivable of Housewares' acquired by Buyer represent bona fide
claims against debtors for sales, services performed or other charges arising
on or before the date hereof, and the goods delivered and services performed
which gave rise to said accounts were delivered or performed in accordance with
the applicable orders, Contracts or customer requirements. Said accounts
receivable are subject to no defenses, counterclaims or rights of setoff and
are fully collectible in the Ordinary Course of Business without cost to Buyer
in collection efforts therefor. Part 4.8 of the Disclosure Schedule contains
or will contain an accurate and complete list of all accounts receivable
arising after the Effective Date until the Closing Date, which list sets forth
the aging of such accounts receivable.
SECTION 4.9 INVENTORY
All Inventory consists of a quality and quantity usable and salable in the
Ordinary Course of Business, except for obsolete items and items of
below-standard quality, all of which have been written off or written down to
net realizable value in the Balance Sheet or on the accounting records of
Housewares as of the Closing Date, as the case may be. All Inventory not
written off have been priced at the lower of cost or market on a last in, first
out basis. The quantities of each item of Inventory (whether raw materials,
work-in-process, or finished goods) are not excessive, but are reasonable in
the present circumstances of Housewares, and in no event represent more than
180 days supply of any item.
SECTION 4.10 NO UNDISCLOSED LIABILITIES
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Except as set forth in Part 4.10 of the Disclosure Letter, Housewares has no
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the Balance Sheet and current
liabilities incurred in the Ordinary Course of Business since the date of the
Balance Sheet.
SECTION 4.11 TAXES.
(a) Housewares has filed or caused to be filed all Tax Returns that are or
were required to be filed by or with respect to it, either separately or as a
member of a group of corporations, pursuant to applicable Legal Requirements.
Seller has delivered or made available to Buyer copies of, and Part 4.11(a) of
the Disclosure Schedule contains a complete and accurate list of, all such Tax
Returns filed since January 1, 1993. Housewares has paid, or made provision for
the payment of, all Taxes that have or may have become due pursuant to those
Tax Returns or otherwise, or pursuant to any assessment received by Housewares,
except such Taxes, if any, as are listed in Part 4.11(a) of the Disclosure
Schedule and are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have been provided in the Balance
Sheet.
(b) The United States federal and state income Tax Returns of Housewares
subject to such Taxes have been audited by the IRS or relevant state tax
authorities or are closed by the applicable statute of limitations for all
taxable years through 1992. Part 4.11(b) of the Disclosure Schedule contains a
complete and accurate list of all audits of all such Tax Returns. All
deficiencies proposed as a result of such audits have been paid, reserved
against, settled, or, as described in Part 4.11(b) of the Disclosure Schedule,
are being contested in good faith by appropriate proceedings. Part 4.11(b) of
the Disclosure Schedule describes all adjustments to the United States federal
income Tax Returns filed by Housewares or any group of corporations including
Housewares for all taxable years since January 1, 1993, and the resulting
deficiencies proposed by the IRS. Except as described in Part 4.11(b) of the
Disclosure Schedule, Housewares has not given or been requested to give waivers
or extensions (or is or would be subject to a waiver or extension given by any
other Person) of any statute of limitations relating to the payment of Taxes of
Housewares or for which Housewares may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on the
respective books of Housewares are adequate (determined in accordance with
GAAP) and are at least equal to Housewares' liability for Taxes. There exists
no proposed tax assessment against Housewares except as disclosed in the
Balance Sheet. No consent to the application of Section 341(f)(2) of the IRC
has been filed with respect to any property or assets held, acquired, or to be
acquired by Housewares. All Taxes that Housewares is or was required by Legal
Requirements to withhold or collect have been duly withheld or collected and,
to the extent required, have been paid to the proper Governmental Body or other
Person.
(d) All Tax Returns filed by Housewares are true, correct, and complete.
There is no tax sharing agreement that will require any payment by Housewares
after the date of this Agreement.
SECTION 4.12 NO MATERIAL ADVERSE CHANGE.
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Since the date of the Balance Sheet, there has not been any material adverse
change in the business, operations, properties, prospects, assets, or condition
of Housewares, and no event has occurred or circumstance exists that may result
in such a material adverse change.
SECTION 4.13 EMPLOYEE BENEFITS.
(a) As used in this Section 4.13, the following terms have the meanings
set forth below.
"COMPANY OTHER BENEFIT OBLIGATION" means an Other Benefit Obligation owed,
adopted, or followed by Housewares or an ERISA Affiliate of Housewares.
"COMPANY PLAN" means all Plans of which Housewares or an ERISA Affiliate of
Housewares is or was a Plan Sponsor, or to which Housewares or an ERISA
Affiliate of Housewares otherwise contributes or has contributed, or in which
Housewares or an ERISA Affiliate of Housewares otherwise participates or has
participated. All references to Plans are to Company Plans unless the context
requires otherwise.
"COMPANY VEBA" means a VEBA whose members include employees of Housewares or
any ERISA Affiliate of Housewares.
"ERISA AFFILIATE" means, with respect to Housewares, any other person that,
together with Housewares, would be treated as a single employer under IRC
Section 414.
"MULTI-EMPLOYER PLAN" has the meaning given in ERISA Section 3(37)(A).
"OTHER BENEFIT OBLIGATIONS" means all obligations, arrangements, or customary
practices, whether or not legally enforceable, to provide benefits, other than
salary, as compensation for services rendered, to present or former directors,
employees, or agents, other than obligations, arrangements, and practices that
are Plans. Other Benefit Obligations include consulting agreements under which
the compensation paid does not depend upon the amount of service rendered,
sabbatical policies, severance payment policies, and fringe benefits within the
meaning of IRC Section 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PENSION PLAN" has the meaning given in ERISA Section 3(2)(A).
"PLAN" has the meaning given in ERISA Section 3(3).
"PLAN SPONSOR" has the meaning given in ERISA Section 3(16)(B).
"QUALIFIED PLAN" means any Plan that meets or purports to meet the
requirements of IRC Section 401(a).
"TITLE IV PLANS" means all Pension Plans that are subject to Title IV of ERISA,
29 U.S.C. Section 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under IRC Section
501(c)(9).
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"WELFARE PLAN" has the meaning given in ERISA Section 3(1).
(b) Part 4.13(b) of the Disclosure Schedule contains a complete and
accurate list of all Company Plans, Company Other Benefit Obligations, and
Company VEBAs, and identifies as such all Company Plans that are (i) defined
benefit Pension Plans, (ii) Qualified Plans, (iii) Title IV Plans, or (iv)
Multi-Employer Plans.
(c) Part 4.13(c) of the Disclosure Schedule contains a complete and
accurate list of (i) all ERISA Affiliates of Housewares, and (ii) all Plans of
which any such ERISA Affiliate is or was a Plan Sponsor, in which any such
ERISA Affiliate participates or has participated, or to which any such ERISA
Affiliate contributes or has contributed.
(d) Part 4.13(d) of the Disclosure Schedule sets forth, for each
Multi-Employer Plan, as of its last valuation date, the amount of potential
withdrawal liability of Housewares and Housewares' other ERISA Affiliates,
calculated according to information made available pursuant to ERISA Section
4221(e).
(e) Part 4.13(e) of the Disclosure Schedule sets forth a calculation of
the liability of Housewares for post-retirement benefits other than pensions,
made in accordance with Financial Accounting Statement 106 of the Financial
Accounting Standards Board, regardless of whether Housewares is required by
this Statement to disclose such information.
(f) Part 4.13(f) of the Disclosure Schedule sets forth the financial cost
of all obligations owed under any Company Plan or Company Other Benefit
Obligation that is not subject to the disclosure and reporting requirements of
ERISA.
(g) Seller has delivered or will make available to Buyer within 10 days of
this Agreement:
(i) all documents that set forth the terms of each Company Plan, Company
Other Benefit Obligation, or Company VEBA and of any related trust, including
(A) all plan descriptions and summary plan descriptions of Company Plans for
which Housewares is required to prepare, file, and distribute plan descriptions
and summary plan descriptions, and (B) all summaries and descriptions furnished
to participants and beneficiaries regarding Company Plans, Company Other
Benefit Obligations, and Company VEBAs for which a plan description or summary
plan description is not required;
(ii) all personnel, payroll, and employment manuals and policies;
(iii) all collective bargaining agreements pursuant to which contributions
have been made or obligations incurred (including both pension and welfare
benefits) by Housewares and the ERISA Affiliates of Housewares, and all
collective bargaining agreements pursuant to which contributions are being made
or obligations are owed by such entities;
(iv) a written description of any Company Plan or Company Other Benefit
Obligation that is not otherwise in writing;
(v) all registration statements filed with respect to any Company Plan;
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(vi) all insurance policies purchased by or to provide benefits under any
Company Plan;
(vii) all contracts with third party administrators, actuaries, investment
managers, consultants, and other independent contractors that relate to any
Company Plan, Company Other Benefit Obligation, or Company VEBA;
(viii) all reports submitted within the four years preceding the date of
this Agreement by third party administrators, actuaries, investment managers,
consultants, or other independent contractors with respect to any Company Plan,
Company Other Benefit Obligation, or Company VEBA;
(ix) all notifications to employees of their rights under ERISA Section
601 et seq. and IRC Section 4980B;
(x) the Form 5500 filed in each of the most recent three plan years,
including all schedules thereto as noted by the independent accountants;
(xi) all notices that were given by Housewares or any ERISA Affiliate of
Housewares or any Company Plan to the IRS, the PBGC, or any participant or
beneficiary, pursuant to statute, within the four years preceding the date of
this Agreement, including notices that are expressly mentioned elsewhere in
this Section 4.12;
(xii) all notices that were given by the IRS, the PBGC, or the Department
of Labor to Housewares, any ERISA Affiliate of Housewares, or any Company Plan
within the four years preceding the date of this Agreement;
(xiii) with respect to Qualified Plans and VEBAs, the most recent
determination letter for each Plan of Housewares that is a Qualified Plan; and
(xiv) with respect to Title IV Plans, the Form PBGC-1 filed for each of
the three most recent plan years.
(h) Except as set forth in Part 4.13(h) of the Disclosure Schedule:
(i) Housewares has performed all of its obligations under all Company
Plans, Company Other Benefit Obligations, and Company VEBAs. Housewares has
made appropriate entries in its financial records and statements for all
obligations and liabilities under such Plans, VEBAs, and Obligations that have
accrued but are not due.
(ii) Housewares, with respect to all Company Plans, Company Other Benefits
Obligations, and Company VEBAs, are, and each Company Plan, Company Other
Benefit Obligation, and Company VEBA is, in full compliance with ERISA, the
IRC, and other applicable Laws including the provisions of such Laws expressly
mentioned in this Section 4.13, and with any applicable collective bargaining
agreement.
(iii) No transaction prohibited by ERISA Section 406 and no "prohibited
transaction" under IRC Section 4975(c) have occurred with respect to any
Company Plan.
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(v) Housewares has no liability to the IRS with respect to any Plan,
including any liability imposed by Chapter 43 of the IRC.
(vi) Housewares has no liability to the PBGC with respect to any Plan or
has any liability under ERISA Section 502 or Section 4071.
(vii) All filings required by ERISA and the IRC as to each Plan have been
timely filed, and all notices and disclosures to participants required by
either ERISA or the IRC have been timely provided.
(viii) All contributions and payments made or accrued with respect to all
Company Plans, Company Other Benefit Obligations, and Company VEBAs are
deductible under IRC Section 162 or Section 404. No amount, or any asset of
any Company Plan or Company VEBA, is subject to tax as unrelated business
taxable income.
(ix) Since June 30, 1996, there has been no establishment or amendment of
any Company Plan, Company VEBA, or Company Other Benefit Obligation.
(x) No event has occurred or circumstance exists that could result in a
material increase in premium costs of Company Plans and Company Other Benefit
Obligations that are insured, or a material increase in benefit costs of such
Plans and Obligations that are self-insured.
(xi) Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding involving, any Company
Plan, Company Other Benefit Obligation, or Company VEBA is pending or, to
Seller's Knowledge, is Threatened.
(xii) No Company Plan is a stock bonus, pension, or profit-sharing plan
within the meaning of IRC Section 401(a).
(xiii) Each Qualified Plan of Housewares is qualified in form and
operation under IRC Section 401(a); each trust for each such Plan is exempt
from federal income tax under IRC Section 501(a). Each Company VEBA is exempt
from federal income tax. No event has occurred or circumstance exists that will
or could give rise to disqualification or loss of tax-exempt status of any such
Plan or trust.
(xiv) Housewares and each ERISA Affiliate of Housewares has met the
minimum funding standard, and has made all contributions required, under ERISA
Section 302 and IRC Section 402.
(xv) No Company Plan is subject to Title IV of ERISA.
(xvi) Housewares has paid all amounts due to the PBGC pursuant to ERISA
Section 4007.
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(xvii) Neither Housewares nor or any ERISA Affiliate of Housewares has
ceased operations at any facility or has withdrawn from any Title IV Plan in a
manner that would subject to any entity or Seller to liability under ERISA
Section 4062(e), Section 4063, or Section 4064.
(xviii) Neither Housewares nor any ERISA Affiliate of Housewares has
filed a notice of intent to terminate any Plan or has adopted any amendment to
treat a Plan as terminated. The PBGC has not instituted proceedings to treat
any Company Plan as terminated. No event has occurred or circumstance exists
that may constitute grounds under ERISA Section 4042 for the termination of,
or the appointment of a trustee to administer, any Company Plan.
(xix) No amendment has been made, or is reasonably expected to be made, to
any Plan that has required or could require the provision of security under
ERISA Section 307 or IRC Section 401(a)(29).
(xx) No accumulated funding deficiency, whether or not waived, exists with
respect to any Company Plan; no event has occurred or circumstance exists that
may result in an accumulated funding deficiency as of the last day of the
current plan year of any such Plan.
(xxi) The actuarial report for each Pension Plan of Housewares and each
ERISA Affiliate of Housewares fairly presents the financial condition and the
results of operations of each such Plan in accordance with GAAP.
(xxii) Since the last valuation date for each Pension Plan of Housewares
and each ERISA Affiliate of Housewares, no event has occurred or circumstance
exists that would increase the amount of benefits under any such Plan or that
would cause the excess of Plan assets over benefit liabilities (as defined in
ERISA Section 4001) to decrease, or the amount by which benefit liabilities
exceed assets to increase.
(xxiii) No reportable event (as defined in ERISA Section 4043 and in
regulations issued thereunder) has occurred.
(xxiv) Seller has no Knowledge of any facts or circumstances that may
give rise to any liability of Housewares or Buyer to the PBGC under Title IV of
ERISA.
(xxv) Neither Housewares nor any ERISA Affiliate of Housewares has ever
established, maintained, or contributed to or otherwise participated in, or had
an obligation to maintain, contribute to, or otherwise participate in, any
Multi-Employer Plan.
(xxvi) Neither Housewares nor any ERISA Affiliate of Housewares has
withdrawn from any Multi-Employer Plan with respect to which there is any
outstanding liability as of the date of this Agreement. No event has occurred
or circumstance exists that presents a risk of the occurrence of any withdrawal
from, or the participation, termination, reorganization, or insolvency of, any
Multi-Employer Plan that could result in any liability of either Housewares or
Buyer to a Multi-Employer Plan.
(xxvii) Neither Housewares nor any ERISA Affiliate of Housewares has
received notice from any Multi-Employer Plan that it is in reorganization or is
insolvent, that
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increased contributions may be required to avoid a reduction in plan benefits
or the imposition of any excise tax, or that such Plan intends to terminate or
has terminated.
(xxviii) No Multi-Employer Plan to which Housewares or any ERISA Affiliate
of Housewares contributes or has contributed is a party to any pending merger
or asset or liability transfer or is subject to any proceeding brought by the
PBGC.
(xxix) Except to the extent required under ERISA Section 601 et seq. and
IRC Section 4980B, Housewares does not provide health or welfare benefits for
any retired or former employee or is obligated to provide health or welfare
benefits to any active employee following such employee's retirement or other
termination of service.
(xxx) Housewares has the right to modify and terminate benefits to
retirees (other than pensions) with respect to both retired and active
employees.
(xxxi) Housewares has complied with the provisions of ERISA Section 601
et seq. and IRC Section 4980B.
(xxxii) No payment that is owed or may become due to any director,
officer, employee, or agent of Housewares will be non-deductible to Housewares
or subject to tax under IRC Section 280G or Section 4999; nor will Housewares
be required to "gross up" or otherwise compensate any such person because of
the imposition of any excise tax on a payment to such person.
(xxxiii) The consummation of the Contemplated Transactions will not result
in the payment, vesting, or acceleration of any benefit.
SECTION 4.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 4.14(a) of the Disclosure Schedule:
(i) Housewares is, and at all times has been, in full compliance with each
Legal Requirement that is or was applicable to it or to the conduct or
operation of its business or the ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with or without
notice or lapse of time) (A) may constitute or result in a violation by
Housewares of, or a failure on the part of Housewares to comply with, any Legal
Requirement, or (B) may give rise to any obligation on the part of Housewares
to undertake, or to bear all or any portion of the cost of, any remedial action
of any nature; and
(iii) Housewares has not received any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement, or (B) any actual, alleged,
possible, or potential obligation on the part of Housewares to undertake, or to
bear all or any portion of the cost of, any remedial action of any nature.
(b) Part 4.14(b) of the Disclosure Schedule contains a complete and
accurate list of each Governmental Authorization that is held by Housewares or
that otherwise relates to the
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business of, or to any of the assets owned or used by, Housewares. Each
Governmental Authorization listed or required to be listed in Part 4.14(b) of
the Disclosure Schedule is valid and in full force and effect. Except as set
forth in Part 4.14(b) of the Disclosure Schedule:
(i) Housewares is, and at all times has been, in full compliance with all
of the terms and requirements of each Governmental Authorization identified or
required to be identified in Part 4.14 of the Disclosure Schedule;
(ii) no event has occurred or circumstance exists that may (with or
without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or
requirement of any Governmental Authorization listed or required to be listed
in Part 4.14(b) of the Disclosure Schedule, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Governmental Authorization listed
or required to be listed in Part 4.14 of the Disclosure Schedule;
(iii) Housewares has not received any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to any
Governmental Authorization; and
(iv) all applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Part 4.14 of the
Disclosure Schedule have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with
respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 4.14 (b)of the Disclosure
Schedule collectively constitute all of the Governmental Authorizations
necessary to permit Housewares to lawfully conduct and operate its business in
the manner it currently conducts and operates such business and to permit
Housewares to own and use its assets in the manner in which it currently owns
and uses such assets.
SECTION 4.15 LEGAL PROCEEDINGS; ORDERS.
(a) There is no pending Proceeding:
(i) that has been commenced by or against Housewares or that otherwise
relates to or may affect the Business of, or any of the assets owned or used
by, Housewares; or
(ii) that challenges, or that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions.
To the Knowledge of Seller, (A) no such Proceeding has been Threatened, and (B)
no event has occurred or circumstance exists that may give rise to or serve as
a basis for the commencement of any such Proceeding.
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(b) (i) there is no Order to which Housewares, or any of the assets owned
or used by Housewares is subject; (ii) Housewares is not subject to any Order
that relates to the business of Housewares; and (ii) no officer, director,
agent, or employee of Housewares is subject to any Order that prohibits such
officer, director, agent, or employee from engaging in or continuing any
conduct, activity, or practice relating to the Business.
SECTION 4.16 ABSENCE OF CERTAIN CHANGES AND EVENTS.
Since the date of the Balance Sheet, Housewares has conducted its business only
in the Ordinary Course of Business and there has not been any:
(a) change in Housewares' authorized or issued capital stock; grant of any
stock option or right to purchase shares of capital stock of Housewares;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
Housewares of any shares of any such capital stock; or declaration or payment
of any dividend or other distribution or payment in respect of shares of
capital stock;
(b) amendment to the Organizational Documents of Housewares;
(c) payment or increase by Housewares of any bonuses, salaries, or other
compensation to any stockholder, director, officer, or (except in the Ordinary
Course of Business) employee or entry into any employment, severance, or
similar Contract with any director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of
Housewares;
(e) damage to or destruction or loss of any asset or property of
Housewares, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects
of Housewares, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination of (i)
any license, distributorship, dealer, sales representative, joint venture,
credit, or similar agreement, or (ii) any Contract or transaction involving a
total remaining commitment by or to Housewares of at least $25,000;
(g) sale (other than sales of Inventory in the Ordinary Course of
Business), lease, or other disposition of any of the assets or property of
Housewares or mortgage, pledge, or imposition of any lien or other encumbrance
on any assets or property of Housewares, including the sale, lease, or other
disposition of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value to
Housewares in excess of $25,000;
(i) material change in the accounting methods used by Housewares; or
(j) agreement, whether oral or written, by Seller or Housewares to do any
of the foregoing.
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SECTION 4.17 CONTRACTS; NO DEFAULTS.
(a) Part 4.17(a) of the Disclosure Schedule contains a complete and
accurate list, and, to Seller's Knowledge, Seller has delivered to Buyer true
and complete copies, of:
(i) each Applicable Contract that involves performance of services or
delivery of goods or materials by Housewares of an amount or value in excess of
$25,000;
(ii) each Applicable Contract that involves performance of services or
delivery of goods or materials to Housewares of an amount or value in excess of
$25,000;
(iii) each Applicable Contract that was not entered into in the Ordinary
Course of Business and that involves expenditures or receipts of Housewares in
excess of $25,000;
(iv) each lease, rental or occupancy agreement, license, installment and
conditional sale agreement, and other Applicable Contract affecting the
ownership of, leasing of, title to, use of, or any Leasehold Estate or other
interest in personal property (except personal property leases and installment
and conditional sales agreements having a value per item or aggregate payments
of less than $25,000);
(v) each licensing agreement or other Applicable Contract with respect to
Patents, Marks, Copyrights, Masks, Trades Secrets or other intellectual
property, including agreements with current or former employees, consultants,
or contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(vi) each collective bargaining agreement and other Applicable Contract to
or with any labor union or other employee representative of a group of
employees;
(vii) each joint venture, partnership, and other Applicable Contract
(however named) involving a sharing of profits, losses, costs, or liabilities
by Housewares with any other Person;
(viii) each Applicable Contract containing covenants that in any way
purport to restrict the business activity of Housewares or any Affiliate of
Housewares or limit the freedom of Housewares or any Affiliate of Housewares to
engage in any line of business or to compete with any Person;
(ix) each Applicable Contract providing for payments to or by any Person
based on sales, purchases, or profits, other than direct payments for goods;
(x) each power of attorney that is currently effective and outstanding;
(xi) each Applicable Contract entered into other than in the Ordinary
Course of Business that contains or provides for an express undertaking by
Housewares to be responsible for consequential damages;
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(xii) each Applicable Contract for capital expenditures in excess of
$25,000;
(xiii) each written warranty, guaranty, and or other similar undertaking
with respect to contractual performance extended by Housewares other than in
the Ordinary Course of Business; and
(xiv) each amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.
(b) Except as set forth in Part 4.17(b) of the Disclosure Schedule:
(i) no Related Person of Housewares has or may acquire any rights under,
and no Related Person of Housewares has or may become subject to any obligation
or liability under, any Contract that relates to the business of, or any of the
assets owned or used by Housewares; and
(ii) no officer, director, agent, employee, consultant, or contractor of
Housewares is bound by any Contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor to (A) engage in
or continue any conduct, activity, or practice relating to the business of
Housewares, or (B) assign to Housewares or to any other Person any rights to
any invention, improvement, or discovery.
(c) Each Contract identified or required to be identified in Part 4.17(a)
of the Disclosure Schedule is in full force and effect and is valid and
enforceable in accordance with its terms.
(d) Except as set forth in Part 4.17(d) of the Disclosure Schedule:
(i) Housewares is, and at all times has been, in full compliance with all
applicable terms and requirements of each Contract under which Housewares has
or had any obligation or liability or by which Housewares or any of the assets
owned or used by Housewares is or was bound;
(ii) each other Person that has or had any obligation or liability under
any Contract under which Housewares has or had any rights is, and at all times
has been, in full compliance with all applicable terms and requirements of such
Contract;
(iii) no event has occurred or circumstance exists that (with or without
notice or lapse of time) may contravene, conflict with, or result in a
violation or breach of, or give Housewares or other Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract;
and
(iv) Housewares has not given to or received from any other Person at any
time any notice or other communication (whether oral or written) regarding any
actual, alleged, possible, or potential violation or breach of, or default
under, any Contract.
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(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to
Housewares under current or completed Contracts with any Person and no such
Person has made written demand for such renegotiation.
(f) The Applicable Contracts have been entered into in the Ordinary Course
of Business and have been entered into without the commission of any act alone
or in concert with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any Legal Requirement.
SECTION 4.18 INSURANCE.
(a) Seller has delivered to Buyer:
(i) true and complete copies of all policies of insurance to which
Housewares is a party or under which Housewares, or any director of Housewares,
is covered; and
(ii) true and complete copies of all pending applications for policies of
insurance.
(b) Part 4.18(b) of the Disclosure Schedule describes:
(i) any self-insurance arrangement by or affecting Housewares, including
any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of insurance, for
the transfer or sharing of any risk by Housewares; and
(iii) all obligations of Housewares to third parties with respect to
insurance (including such obligations under leases and service agreements) and
identifies the policy under which such coverage is provided.
(c) Part 4.18(c) of the Disclosure Schedule sets forth, by year, for the
current policy year and each of the two (2) preceding policy years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each unpaid claim under an insurance policy
for an amount in excess of $10,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of insurance, and period
of coverage; and
(C) the amount and a brief description of the claim; and
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(iii) a statement describing the loss experience for all claims that were
self-insured, including the number and aggregate cost of such claims.
(d) Except as set forth on Part 4.18(d) of the Disclosure Schedule:
(i) All policies to which Housewares is a party or that provide coverage
to Housewares or any director or officer of Housewares:
(A) are valid, outstanding, and enforceable;
(B) are issued by an insurer that is financially sound and reputable;
(C) taken together, provide adequate insurance coverage for the assets and
the operations of Housewares;
(D) are sufficient for compliance with all Legal Requirements and
Applicable Contracts;
(E) will continue in full force and effect following the consummation of
the Contemplated Transactions; and
(F) do not provide for any retrospective premium adjustment or other
experienced-based liability on the part of Housewares.
(ii) Housewares has not received (A) any refusal of coverage or any notice
that a defense will be afforded with reservation of rights, or (B) any notice
of cancellation or any other indication that any insurance policy is no longer
in full force or effect or will not be renewed or that the issuer of any policy
is not willing or able to perform its obligations thereunder.
(iii) Housewares has paid all premiums due, and have otherwise performed
all of its obligations, under each policy to which Housewares is a party or
that provides coverage to Housewares or a director thereof.
(iv) Housewares has given notice to the insurer of all claims that may be
insured thereby.
SECTION 4.19 EMPLOYEES.
To the Seller's Knowledge, no employee or director of Housewares is a
party to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights Agreement") that
in any way adversely affects or will affect (i) the performance of his duties
as an employee or director of Housewares, or (ii) the ability of Housewares to
conduct its business, including any Proprietary Rights Agreement with
Housewares by any such employee or director. To Seller's Knowledge, no officer
or other key employee of Housewares intends to terminate his employment with
Housewares.
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SECTION 4.20 LABOR RELATIONS; COMPLIANCE.
Except as disclosed on Part 4.20 of the Disclosure Schedule, Housewares has not
been or has not been a party to any collective bargaining or other labor
Contract. There has not been, there is not presently pending or existing, and
to Seller's Knowledge there is not Threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) any Proceeding
against or affecting Housewares relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment
dispute against or affecting Housewares or its premises, or (c) any application
for certification of a collective bargaining agent. To Seller's Knowledge no
event has occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lockout of any employees by
Housewares, and no such action is contemplated by Housewares. Housewares has
complied in all respects with all Legal Requirements relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, occupational safety and health, and plant closing. Housewares is not
liable for the payment of any compensation, damages, taxes, fines, penalties,
or other amounts, however designated, for failure to comply with any of the
foregoing Legal Requirements.
SECTION 4.21 INTELLECTUAL PROPERTY ASSETS.
(a) Agreements--Part 4.21(a) of the Disclosure Schedule contains a
complete and accurate list and summary description, including any royalties
paid or received by Housewares, of all Applicable Contracts relating to the
Intellectual Property Assets, except for any license implied by the sale of a
product and perpetual, paid-up licenses for commonly available software
programs with a minimal value under which Housewares is the licensee. There are
no outstanding and, to Seller's Knowledge, no Threatened disputes or
disagreements with respect to any such agreement.
(b) Know-How Necessary for the Business
(i) The Intellectual Property Assets are all those necessary for the
operation of Housewares' business as it is currently conducted. Housewares is
the owner of all right, title, and interest in and to each of the Intellectual
Property Assets, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims, and has the right to use
without payment to a third party all of the Intellectual Property Assets.
(ii) Except as set forth in Part 4.21(b) of the Disclosure Schedule, all
former and current employees of Housewares have executed written Contracts with
Housewares that assign to Housewares all rights to any inventions,
improvements, discoveries, or information relating to the business of
Housewares. To Seller's Knowledge, no employee of Housewares has entered into
any Contract that restricts or limits in any way the scope or type of work in
which the employee may be engaged or requires the employee to transfer, assign,
or disclose information concerning his work to anyone other than Housewares.
(c) Patents
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(i) Part 4.21(c) of the Disclosure Schedule contains a complete and
accurate list and summary description of all Patents. Housewares is the owner
of all right, title, and interest in and to each of the Patents, free and clear
of all liens, security interests, charges, encumbrances, entities, and other
adverse claims.
(ii) All of the issued Patents are currently in compliance with formal
legal requirements (including payment of filing, examination, and maintenance
fees and proofs of working or use), are valid and enforceable, and are not
subject to any maintenance fees or taxes or actions falling due within ninety
days after the Effective Date.
(iii) No Patent has been or is now involved in any interference, reissue,
reexamination, or opposition proceeding. To Seller's Knowledge, there is no
potentially interfering patent or patent application of any third party.
(iv) No Patent is infringed or, to Seller's Knowledge, has been challenged
or threatened in any way. None of the products manufactured and sold, nor any
process or know-how used, by Housewares infringes or is alleged to infringe any
patent or other proprietary right of any other Person.
(v) All products made, used, or sold under the Patents have been marked
with the proper patent notice.
(d) Marks
(i) Part 4.21(d) of the Disclosure Schedule contains a complete and
accurate list and summary description of all Marks. Housewares is the owner of
all right, title, and interest in and to each of the Marks, free and clear of
all liens, security interests, charges, encumbrances, equities, and other
adverse claims.
(ii) All Marks that have been registered with the United States Patent and
Trademark Office are currently in compliance with all formal legal requirements
(including the timely post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and enforceable, and are
not subject to any maintenance fees or taxes or actions falling due within
ninety days after the Effective Date.
(iii) No Mark has been or is now involved in any opposition, invalidation,
or cancellation and, to Seller's Knowledge, no such action is Threatened with
the respect to any of the Marks.
(iv) To Seller's Knowledge, there is no potentially interfering trademark
or trademark application of any third party.
(v) No Mark is infringed or, to Seller's Knowledge, has been challenged
or threatened in any way. None of the Marks used by Housewares infringes or is
alleged to infringe any trade name, trademark, or service mark of any third
party.
(vi) All products and materials containing a Mark bear the proper federal
registration notice where permitted by law.
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(e) Copyrights
(i) Part 4.21(e) of the Disclosure Schedule contains a complete and
accurate list and summary description of all Copyrights. Housewares is the
owner of all right, title, and interest in and to each of the Copyrights, free
and clear of all liens, security interests, charges, encumbrances, equities,
and other adverse claims.
(ii) All the Copyrights have been registered and are currently in
compliance with formal legal requirements, are valid and enforceable, and are
not subject to any maintenance fees or taxes or actions falling due within
ninety days after the Effective Date.
(iii) To Seller's Knowledge, no Copyright is infringed or, to Seller's
Knowledge, has been challenged or threatened in any way. None of the subject
matter of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work of a
third party.
(iv) All works encompassed by the Copyrights have been marked with the
proper copyright notice.
(f) Trade Secrets
(i) With respect to each Trade Secret, the documentation relating to such
Trade Secret is current, accurate, and sufficient in detail and content to
identify and explain it and to allow its full and proper use without reliance
on the knowledge or memory of any individual.
(ii) Housewares has taken all reasonable precautions to protect the
secrecy, confidentiality, and value of its Trade Secrets.
(iii) To Seller's Knowledge, Housewares has good title and an absolute
(but not necessarily exclusive) right to use the Trade Secrets. The Trade
Secrets are not part of the public knowledge or literature, and, to Seller's
Knowledge, have not been used, divulged, or appropriated either for the benefit
of any Person (other than for Housewares) or to the detriment of Housewares. No
Trade Secret is subject to any adverse claim or has been challenged or
threatened in any way.
SECTION 4.22 CERTAIN PAYMENTS.
Neither Housewares nor any director, officer, agent, or employee of Housewares,
or to Seller's Knowledge any other Person associated with or acting for or on
behalf of Housewares, has directly or indirectly (a) made any contribution,
gift, bribe, rebate, payoff, influence payment, kickback, or other payment to
any Person, private or public, regardless of form, whether in money, property,
or services (i) to obtain favorable treatment in securing business, (ii) to pay
for favorable treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for or in respect of
Housewares or any Affiliate of Housewares, or (iv) in violation of any Legal
Requirement, (b) established or maintained any fund or asset that has not been
recorded in the books and records of Housewares.
SECTION 4.23 DISCLOSURE.
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(a) No representation or warranty of Seller in this Agreement and no
statement in the Disclosure Schedule omits to state a material fact necessary
to make the statements herein or therein, in light of the circumstances in
which they were made, not misleading.
(b) No notice given pursuant to Section 6.5 will contain any untrue
statement or omit to state a material fact necessary to make the statements
therein or in this Agreement, in light of the circumstances in which they were
made, not misleading.
(c) There is no fact known to Seller that has specific application to
Housewares (other than general economic or industry conditions) and that
materially adversely affects or, as far as Seller can reasonably foresee,
materially threatens, the assets, business, prospects, financial condition, or
results of operations of Housewares that has not been set forth in this
Agreement or the Disclosure Schedule.
SECTION 4.24 RELATIONSHIPS WITH RELATED PERSONS.
Except as set forth on Part 4.24 of the Disclosure Schedule, (a) no Related
Person of Seller or Housewares has had any interest in any property (whether
real, personal, or mixed and whether tangible or intangible), used in or
pertaining to Housewares' Business; (b) no Related Person of Seller or
Housewares has owned (of record or as a beneficial owner) an equity interest or
any other financial or profit interest in, a Person that has (i) had business
dealings or a financial interest in any transaction with Housewares, or (ii)
engaged in competition with Housewares with respect to any line of the products
or services of Housewares (a "Competing Business") in any market presently
served by Housewares. Except as set forth in Part 4.24 of the Disclosure
Schedule, no Related Person of Seller or Housewares is a party to any Contract
with, or has any claim or right against, Housewares. To Seller's Knowledge,
each relationship or Contract set forth on Part 4.24 of the Disclosure Schedule
was entered into on an arms length basis, on terms that reflect the fair market
value for services rendered or products supplied or purchased.
SECTION 4.25 BROKERS OR FINDERS.
Seller and its agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement.
SECTION 4.26 CUSTOMERS AND SUPPLIERS.
(a) Part 4.26 of the Disclosure Schedule contains a complete and accurate
list of (a) the 5 largest customers of Housewares in terms of sales during
Housewares' last fiscal year, showing the approximate total sales by Housewares
to each such customer during such fiscal year; (b) the 5 largest suppliers of
Housewares in terms of purchases during Housewares' last fiscal, showing the
approximate total purchases by Housewares from each such supplier during such
fiscal year. Since the date of the Balance Sheet, there has be no material
adverse change in the business relationship of Housewares with any customer or
supplier named in Part 4.26 of the Disclosure Schedule.
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(b) There has been no notice from any supplier of an item material to
Housewares that such supplier will not continue to make deliveries on the same
price, quality and delivery terms and conditions consistent with past practices
of such suppliers. No condition or state of facts exists concerning the
suppliers of Housewares which would materially and adversely affect the
business of Housewares or prevent Housewares from conducting its business after
the consummation of the Contemplated Transactions.
SECTION 4.27 PURCHASE COMMITMENTS AND OUTSTANDING BIDS.
As of the Closing Date, the aggregate of all accepted and unfulfilled orders
for the sale merchandise entered into by Housewares does not exceed $50,000,
and the aggregate of all Contracts or commitments for the purchase of supplies
by it does not exceed $50,000, all of which orders, Contracts and commitments
were made in the Ordinary Course of Business. As of the Closing Date, there
are no claims against Housewares to return merchandise by reason of alleged
overshipments, defective merchandise or otherwise, or of merchandise in the
hands of customers under an understanding that such merchandise would be
returnable. No outstanding purchase or outstanding lease commitment of
Housewares presently is in excess of the normal, ordinary and usual
requirements of its business or was made at any price in excess of the now
current market price or contains terms and conditions more onerous than those
usual and customary in Housewares' business. There is no outstanding bid,
proposal, Contract or unfilled order of Housewares which will or would, if
accepted, have a material adverse effect, individually or in the aggregate, on
the business of financial condition of Housewares.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
SECTION 5.1 ORGANIZATION AND GOOD STANDING.
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware.
SECTION 5.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Employment Agreement (the "Buyer's
Closing Documents"), the Buyer's Closing Documents will constitute the legal,
valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms. Buyer has the absolute and unrestricted
right, power, and authority to execute and deliver this Agreement and the
Buyer's Closing Documents and to perform its obligations under this Agreement
and the Buyer's Closing Documents.
(b) Except as set forth in Schedule 5.2, neither the execution and
delivery of this Agreement by Buyer nor the consummation or performance of any
of the Contemplated Transactions by Buyer will give any Person the right to
prevent, delay, or otherwise interfere with any of the Contemplated
Transactions pursuant to:
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(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or the stockholders
of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be subject; or
(iv) any Contract to which Buyer is a party or by which Buyer may be
bound.
Except as set forth in Schedule 5.2, Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
SECTION 5.3 CERTAIN PROCEEDINGS.
There is no pending Proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
SECTION 5.4 BROKERS OR FINDERS.
Buyer and its officers and agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement and will indemnify
and hold Seller harmless from any such payment alleged to be due by or through
Buyer as a result of the action of Buyer or its officers or agents.
SECTION 6. COVENANTS OF SELLER AND HOUSEWARES PRIOR TO CLOSING DATE.
SECTION 6.1 ACCESS AND INVESTIGATION.
Between the date of this Agreement and the Closing Date, Seller and Housewares
will and will cause their respective Representatives to, (a) afford Buyer and
its Representatives and prospective lenders and their Representatives
(collectively, "Buyer's Advisors") full and free access to Housewares
personnel, properties (including subsurface testing), Contracts, Books and
Records, and other documents and data, (b) furnish Buyer and Buyer's Advisors
with copies of all such Contracts, Books and Records, and other existing
documents and data as Buyer may reasonably request, and (c) furnish Buyer and
Buyer's Advisors with such additional financial, operating, and other data and
information as Buyer may reasonably request. Buyer's investigation of
Housewares pursuant to the foregoing shall not modify, diminish, alter nor in
any way affect the scope, content or legal effect of the Seller's
representations and warranties set forth in this Agreement.
SECTION 6.2 OPERATION OF THE BUSINESS OF HOUSEWARES; MAINTENANCE OF ASSETS.
Between the date of this Agreement and the Closing Date, Seller and Housewares
will:
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(a) conduct the business of Housewares only in the Ordinary Course of
Business;
(b) use their Best Efforts to preserve intact the current business
organization of Housewares, keep available the services of the current
officers, employees, and agents of Housewares, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents,
and others having business relationships with Housewares;
(c) confer with Buyer concerning operational matters of a material nature;
(d) otherwise report periodically to Buyer concerning the status of the
business, operations, and finances of Housewares; and
(e) maintain the Housewares assets in substantially their current state of
repair, excepting normal wear and tear and, through the Closing Date, maintain
insurance covering such assets similar to that in effect on the date hereof.
SECTION 6.3 NEGATIVE COVENANT.
Except as otherwise expressly permitted by this Agreement, between the date of
this Agreement and the Closing Date, Seller and Housewares will not, without
the prior consent of Buyer, take any affirmative action, or fail to take any
reasonable action within their control, as a result of which any of the changes
or events listed in Section 4.16 is likely to occur.
SECTION 6.4 REQUIRED APPROVALS.
As promptly as practicable after the date of this Agreement, Seller and
Housewares will make all filings required by Legal Requirements to be made by
it in order to consummate the Contemplated Transactions. Between the date of
this Agreement and the Closing Date, Seller and Housewares will (a) cooperate
with Buyer with respect to all filings that Buyer elects to make or is required
by Legal Requirements to make in connection with the Contemplated Transactions,
and (b) cooperate with Buyer in obtaining all consents identified in Schedule
5.2.
SECTION 6.5 NOTIFICATION.
Between the date of this Agreement and the Closing Date, Seller will promptly
notify Buyer in writing if Seller or Housewares becomes aware of any fact or
condition that causes or constitutes a Breach of any of Seller's or Housewares'
representations and warranties as of the date of this Agreement, or if Seller
or Housewares becomes aware of the occurrence after the date of this Agreement
of any fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or condition require
any change in the Disclosure Schedule if the Disclosure Schedule were dated the
date of the occurrence or discovery of any such fact or condition, Seller will
promptly deliver to Buyer a supplement to the Disclosure Schedule specifying
such change. During the same period, Seller will promptly notify Buyer of the
occurrence of any Breach of any covenant of Seller or Housewares in this
Section 6 or of the occurrence of any event that may make the satisfaction of
the conditions in Section 8 impossible or unlikely.
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SECTION 6.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS.
Except as expressly provided in this Agreement, Seller and Housewares will
cause all indebtedness owed to or due from any Related Person of Housewares to
be paid in full prior to Closing.
SECTION 6.7 NO NEGOTIATION.
Until such time, if any, as this Agreement is terminated pursuant to Section
11, Seller and Housewares will not, and will cause each of their respective
Representatives not to, directly or indirectly solicit, initiate, or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the Business (other than in the Ordinary Course of
Business) of Housewares, or any of the capital stock of Housewares, or any
merger, consolidation, business combination, or similar transaction involving
Housewares.
SECTION 6.8 BEST EFFORTS.
Between the date of this Agreement and the Closing Date, Seller and Housewares
will use their Best Efforts to cause the conditions in Sections 8 and 9 to be
satisfied.
SECTION 7. COVENANTS OF BUYER PRIOR TO CLOSING DATE
SECTION 7.1 APPROVALS OF GOVERNMENTAL BODIES.
As promptly as practicable after the date of this Agreement, Buyer will, and
will cause each of its Related Persons to, make all filings required by Legal
Requirements to be made by them to consummate the Contemplated Transactions.
Between the date of this Agreement and the Closing Date, Buyer will, and will
cause each Related Person to, (a) cooperate with Seller and Housewares with
respect to all filings that Seller and Housewares are required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Seller and Housewares in obtaining all consents identified in
Part 4.2 of the Disclosure Schedule; provided that this Agreement will not
require Buyer to dispose of or make any change in any portion of its business
or to incur any other burden to obtain a Governmental Authorization.
SECTION 7.2 BEST EFFORTS.
Except as set forth in the proviso to Section 7.1, between the date of this
Agreement and the Closing Date, Buyer will use its Best Efforts to cause the
conditions in Sections 8 and 9 to be satisfied.
SECTION 8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS TO CLOSE
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Buyer's obligation to effect the Merger under the terms of this Agreement and
to take the other actions required to be taken by Buyer at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Buyer, in whole or in
part):
SECTION 8.1 ACCURACY OF REPRESENTATIONS
All of Seller's and Housewares' representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
SECTION 8.2 SELLER'S AND HOUSEWARES' PERFORMANCE
(a) All of the covenants and obligations that Seller and Housewares are
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered pursuant to Section 3.2 must
have been delivered, and each of the other covenants and obligations in
Sections 6.4 and 6.8 must have been performed and complied with in all
respects.
SECTION 8.3 CONSENTS
Each of the Consents identified in Part 4.2 of the Disclosure Schedule, and
each Consent identified in Schedule 5.2, must have been obtained and must be in
full force and effect.
SECTION 8.4 ADDITIONAL DOCUMENTS.
Each of the following documents must have been delivered to Buyer:
(a) an opinion of John Roncone of the Roncone Law Offices dated the
Closing Date, in the form of Exhibit 8.4(a);
(b) estoppel certificates executed on behalf of ______________ and
_________________, dated as of [a date not more than ___ days prior to] the
Closing Date, each in the form of Exhibit 8.4(b);
(c) resignations of the Seller and all of Housewares' appointees from
their respective positions as officers and directors of Housewares and as
Trustees of any plan; and
(c) such other documents as Buyer may reasonably request for the purpose
of (i) enabling its counsel to provide the opinion referred to in Section
9.4(a), (ii) evidencing the accuracy of any of Seller's and Housewares'
representations and warranties, (iii) evidencing the performance by Seller and
Housewares of, or the compliance by Seller and Housewares with, any covenant or
obligation required to be performed or complied with by Seller and Housewares,
(iv) evidencing the satisfaction of any condition referred to in this Section
8, or
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(v) otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
SECTION 8.5 NO PROCEEDINGS.
Since the date of the Balance Sheet, there must not have been commenced or
Threatened against Seller or Housewares, or against any Person affiliated with
Housewares, any Proceeding (a) involving any challenge to, or seeking damages
or other relief in connection with, any of the Contemplated Transactions, or
(b) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the Contemplated Transactions.
SECTION 8.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS.
There must not have been made or Threatened by any Person any claim asserting
that such Person (a) is the holder or the beneficial owner of, or has the right
to acquire or to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, the Housewares, or (b) is entitled to
all or any portion of the purchase price payable in consideration of the
Merger.
SECTION 8.7 NO PROHIBITION.
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any Person affiliated with Buyer to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise formally proposed by or before any Governmental Body.
SECTION 8.8 CLOSING OF TAMOR TRANSACTION
Buyer's obligation to close the transactions contemplated under this Agreement
is conditioned upon the simultaneous closing of the Tamor Transaction.
SECTION 8.9 LETTER FROM BUYER'S INVESTMENT BANKER.
Buyer shall have received a letter dated on or before the Closing Date from
Buyer's investment banker addressed to Buyer indicating such investment
banker's ability to arrange adequate financing to close the Contemplated
Transactions.
SECTION 8.10 DUE DILIGENCE.
The Buyer obtains a satisfactory report, based on reasonable objective
standards, from its due diligence investigation; provided, however, that if
Buyer does not provide notice to Seller and Housewares of dissatisfaction by
December 16, 1996, this condition shall be deemed waived and satisfied.
SECTION 8.11 MATERIAL CHANGE. Between the date of the Balance Sheet and the
Closing, there shall not be a material adverse change in the assets, prospects,
condition (financial or otherwise) or properties of Housewares. There also
shall not have occurred any material
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damage to the assets or properties of Housewares, regardless of insurance, nor
shall any legislation have been enacted which materially and adversely affects
Housewares.
SECTION 9. CONDITIONS PRECEDENT TO SELLER'S AND HOUSEWARES' OBLIGATION TO CLOSE
Seller's and Housewares' obligation to effect the Merger and for Seller to
accept the Merger Shares and to take the other actions required to be taken by
Seller and Housewares at the Closing is subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be
waived by Seller or Housewares, in whole or in part):
SECTION 9.1 ACCURACY OF REPRESENTATIONS.
All of Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.
SECTION 9.2 BUYER'S PERFORMANCE.
(a) All of the covenants and obligations that Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 3.2 and must have made the cash payment
and delivery of the Merger Shares required to be made by Buyer pursuant to
Section 2.5.
SECTION 9.3 CONSENTS.
Each of the Consents identified in Part 4.2 of the Disclosure Schedule must
have been obtained and must be in full force and effect.
SECTION 9.4 ADDITIONAL DOCUMENTS.
Buyer must have caused the following documents to be delivered to Seller and
Housewares :
(a) an opinion of Much Shelist Freed Denenberg Ament Bell & Rubenstein,
P.C., dated the Closing Date, in the form of Exhibit 9.4(a); and
(b) such other documents as Seller and Housewares may reasonably request
for the purpose of (i) enabling their counsel to provide the opinion referred
to in Section 7.4(a), (ii) evidencing the accuracy of any representation or
warranty of Buyer, (iii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be performed
or complied with by Buyer, (ii) evidencing the satisfaction of any condition
referred to in this Section 8, or (v) otherwise facilitating the consummation
of any of the Contemplated Transactions.
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SECTION 9.5 NO INJUNCTION.
There must not be in effect any Legal Requirement or any injunction or other
Order that (a) prohibits the Merger, and (b) has been adopted or issued, or has
otherwise become effective, since the date of this Agreement.
SECTION 9.6 CLOSE OF TAMOR TRANSACTION.
Seller's and Housewares' obligation to close the transactions contemplated
under this Agreement is conditioned upon the simultaneous closing of the Tamor
Transaction.
SECTION 10. REGISTRATION RIGHTS OF MERGER SHARES
SECTION 10.1 REGISTRATION RIGHTS OF SELLER.
During the twenty-four (24) month period beginning after the Closing,
Seller shall have the right on no more than two occasions to request that Buyer
register at least an aggregate of 100,000 the Merger Shares, appropriately
adjusted for any subsequent stock dividend or stock split (the "Request"). As
soon as is reasonably practicable after receipt of the Request, Buyer will file
with the Securities and Exchange Commission and use its best efforts to have
declared effective a registration statement for an offering on a continuous or
delayed basis in the future pursuant to Rule 415 of the Securities Act on Form
S-3 thereunder to permit the sale, transfer or other disposition intended by
Seller of such shares (the "Registration"). Buyer shall be obligated to
continue such Registration in effect until the time at which legal counsel for
Buyer determines that the Merger Shares can be sold free of registration under
the Securities Act. In the event Buyer is involved in any event which would
require that such a registration statement be terminated or suspended, Buyer
may terminate or suspend such registration statement for a period not to exceed
sixty (60) days, but shall promptly thereafter cause a new Registration to be
effective for the Merger Shares subject to the Request.
If Seller is unable to register the Merger Shares pursuant to a
Registration as described above for any reason, then Shareholders may elect at
such time to receive in cash the portion of the purchase price originally
allocated to the Merger Shares. In addition, on the second occasion, if any,
that Buyer is involved in an event which would require that such a registration
statement be terminated or suspended for a period not to exceed sixty (60) days
(as described above), then Shareholders also may elect at such time to receive
in cash the portion of the purchase price originally allocated to the Merger
Shares.
SECTION 10.2 EXPENSES; INDEMNIFICATION.
(a) Buyer shall bear all expenses of any Registration under this Section
other than (i) broker or dealer charges and (ii) counsel fees and expenses of
Seller. Buyer will furnish copies of preliminary prospectuses, final
prospectuses (together with supplements thereto) and other documents necessary
or incidental to the offerings and dispositions pursuant to the Registration in
such quantities as Seller may reasonably request.
(b) Seller agrees to provide Buyer written notice of the sale of any of
the Merger Shares not less than three (3) business days prior to the closing
date of such sale. It is understood and
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agreed that the Merger Shares covered by the Registration shall be sold by
Seller in ordinary brokerage transactions.
(c) With respect to the registration statement effected pursuant to this
Section, Buyer agrees to indemnify and hold harmless and defend Seller and each
person who may control it within the meaning of the Securities Act against any
and all losses, claims, damages, actions, or liabilities (including reasonable
legal and other expenses incurred in investigating and defending the same),
joint or several, to which Seller may become subject under the Securities Act
or otherwise, arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in such registration statement or any
preliminary prospectus or prospectus with respect thereto, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the indemnity contained in this
Section shall no apply to any such losses, claims, damages, actions or
liabilities arising out of or based upon any untrue or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with
information furnished in writing to Buyer by or on behalf of Seller for use
therein. Seller agrees that as soon as practicable after the receipt of notice
of any claim or action against it in respect of which indemnity may be sought
from Buyer hereunder, Seller will notify Buyer thereof in writing. Upon
receipt of such notice Buyer shall have the right to assume the defense of such
claim or action (including the employment of counsel and the payment of
expenses) insofar as such claim or action shall relate to any alleged liability
in respect of which indemnity may be sought from Buyer hereunder. Seller
further agrees that it will in the same manner and to the same extent as set
forth above indemnify, hold harmless and defend each of its directors and each
of its officers who has signed any such registration statement with respect to
any such untrue or alleged untrue statement or omission or allege omission made
in reliance upon and in conformity with such information furnished in writing
to Buyer by or on behalf of Seller and that in case any claim or action in
respect of which indemnity may be sought from Seller hereunder arises it will
have the right to assume the defense thereof as set forth above. Buyer shall
have similar obligations to notify Seller thereof as set forth above.
SECTION 11. TERMINATION EVENTS.
SECTION 11.1 TERMINATION EVENTS.
This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by either Buyer or Seller if a material Breach of any provision of
this Agreement has been committed by the other party and such Breach has not
been promptly cured or waived;
(b) (i) by Buyer if any of the conditions in Section 8 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Seller and Housewares, if any of the
conditions in Section 9 has not been satisfied of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Seller or Housewares to comply with their obligations under this
Agreement) and Seller and Housewares has not waived such condition on or before
the Closing Date; or
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(c) by mutual consent of Buyer and Seller.
SECTION 11.2 EFFECT OF TERMINATION.
Each party's right of termination under Section 11.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies. If this Agreement
is terminated pursuant to Section 11.1, all further obligations of the parties
under this Agreement will terminate, except that the obligations in Sections
13.1 and 13.3 will survive; provided, however, that if this Agreement is
terminated by a party because of the material Breach of the Agreement by the
other party (which Breach has not been cured within a reasonable period after
notice thereof) or because one or more of the material conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
SECTION 12. INDEMNIFICATION; REMEDIES
SECTION 12.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE.
All representations, warranties, covenants, and obligations in this Agreement,
the Disclosure Schedule, the supplements to the Disclosure Schedule, if any,
the certificate delivered pursuant to Section 3.2, and any other certificate or
document delivered pursuant to this Agreement will survive the Closing. The
right to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the
accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
SECTION 12.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER.
Seller, will indemnify and hold harmless Buyer and its Representatives, and
affiliates (collectively, the "Indemnified Persons") for, and will pay to the
Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by Seller or
Housewares in this Agreement, the Disclosure Schedule, or any other certificate
or document delivered by Seller and Housewares pursuant to this Agreement;
(b) any Breach by Seller or Housewares of any covenant or obligation of
Seller or Housewares in this Agreement; or
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(c) any claim by any Person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding alleged to have
been made by any such Person with Seller or Housewares (or any Person acting on
its behalf) in connection with any of the Contemplated Transactions.
Notwithstanding the foregoing, Seller will not have any obligation to indemnify
Buyer against Damages until Buyer has suffered aggregate Damages by reason of
all such Breaches of Twenty-Five Thousand Dollars ($25,000) (the "Damage
Threshold"). Seller's indemnification will only extend to those Damages in
excess of the Damage Threshold. The remedies provided in this Section 12.2
will not be exclusive of or limit any other remedies that may be available to
Buyer or the other Indemnified Persons.
SECTION 12.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER.
Buyer will indemnify and hold harmless Seller, and will pay to Seller the
amount of any Damages arising, directly or indirectly, from or in connection
with (a) any Breach of any representation or warranty made by Buyer in this
Agreement or in any certificate delivered by Buyer pursuant to this Agreement,
(b) any Breach by Buyer of any covenant or obligation of Buyer in this
Agreement, or (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on
its behalf) in connection with any of the Contemplated Transactions.
SECTION 12.4 TIME LIMITATIONS.
If the Closing occurs, Seller will have no liability (for indemnification or
otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date, other
than those in Sections 4.2, 4.3, 4.4, 4.10, 4.11 and 4.13 unless on or before
July 1, 1998 Buyer notifies Seller of a claim specifying the factual basis of
that claim in reasonable detail to the extent then known by Buyer. A claim
with respect to Sections 4.2, 4.3 or 4.4, or a claim for indemnification or
reimbursement not based upon any representation or warranty or any covenant or
obligation to be performed and complied with prior to the Closing Date, may be
made at any time. A claim with respect to Sections 4.10, 4.11 and 4.13 may be
made at any time during the applicable statute of limitations. If the Closing
occurs, Buyer will have no liability (for indemnification or otherwise) with
respect to any representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date, unless on or before July
1, 1998 Seller notify Buyer of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by Seller.
SECTION 12.5. PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party of notice under Section
12.2, 12.4 or to the extent provided in the last sentence of Section 12.3, of
the commencement of any Proceeding against it, such indemnified party will, if
a claim is to be made against an indemnifying party under such Section, give
notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any indemnified party, except to the
extent
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that the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 12.5(a) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the
extent that it wishes (unless (i) the indemnifying party is also a party to
such Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 12 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding,
in each case subsequently incurred by the indemnified party in connection with
the defense of such Proceeding, other than reasonable costs of investigation.
If the indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (iii) the indemnified party
will have no liability with respect to any compromise or settlement of such
claims effected without its consent. If notice is given to an indemnifying
party of the commencement of any Proceeding and the indemnifying party does
not, within ten days after the indemnified party's notice is given, give notice
to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will be bound by any determination made in
such Proceeding or any compromise or settlement effected by the indemnified
party.
(c) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement,
the indemnified party may, by notice to the indemnifying party, assume the
exclusive right to defend, compromise, or settle such Proceeding, but the
indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which
may not be unreasonably withheld).
(d) Seller hereby consents to the non-exclusive jurisdiction of any court
in which a Proceeding is brought against any Indemnified Person for purposes of
any claim that an Indemnified Person may have under this Agreement with respect
to such Proceeding or the matters alleged therein, and agree that process may
be served on Seller with respect to such a claim anywhere in the world.
SECTION 12.6 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS.
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A claim for indemnification for any matter not involving a third-party claim
may be asserted by notice to the party from whom indemnification is sought.
SECTION 12.7 RELEASE.
Seller on his own behalf and on behalf of his Related Persons, hereby releases
and forever discharges the Buyer, Housewares and each of their respective past,
present and future Representatives, affiliates, successors and assigns
(individually a "Releasee" and collectively "Releasees") from any and all
claims, demands, Proceedings, causes of action, Orders, obligations, contracts,
agreements, debts and liabilities whatsoever, whether known or unknown, at law
and in equity, which Seller or any of his Related Persons now has, ever had, or
may hereafter have against the Releasees arising contemporaneously with or
prior to the Closing Date, including but not limited to, any rights to
indemnification or reimbursement from Housewares, whether pursuant to its
Organizational Documents, contract or otherwise and whether or not relating to
claims pending on or asserted after the Closing Date; provided, however, that
nothing contained herein shall operate to release any obligations of Buyer
arising under this Agreement or any obligation of Housewares with respect to
Seller which is to remain in effect after the Closing as specifically provided
in this Agreement. Seller hereby irrevocably covenants to refrain from,
directly or indirectly, asserting any claim or demand, or commencing,
instituting or causing to be commenced, any proceeding of any kind against any
Releasee, based upon any matter purported to be released hereby. Seller's
indemnification obligation pursuant to Section 12.2 shall extend to any Damages
arising directly or indirectly from or in connection with the assertion by or
on behalf of Seller or any of his Related Persons of any claim or other matter
purported to be released pursuant to this Section and the assertion of any
third party of any claim or demand against any Releasee which arises directly
or indirectly from or in connection with any assertion by or on behalf of
Seller or any of his Related Persons against such third party with any claims
or other matters purported to be released hereby.
SECTION 13. GENERAL PROVISIONS
SECTION 13.1 EXPENSES.
Except as otherwise expressly provided in this Agreement, each party to this
Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. Seller will cause Housewares not incur any
out-of-pocket expenses in connection with this Agreement. In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a breach of
this Agreement by another party.
SECTION 13.2 PUBLIC ANNOUNCEMENTS.
Any public announcement or similar publicity with respect to this Agreement or
the Contemplated Transactions will be issued, if at all, at such time and in
such manner as Buyer determines. Unless consented to by Buyer in advance or
required by Legal Requirements, prior to the Closing Seller and Housewares
shall keep this Agreement strictly confidential and may not make any disclosure
of this Agreement to any Person. Seller and Buyer will consult with each other
concerning the means by which Housewares' employees, customers, and suppliers
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and others having dealings with Housewares will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any such
communication.
SECTION 13.3 CONFIDENTIALITY.
Between the date of this Agreement and the Closing Date, or if the Contemplated
Transactions shall not close, Buyer, Seller and Housewares will maintain in
confidence, and will cause the directors, officers, employees, agents, and
advisors of Buyer, Seller and Housewares to maintain in confidence, any
written, oral, or other information obtained in confidence from another party
in connection with this Agreement or the Contemplated Transactions, unless (a)
such information is already known to such party or to others not bound by a
duty of confidentiality or such information becomes publicly available through
no fault of such party, (b) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the Contemplated Transactions, or (c) the furnishing or
use of such information is required by Legal Proceedings. If the Contemplated
Transactions are not consummated, each party will return or destroy as much of
such written information as the other party may reasonably request.
SECTION 13.4 NOTICES.
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Seller:
Attention: Leonard J. Tocci
Facsimile No.: _______________
with a copy to: Roncone Law Offices
142 Main Street
Leominster, MA 01453
Attention: John Roncone
Facsimile No.: (508) 840-6000
Buyer: Selfix, Inc.
4501 W. 47th Street
Chicago, IL 60632
Attention: James R. Tennant
Facsimile No.: (312) 890-0523
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with a copy to: Much Shelist Freed Denenberg
Ament Bell & Rubenstein, P.C.
200 N. LaSalle Street, Suite 2100
Chicago, IL 60601
Attention: Jeffrey C. Rubenstein
Facsimile No.: (312) 621-1750
SECTION 13.5 ARBITRATION.
In the event a dispute arises between the parties in connection with this
Agreement, the parties shall cause such dispute to be submitted for
determination by arbitration in accordance with the commercial rules of the
American Arbitration Association ("AAA") then in effect. Such proceeding shall
take place in Harrisburg, Pennsylvania. All disputes within the scope of the
Federal Arbitration Act of the United States shall be governed by that Act.
The arbitrator shall have the right to award or include in any award such
relief which the arbitrator deems proper in the circumstances included, without
limitation, money damages, specific performance, injunctive relief. The award
and decision of the arbitrator shall be conclusive and binding upon all of the
parties, and judgment upon the award may be entered in any court of competent
jurisdiction. Each of the parties reserves the right in a proper case to
obtain temporary restraining orders and temporary or preliminary injunctive
relief from a court of competent jurisdiction, provided such party promptly
submits the dispute for arbitration on the merits as provided by this Section.
SECTION 13.6 FURTHER ASSURANCES.
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
SECTION 13. 7 WAIVER.
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or
the exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which
it is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
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SECTION 13.8 ENTIRE AGREEMENT AND MODIFICATION.
This Agreement supersedes all prior agreements between the parties with respect
to its subject matter (including the Memorandum Agreement among Buyer, Seller
and Housewares dated October 29, 1996) and constitutes (along with the
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
SECTION 13.9 DISCLOSURE SCHEDULE.
In the event of any inconsistency between the statements in the body of this
Agreement and those in the Disclosure Schedule (other than an exception
expressly set forth as such in the Disclosure Schedule with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement will control.
SECTION 13.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties, except that Buyer may assign any of its
rights under this Agreement to any Subsidiary of Buyer; provided, however, that
such assignment shall not have a material adverse effect on the value of the
Merger Shares. Subject to the preceding sentence, this Agreement will apply to,
be binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
SECTION 13.11 SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
SECTION 13.12 SECTION HEADINGS, CONSTRUCTION.
The headings of Sections in this Agreement are provided for convenience only
and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
SECTION 13.13 GOVERNING LAW.
This Agreement will be governed by the laws of the Commonwealth of
Massachusetts without regard to conflicts of laws principles.
SECTION 13.14 COUNTERPARTS.
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This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of the date first written above.
Houseware Sales, Inc. Shareholders:
By: /s/ Leonard J. Tocci /s/ Leanne Whitney
-------------------- --------------------
Leanne Whitney
President: /s/ Lynel Tocci
--------------------
Lynel Tocci
/s/ Leonard J. Tocci /s/ Linnea Tocci
- -------------------- --------------------
Leonard J. Tocci Linnea Tocci
Buyer:
Selfix, Inc.
By: /s/ James R Tennant
---------------------
Its
46
<PAGE> 1
EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of January 1, 1997, by
Selfix, Inc., a Delaware corporation ("Buyer"), Leonard J. Tocci, Richard M.
Tocci, Lawrence J. Tata, Michael P. Tata and Barbara L. Tata (collectively
"Sellers").
RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the issued and
outstanding shares (the "Shares") of capital stock of Tamor Plastics Corp., a
Massachusetts corporation (the "Company"), for the consideration and on the
terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Section 1:
"ADJUSTMENT AMOUNT"--as defined in Section 2.3.
"APPLICABLE CONTRACT"--any Contract (a) under which the Company has or may
acquire any rights, (b) under which the Company has or may become subject to
any obligation or liability, or (c) by which the Company or any of the assets
owned or used by it is or may become bound.
"BALANCE SHEET"--as defined in Section 3.4.
"BEST EFFORTS"--the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is
achieved as expeditiously as possible.
"BREACH"--a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"BUYER"--as defined in the first paragraph of this Agreement.
"CLOSING"--as defined in Section 2.4.
<PAGE> 2
"CLOSING DATE"--the date and time as of which the Closing actually takes place.
"COMPANY"--as defined in the Recitals of this Agreement.
"CONSENT"--any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS"--all of the transactions contemplated by this
Agreement, including:
(a) the sale of the Shares by Sellers to Buyer;
(b) the execution, delivery, and performance of the Noncompetition
Agreements;
(c) the performance by Buyer and Sellers of their respective covenants
and obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares and exercise of
control over the Company.
"CONTRACT"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"DAMAGES"--as defined in Section 10.2.
"DISCLOSURE LETTER"--the disclosure schedules delivered by Sellers to Buyer
concurrently with the execution and delivery of this Agreement.
"ENCUMBRANCE"--any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"ENVIRONMENT"--soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"--any cost, damages, expense,
liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
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<PAGE> 3
(a) any environmental, health, or safety matters or conditions (including
on-site or off-site contamination, occupational safety and health, and
regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including
any investigation, cleanup, removal, containment, or other remediation or
response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and
for any natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial measures
required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of
the commencements of activities, such as resource extraction or
construction, that could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants
or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
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(g) cleaning up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for
injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any successor
law, and regulations and rules issued pursuant to that Act or any successor
law.
"ESCROW AGREEMENT"--as defined in Section 10.3.
"FACILITIES"--any real property, leaseholds, or other interests currently or
formerly owned or operated by the Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by the Company.
"GAAP"--generally accepted United States accounting principles, applied on a
basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4(b) were prepared.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license, permit, waiver,
or other authorization issued, granted, given, or otherwise made available by
or under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"GOVERNMENTAL BODY"--any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and any
court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority
or power of any nature.
"HAZARDOUS ACTIVITY"--the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release,
storage, transfer, transportation, treatment, or use (including any withdrawal
or other use of groundwater) of Hazardous
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<PAGE> 5
Materials in, on, under, about, or from the Facilities or any part thereof into
the Environment, and any other act, business, operation, or thing that
increases the danger, or risk of danger, or poses an unreasonable risk of harm
to persons or property on or off the Facilities, or that may affect the value
of the Facilities or the Company.
"HAZARDOUS MATERIALS"--any waste or other substance that is listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and
specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"HOUSEWARES TRANSACTION"--the contemplated merger of Housewares Sales, Inc.
with and into Buyer.
"HSR ACT"--the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"INTELLECTUAL PROPERTY ASSETS" --as defined in Section 3.22.
"INTERIM BALANCE SHEET"--as defined in Section 3.4.
"INTERIM BALANCE SHEET DATE"--September 30, 1996.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and regulations
issued by the IRS pursuant to the Internal Revenue Code or any successor law.
"IRS"--the United States Internal Revenue Service or any successor agency, and,
to the extent relevant, the United States Department of the Treasury.
"KNOWLEDGE"--an individual will be deemed to have "Knowledge" of a particular
fact or other matter if:
(a) such individual is actually aware of such fact or other matter; or
(b) such individual knows or should be expected to know the possible
existence of such fact or other matter which could be learned by a
reasonably comprehensive investigation.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
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<PAGE> 6
"LEGAL REQUIREMENT"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"NONCOMPETITION AGREEMENTS"--as defined in Section 2.5(a)(iv) and (v).
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"ORDER"--any award, decision, injunction, judgment, order, ruling, subpoena, or
verdict entered, issued, made, or rendered by any court, administrative agency,
or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person and
is taken in the ordinary course of the normal day-to-day operations of
such Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
(c) such action is similar in nature and magnitude to actions customarily
taken, without any authorization by the board of directors (or by any
Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in
the same line of business as such Person.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of incorporation
and the bylaws of a corporation; and (b) any amendment to any of the
foregoing.
"PERSON"--any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"PLAN"--as defined in Section 3.13.
"PROCEEDING"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PROMISSORY NOTES"--as defined in Section 2.5(b)(i).
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<PAGE> 7
"RELATED PERSON"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer,
partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor, or
trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material Interest;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse, (iii) any other natural person
who is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 10% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 10% of the outstanding equity securities or
equity interests in a Person.
"RELEASE"--any spilling, leaking, emitting, discharging, depositing, escaping,
leaching, dumping, or other releasing into the Environment, whether intentional
or unintentional.
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<PAGE> 8
"REPRESENTATIVE"--with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"SECURITIES ACT"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SELLERS"--as defined in the first paragraph of this Agreement.
"SHARES"--as defined in the Recitals of this Agreement.
"SUBSIDIARY"--with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"TAX RETURN"--any return (including any information return), report, statement,
schedule, notice, form, or other document or information filed with or
submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE"--a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may
result from such Release.
"THREATENED"--a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the Closing, Sellers
will sell and transfer the Shares to Buyer, and Buyer will purchase the Shares
from Sellers.
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<PAGE> 9
2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Shares will be Twenty-Four
Million, Nine Hundred Ninety Thousand Dollars ($24,990,000) less the Adjustment
Amount. Buyer will pay the sum of $300,000 of the Purchase Price to the escrow
agent referred to in the Escrow Agreement. The balance of the Purchase Price
shall be deferred and payable pursuant to the Promissory Notes.
2.3 ADJUSTMENT AMOUNT
The Adjustment Amount will be equal to the sum of the following:
(i) the amount of any prepayment penalty incurred by the Company as a
result of the repayment of the Company's obligations to Phoenixcor or any
other party equipment financing.
(ii) the amount which would be payable to Richard upon termination of his
employment with the Company, pursuant to a certain employment agreement
between Richard and the Company dated March 25, 1993, being $500,000;
(iii) the amount of all dividends and S distributions paid to Sellers
from June 30, 1996 to the Closing Date; and
(iv) one-half (1/2) of the sum of the principal balance and all interest
accruing from June 30, 1996, of the Company's note payable to the estate
of Lucille M. Tata dated September 27, 1996, as of the Closing Date.
2.4 CLOSING
The purchase and sale (the "Closing") provided for in this Agreement will take
place at the offices of Seller's counsel at 10:00 a.m. (local time) on the date
that is five (5) business days following the delivery to Buyer of audited
financial statements of the Company for the year ended December 31, 1996; which
date is anticipated to be January 27, 1997. The Closing will be effective at
12:01 a.m. on January 1, 1997, and Buyer shall assume and enjoy the risk and
benefits from the operation of the Sellers from January 1, 1997. Buyer shall
report all income and pay all applicable federal and state taxes with respect
to income of the Company beginning January 1, 1997.
2.5 CLOSING OBLIGATIONS
At the Closing:
(a) Sellers will deliver to Buyer:
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(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), for transfer to Buyer;
(ii) noncompetition agreement and a two year employment letter
agreement for a salary of $178,000, plus the Management Incentive
Plan bonus and other prerequisites of an executive of Selfix in the
form of Exhibit 2.5(a)(ii), executed by Richard M. Tocci;
(iii) noncompetition agreement in the form of Exhibit 2.5(a)(iii),
executed by Leonard J. Tocci (such agreement, together with the
noncompetition agreement described in (iv) above, shall be referred
to collectively as the "Noncompetition Agreements"); and
(iv) a certificate executed by Sellers representing and warranting
to Buyer that each of Sellers' representations and warranties in
this Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date as
if made on the Closing Date (giving full effect to any supplements
to the Disclosure Letter that were delivered by Sellers to Buyer
prior to the Closing Date in accordance with Section 5.5).
(b) Buyer will deliver:
(i) to Sellers promissory notes in the form of Exhibit 2.5(b) in
the following amounts:
<TABLE>
<C> <C>
Leonard J. Tocci $
Richard M. Tocci $
Lawrence J. Tata $
Michael P. Tata $
Barbara L. Tata $
</TABLE>
(ii) to Sellers a certificate executed by Buyer to the effect that,
except as otherwise stated in such certificate, each of Buyer's
representations and warranties in this Agreement was accurate in
all respects as of the date of this Agreement and is accurate in
all respects as of the Closing Date as if made on the Closing Date;
and
(iii) to Richard M. Tocci and Leonard J. Tocci the Noncompetition
Agreements and a two year employment agreement for a salary of
$178,000, plus the Management Incentive Plan bonus and other
prerequisites of an executive employee of Selfix executed by Buyer;
and
(iv) to the escrow agent referred to in the Escrow Agreement, the
sum of $100,000.
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(c) Buyer and Sellers will enter into the Escrow Agreement described in
Section 10.3.
(d) Buyer intends to make a Section 338(h)(10) election pursuant to the
Internal Revenue Code in connection with the Contemplated Transactions.
Sellers agree to cooperate with Buyer in making such election, including
filing, and causing the Company to file, any necessary elections with the
Internal Revenue Service. In that regard, each of the Sellers agree to execute
a power of attorney in the form of Exhibit 2.5(d). Buyer agrees to reimburse
the Seller and the Seller's shareholders for any taxes incurred by the Seller
or its shareholders by reason of making an election pursuant to IRC Section
338(h)(10) in excess of the amount of taxes that would have been incurred in
the absence of making the election. The taxes which Buyer agrees to reimburse
above if caused by the IRC Section 338(h)(10) election shall include but not be
limited to the Massachusetts Corporate Excise Tax, any Massachusetts income tax
or capital gains tax assessed or imposed on the shareholder Michael P. Tata and
Barbara L. Tata as well as any American or Foreign federal, state, municipal or
local income, gross receipts, windfall profits, severance, property,
production, sales, use, value added, license, excise, franchise, employment,
withholding, capital stock, levies, imposts, duties, transfer and registration
fees or similar taxes or charges imposed on, or measured by, the income,
payroll, properties or operations of Tamor, together with any interest,
additions or penalties, deficiencies, or assessments with respect thereto and
any interest in respect of such additions or penalties.
2.6 PURCHASE OF INSURANCE.
At the Closing, each of the Sellers, upon notice to Buyers at least 10 days
prior to the Closing Date, shall have the right to purchase from the Company
any life insurance on their lives which are owned by the Company (other than
certain policies designated by the Company as Key Man Insurance on the lives of
Leonard and Richard). The purchase price of any such policy shall be equal to
the then cash value of the policy plus any prepaid premiums on such policy.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Part 3.1 of the Disclosure Letter contains a complete and accurate
list for the Company of jurisdictions in which it is authorized to do
business, and its capitalization (including the identity of each
stockholder and the number of shares held by each). The Company is a
corporation duly organized, validly existing, and in good standing under
the laws of the State of Massachusetts, with full corporate power and
authority to conduct its business as it is now being conducted, to own or
use the properties and assets that it purports to own or use, and to
perform all its obligations under Applicable Contracts. The Company is
duly qualified to do business as a foreign corporation and is
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in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it,
or the nature of the activities conducted by it, requires such
qualification. The Company has no subsidiaries.
(b) Sellers have delivered to Buyer copies of the Organizational
Documents of the Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation
of Sellers, enforceable against Sellers in accordance with its terms.
Upon the execution and delivery by Sellers of the Noncompetition
Agreements (collectively, the "Sellers' Closing Documents"), the Sellers'
Closing Documents will constitute the legal, valid, and binding
obligations of Sellers, enforceable against Sellers in accordance with
their respective terms. Sellers have the absolute and unrestricted right,
power, authority, and capacity to execute and deliver this Agreement and
the Sellers' Closing Documents and to perform their obligations under
this Agreement and the Sellers' Closing Documents.
(b) Except as set forth in Part 3.2 of the Disclosure Letter, neither the
execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of the Company, or (B)
any resolution adopted by the board of directors or the
stockholders of the Company;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge
any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to
which the Company or any Seller, or any of the assets owned or used
by the Company, may be subject;
(iii) contravene, conflict with, or result in a violation of any of
the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify,
any Governmental Authorization that is held by the Company or that
otherwise relates to the business of, or any of the assets owned or
used by, the Company;
(iv) cause Buyer or the Company to become subject to, or to become
liable for the payment of, any Tax;
(v) cause any of the assets owned by the Company to be reassessed
or revalued by any taxing authority or other Governmental Body;
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(vi) contravene, conflict with, or result in a violation or breach
of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any
Applicable Contract; or
(vii) result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by the Company.
Except as set forth in Part 3.2 of the Disclosure Letter, no Seller or the
Company is or will be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions.
3.3 CAPITALIZATION
The authorized equity securities of the Company consist of 100 shares of common
stock, no par value per share, of which 38.771 shares are issued and
outstanding and constitute the Shares. Sellers are and will be on the Closing
Date the record and beneficial owners and holders of all of the Shares, free
and clear of all Encumbrances. No legend or other reference to any purported
Encumbrance appears upon any certificate representing equity securities of the
Company. All of the outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are
no Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of the Company. None of the outstanding equity
securities or other securities of the Company was issued in violation of the
Securities Act or any other Legal Requirement. The Company does not own, or has
no Contract to acquire, any equity securities or other securities of any Person
(other than Company) or any direct or indirect equity or ownership interest in
any other business.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer: (a) audited balance sheet of the Company as
of December 31, 1995 ("Balance Sheet") and the related audited statements of
income, for the fiscal year then ended, and (b) an unaudited consolidated
balance sheet of the Company as at September 30, 1996 (the "Interim Balance
Sheet") and the related unaudited consolidated statements of income for the 9
months then ended, including in each case the notes thereto. Such financial
statements and notes fairly present the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the Company as at
the respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP; the financial statements referred to
in this Section 3.4 reflect the consistent application of such accounting
principles throughout the periods involved. No financial statements of any
Person is required by GAAP to be included in the consolidated financial
statements of the Company. Sellers have also delivered to Buyer certain
financial projections of the Company for the periods ended December 31, 1996
and December 31, 1997. The financial projections delivered by Sellers to
Buyers have been prepared by Sellers
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and represent a good faith estimate of the financial results of the Company for
the periods shown.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other records of
the Company, all of which have been made available to Buyer, are complete and
correct and have been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal controls. The
minute books of the Company contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the Boards
of Directors, and committees of the Boards of Directors of the Company, and no
meeting of any such stockholders, Board of Directors, or committee has been
held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of those books and records will be in the
possession of the Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a complete and accurate list of all
real property, leaseholds, or other interests therein owned by the Company.
Sellers have delivered or will make available to Buyer copies of the deeds and
other instruments (as recorded) by which the Company acquired such real
property and interests, and copies of all title insurance policies, opinions,
abstracts, and surveys in the possession of Sellers or the Company and relating
to such property or interests. The Company owns (with good and marketable title
in the case of real property, subject only to the matters permitted by the
following sentence) all the properties and assets (whether real, personal, or
mixed and whether tangible or intangible) that they purport to own located in
the Facilities owned or operated by the Company or reflected as owned in the
books and records of the Company, including all of the properties and assets
reflected in the Balance Sheet and the Interim Balance Sheet (except for assets
held under capitalized leases disclosed or not required to be disclosed in Part
3.6 of the Disclosure Letter and personal property sold since the date of the
Balance Sheet and the Interim Balance Sheet, as the case may be, in the
Ordinary Course of Business), and all of the properties and assets purchased or
otherwise acquired by the Company since the Balance Sheet (except for personal
property acquired and sold since the Balance Sheet in the Ordinary Course of
Business and consistent with past practice), which subsequently purchased or
acquired properties and assets (other than inventory and short-term
investments) are listed in Part 3.6 of the Disclosure Letter. All material
properties and assets reflected in the Balance Sheet and the Interim Balance
Sheet are free and clear of all Encumbrances and are not, in the case of real
property, subject to any rights of way, building use restrictions, exceptions,
variances, reservations, or limitations of any nature except, with respect to
all such properties and assets, (a) mortgages or security interests shown on
the Balance Sheet or the Interim Balance Sheet as securing specified
liabilities or obligations, with respect to which no default (or event that,
with notice or
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lapse of time or both, would constitute a default) exists, (b) mortgages or
security interests incurred in connection with the arm's length purchase of
property or assets after the date of the Interim Balance Sheet (such mortgages
and security interests being limited to the property or assets so acquired),
with respect to which no default (or event that, with notice or lapse of time
or both, would constitute a default) exists, (c) liens for current taxes not
yet due, and (d) with respect to real property, (i) minor imperfections of
title, if any, none of which is substantial in amount, materially detracts from
the value or impairs the use of the property subject thereto, or impairs the
operations of the Company, and (ii) zoning laws and other land use restrictions
that do not impair the present or anticipated use of the property subject
thereto. All buildings, plants, and structures owned by the Company lie wholly
within the boundaries of the real property owned by the Company and do not
encroach upon the property of, or otherwise conflict with the property rights
of, any other Person.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
The buildings, plants, structures, and equipment of the Company are
structurally sound, are in good operating condition and repair, and are
adequate for the uses to which they are being put, and none of such buildings,
plants, structures, or equipment is in need of maintenance or repairs except
for ordinary, routine maintenance and repairs that are not material in nature
or cost. The building, plants, structures, and equipment of the Company are
sufficient for the continued conduct of the Company's businesses after the
Closing in substantially the same manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are reflected on the Balance Sheet
or the Interim Balance Sheet or on the accounting records of the Company as of
the Closing Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the respective reserves shown on the Balance
Sheet or the Interim Balance Sheet or on the accounting records of the Company
as of the Closing Date (which reserves are adequate and calculated consistent
with past practice and, in the case of the reserve as of the Closing Date, will
not represent a greater percentage of the Accounts Receivable as of the Closing
Date than the reserve reflected in the Interim Balance Sheet represented of the
Accounts Receivable reflected therein and will not represent a material adverse
change in the composition of such Accounts Receivable in terms of aging).
Subject to such reserves, each of the Accounts Receivable either has been or
will be collected in full, without any set-off, within ninety days after the
day on which it first becomes due and payable. There is no contest, claim, or
right of set-off, other than returns in the Ordinary Course of Business, under
any Contract with any obligor of an Accounts Receivable relating to the amount
or validity of such Accounts Receivable. Part 3.8 of the Disclosure Letter
contains a complete and accurate list of all Accounts Receivable as of the date
of the Interim Balance Sheet, which list sets forth the aging of such Accounts
Receivable.
3.9 INVENTORY
All inventory of the Company, whether or not reflected in the Interim Balance
Sheet, consists of a quality and quantity usable and salable in the Ordinary
Course of Business, except for
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obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Interim Balance
Sheet or on the accounting records of the Company as of the Closing Date, as
the case may be. All inventories not written off have been priced at the lower
of cost or market. The quantities of each item of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but are
reasonable in the present circumstances of the Company, and in no event
represent more than 180 days' supply of any item.
3.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.10 of the Disclosure Letter, the Company has no
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the Interim Balance Sheet and
current liabilities incurred in the Ordinary Course of Business since the
respective dates thereof.
3.11 TAXES
(a) The Company has filed or caused to be filed all Tax Returns that are
or were required to be filed by or with respect to it, pursuant to
applicable Legal Requirements. Sellers have delivered to Buyer copies of,
and Part 3.11 of the Disclosure Letter contains a complete and accurate
list of, all such Tax Returns relating to income or franchise taxes with
respect to all periods since January 1, 1993. The Company have paid, or
made provision for the payment of, all Taxes that have or may have become
due pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by Sellers or the Company, except such Taxes, if any,
as are listed in Part 3.11 of the Disclosure Letter and are being
contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided in the Balance Sheet and the
Interim Balance Sheet.
(b) The United States federal and state income Tax Returns of the Company
subject to such Taxes have been audited by the IRS or relevant state tax
authorities or are closed by the applicable statute of limitations for
all taxable years through 1992. Part 3.11 of the Disclosure Letter
contains a complete and accurate list of all audits of all such Tax
Returns. All deficiencies proposed as a result of such audits have been
paid, reserved against, settled, or, as described in Part 3.11 of the
Disclosure Letter, are being contested in good faith by appropriate
proceedings. Part 3.11 of the Disclosure Letter describes all adjustments
to the United States federal income Tax Returns filed by the Company for
all taxable years since January 1, 1993, and the resulting deficiencies
proposed by the IRS. Except as described in Part 3.11 of the Disclosure
Letter, no Seller or the Company has given or been requested to give
waivers or extensions (or is or would be subject to a waiver or extension
given by any other Person) of any statute of limitations relating to the
payment of Taxes of the Company or for which the Company may be liable.
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(c) The charges, accruals, and reserves with respect to Taxes on the
books of the Company are adequate (determined in accordance with GAAP)
and are at least equal to the Company's liability for Taxes. There exists
no proposed tax assessment against the Company except as disclosed in the
Interim Balance Sheet. No consent to the application of Section 341(f)(2)
of the IRC has been filed with respect to any property or assets held,
acquired, or to be acquired by the Company. All Taxes that the Company is
or was required by Legal Requirements to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid to
the proper Governmental Body or other Person.
(d) All Tax Returns filed by the Company are true, correct, and complete.
There is no tax sharing agreement that will require any payment by the
Company after the date of this Agreement. During the consistency period
(as defined in Section 338(h)(4) of the IRC with respect to the sale of
the Shares to Buyer, neither the Company nor any target affiliate (as
defined in Section 338(h)(6) of the IRC with respect to the sale of the
Shares to Buyer) has sold or will sell any property or assets to Buyer or
to any member of the affiliated group (as defined in Section 338(h)(5) of
the IRC) that includes Buyer. Part 3.11 of the Disclosure Letter lists
all such target affiliates.
3.12 NO MATERIAL ADVERSE CHANGE
Since the Interim Balance Sheet Date, there has not been any material adverse
change in the business, operations, properties, prospects, assets, or condition
of the Company, and no event has occurred or circumstance exists that may
result in such a material adverse change.
3.13 EMPLOYEE BENEFITS
(a) As used in this Section 3.13, the following terms have the meanings
set forth below.
"COMPANY OTHER BENEFIT OBLIGATION" means an Other Benefit Obligation owed,
adopted, or followed by the Company or an ERISA Affiliate of the Company.
"COMPANY PLAN" means all Plans of which the Company or an ERISA Affiliate of
the Company is or was a Plan Sponsor, or to which the Company or an ERISA
Affiliate of the Company otherwise contributes or has contributed, or in which
the Company or an ERISA Affiliate of the Company otherwise participates or has
participated. All references to Plans are to Company Plans unless the context
requires otherwise.
"COMPANY VEBA" means a VEBA (hereinafter defined) whose members include
employees of the Company or any ERISA Affiliate of the Company.
"ERISA AFFILIATE" means, with respect to the Company, any other person that,
together with the Company, would be treated as a single employer under IRC
Section 414.
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"MULTI-EMPLOYER PLAN" has the meaning given in ERISA Section 3(37)(A).
"OTHER BENEFIT OBLIGATIONS" means all obligations, arrangements, or customary
practices, whether or not legally enforceable, to provide benefits, other than
salary, as compensation for services rendered, to present or former directors,
employees, or agents, other than obligations, arrangements, and practices that
are Plans. Other Benefit Obligations include consulting agreements under which
the compensation paid does not depend upon the amount of service rendered,
sabbatical policies, severance payment policies, and fringe benefits within the
meaning of IRC Section 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PENSION PLAN" has the meaning given in ERISA Section 3(2)(A).
"PLAN" has the meaning given in ERISA Section 3(3).
"PLAN SPONSOR" has the meaning given in ERISA Section 3(16)(B).
"QUALIFIED PLAN" means any Plan that meets or purports to meet the
requirements of IRC Section 401(a).
"TITLE IV PLANS" means all Pension Plans that are subject to Title IV of ERISA,
29 U.S.C. Section 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under IRC Section
501(c)(9).
"WELFARE PLAN" has the meaning given in ERISA Section 3(1).
(b)
(i) Part 3.13(i) of the Disclosure Letter contains a complete and
accurate list of all Company Plans, Company Other Benefit
Obligations, and Company VEBAs, and identifies as such all Company
Plans that are (A) defined benefit Pension Plans, (B) Qualified
Plans, (C) Title IV Plans, or (D) Multi-Employer Plans.
(ii) Part 3.13(ii) of the Disclosure Letter contains a complete and
accurate list of (A) all ERISA Affiliates of the Company, and (B)
all Plans of which any such ERISA Affiliate is or was a Plan
Sponsor, in which any such ERISA Affiliate participates or has
participated, or to which any such ERISA Affiliate contributes or
has contributed.
(iii) Part 3.13(iii) of the Disclosure Letter sets forth, for each
Multi-Employer Plan, as of its last valuation date, the amount of
potential withdrawal liability of
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the Company and its other ERISA Affiliates, calculated according to
information made available pursuant to ERISA Section 4221(e).
(iv) Part 3.13(iv) of the Disclosure Letter sets forth a
calculation of the liability of the Company for post-retirement
benefits other than pensions, made in accordance with Financial
Accounting Statement 106 of the Financial Accounting Standards
Board, regardless of whether the Company is required by this
Statement to disclose such information.
(v) Part 3.13(v) of the Disclosure Letter sets forth the financial
cost of all obligations owed under any Company Plan or Company
Other Benefit Obligation that is not subject to the disclosure and
reporting requirements of ERISA.
(c) Sellers have delivered to Buyer, or will make available to Buyer
within ten days of the date of this Agreement:
(i) all documents that set forth the terms of each Company Plan,
Company Other Benefit Obligation, or Company VEBA and of any
related trust, including (A) all plan descriptions and summary plan
descriptions of Company Plans for which Sellers or the Company are
required to prepare, file, and distribute plan descriptions and
summary plan descriptions, and (B) all summaries and descriptions
furnished to participants and beneficiaries regarding Company
Plans, Company Other Benefit Obligations, and Company VEBAs for
which a plan description or summary plan description is not
required;
(ii) all personnel, payroll, and employment manuals and policies;
(iii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including
both pension and welfare benefits) by the Company and the ERISA
Affiliates of the Company, and all collective bargaining agreements
pursuant to which contributions are being made or obligations are
owed by such entities;
(iv) a written description of any Company Plan or Company Other
Benefit Obligation that is not otherwise in writing;
(v) all registration statements filed with respect to any Company
Plan;
(vi) all insurance policies purchased by or to provide benefits
under any Company Plan;
(vii) all contracts with third party administrators, actuaries,
investment managers, consultants, and other independent contractors
that relate to any Company Plan, Company Other Benefit Obligation,
or Company VEBA;
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(viii) all reports submitted within the four years preceding the
date of this Agreement by third party administrators, actuaries,
investment managers, consultants, or other independent contractors
with respect to any Company Plan, Company Other Benefit Obligation,
or Company VEBA;
(ix) all notifications to employees of their rights under ERISA
Section 601 et seq. and IRC Section 4980B;
(x) the Form 5500 filed in each of the most recent three plan years
with respect to each Company Plan, including all schedules thereto
and the opinions of independent accountants;
(xi) all notices that were given, pursuant to statute, by the
Company or any ERISA Affiliate of the Company or any Company Plan
to the IRS, the PBGC, or any participant or beneficiary within the
four years preceding the date of this Agreement, including notices
that are expressly mentioned elsewhere in this Section 3.13;
(xii) all notices that were given by the IRS, the PBGC, or the
Department of Labor to the Company, any ERISA Affiliate of the
Company, or any Company Plan within the four years preceding the
date of this Agreement;
(xiii) with respect to Qualified Plans and VEBAs, the most recent
determination letter for each Plan of the Company that is a
Qualified Plan; and
(xiv) with respect to Title IV Plans, the Form PBGC-1 filed for
each of the three most recent plan years.
(d) Except as set forth in Part 3.13(vi) of the Disclosure Letter:
(i) The Company has performed all of their respective obligations
under all Company Plans, Company Other Benefit Obligations, and
Company VEBAs. The Company has made appropriate entries in their
financial records and statements for all obligations and
liabilities under such Plans, VEBAs, and Obligations that have
accrued but are not due.
(ii) The Company, with respect to all Company Plans, Company Other
Benefits Obligations, and Company VEBAs, are, and each Company
Plan, Company Other Benefit Obligation, and Company VEBA is, in
full compliance with ERISA, the IRC, and other applicable Laws
including the provisions of such Laws expressly mentioned in this
Section 3.13, and with any applicable collective bargaining
agreement.
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(A) No transaction prohibited by ERISA Section 406 and no
"prohibited transaction" under IRC Section 4975(c) have
occurred with respect to any Company Plan.
(B) No Seller or the Company has any liability to the IRS
with respect to any Plan, including any liability imposed by
Chapter 43 of the IRC.
(C) No Seller or the Company has any liability to the PBGC
with respect to any Plan or has any liability under ERISA
Section 502 or Section 4071.
(D) All filings required by ERISA and the IRC as to each Plan
have been timely filed, and all notices and disclosures to
participants required by either ERISA or the IRC have been
timely provided.
(E) All contributions and payments made or accrued with
respect to all Company Plans, Company Other Benefit
Obligations, and Company VEBAs are deductible under IRC
Section 162 or Section 404. No amount, or any asset of any
Company Plan or Company VEBA, is subject to tax as unrelated
business taxable income.
(iii) Since January 1, 1995, there has been no establishment or
amendment of any Company Plan, Company VEBA, or Company Other
Benefit Obligation.
(iv) No event has occurred or circumstance exists that could result
in a material increase in premium costs of Company Plans and
Company Other Benefit Obligations that are insured, or a material
increase in benefit costs of such Plans and Obligations that are
self-insured.
(v) Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding involving, any
Company Plan, Company Other Benefit Obligation, or Company VEBA is
pending or, to Sellers' Knowledge, is Threatened.
(vi) No Company Plan is a stock bonus, pension, or profit-sharing
plan within the meaning of IRC Section 401(a).
(vii) Each Qualified Plan of the Company is qualified in form and
operation under IRC Section 401(a); each trust for each such Plan
is exempt from federal income tax under IRC Section 501(a). Each
Company VEBA is exempt from federal income tax. No event has
occurred or circumstance exists that will or could give rise to
disqualification or loss of tax-exempt status of any such Plan or
trust.
(viii) Each Acquired Company and each ERISA Affiliate of the
Company has met the minimum funding standard, and has made all
contributions required, under ERISA Section 302 and IRC Section
402.
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(ix) No Company Plan is subject to Title IV of ERISA.
(x) The Company have paid all amounts due to the PBGC pursuant to
ERISA Section 4007.
(xi) Neither the Company nor any ERISA Affiliate of the Company has
ceased operations at any facility or has withdrawn from any Title
IV Plan in a manner that would subject to any entity or Sellers to
liability under ERISA Section 4062(e), Section 4063, or Section
4064.
(xii) Neither the Company nor any ERISA Affiliate of the Company
has filed a notice of intent to terminate any Plan or has adopted
any amendment to treat a Plan as terminated. The PBGC has not
instituted proceedings to treat any Company Plan as terminated. No
event has occurred or circumstance exists that may constitute
grounds under ERISA Section 4042 for the termination of, or the
appointment of a trustee to administer, any Company Plan.
(xiii) No amendment has been made, or is reasonably expected to be
made, to any Plan that has required or could require the provision
of security under ERISA Section 307 or IRC Section 401(a)(29).
(xiv) No accumulated funding deficiency, whether or not waived,
exists with respect to any Company Plan; no event has occurred or
circumstance exists that may result in an accumulated funding
deficiency as of the last day of the current plan year of any such
Plan.
(xv) The actuarial report for each Pension Plan of the Company and
each ERISA Affiliate of the Company fairly presents the financial
condition and the results of operations of each such Plan in
accordance with GAAP.
(xvi) Since the last valuation date for each Pension Plan of the
Company and each ERISA Affiliate of the Company, no event has
occurred or circumstance exists that would increase the amount of
benefits under any such Plan or that would cause the excess of Plan
assets over benefit liabilities (as defined in ERISA Section 4001)
to decrease, or the amount by which benefit liabilities exceed
assets to increase.
(xvii) No reportable event (as defined in ERISA Section 4043 and
in regulations issued thereunder) has occurred.
(xviii) No Seller or the Company has Knowledge of any facts or
circumstances that may give rise to any liability of any Seller,
the Company, or Buyer to the PBGC under Title IV of ERISA.
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(xix) Neither the Company nor any ERISA Affiliate of the Company
has ever established, maintained, or contributed to or otherwise
participated in, or had an obligation to maintain, contribute to,
or otherwise participate in, any Multi-Employer Plan.
(xx) Neither the Company nor any ERISA Affiliate of the Company has
withdrawn from any Multi-Employer Plan with respect to which there
is any outstanding liability as of the date of this Agreement. No
event has occurred or circumstance exists that presents a risk of
the occurrence of any withdrawal from, or the participation,
termination, reorganization, or insolvency of, any Multi-Employer
Plan that could result in any liability of either the Company or
Buyer to a Multi-Employer Plan.
(xxi) Neither the Company nor any ERISA Affiliate of the Company
has received notice from any Multi-Employer Plan that it is in
reorganization or is insolvent, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of
any excise tax, or that such Plan intends to terminate or has
terminated.
(xxii) No Multi-Employer Plan to which the Company or any ERISA
Affiliate of the Company contributes or has contributed is a party
to any pending merger or asset or liability transfer or is subject
to any proceeding brought by the PBGC.
(xxiii) Except to the extent required under ERISA Section 601 et
seq. and IRC Section 4980B, the Company does not provide health or
welfare benefits for any retired or former employee and is not
obligated to provide health or welfare benefits to any active
employee following such employee's retirement or other termination
of service.
(xxiv) The Company has the right to modify and terminate benefits
to retirees (other than pensions) with respect to both retired and
active employees.
(xxv) Sellers and the Company have complied with the provisions of
ERISA Section 601 et seq. and IRC Section 4980B.
(xxvi) The consummation of the Contemplated Transactions will not
result in the payment, vesting, or acceleration of any benefit.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) the Company is, and at all times has been in full compliance
with each Legal Requirement that is or was applicable to it or to
the conduct or operation of its business or the ownership or use of
any of its assets;
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(ii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result in a
violation by the Company of, or a failure on the part of the
Company to comply with, any Legal Requirement, or (B) may give rise
to any obligation on the part of the Company to undertake, or to
bear all or any portion of the cost of, any remedial action of any
nature; and
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental Body
or any other Person regarding (A) any actual, alleged, possible, or
potential violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of the Company to undertake, or to bear all
or any portion of the cost of, any remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete and accurate
list of each Governmental Authorization that is held by the Company or
that otherwise relates to the business of, or to any of the assets owned
or used by, the Company. Each Governmental Authorization listed or
required to be listed in Part 3.14 of the Disclosure Letter is valid and
in full force and effect. Except as set forth in Part 3.14 of the
Disclosure Letter:
(i) the Company is, and at all times has been, in full compliance
with all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Part 3.14
of the Disclosure Letter;
(ii) no event has occurred or circumstance exists that may (with or
without notice or lapse of time) (A) constitute or result directly
or indirectly in a violation of or a failure to comply with any
term or requirement of any Governmental Authorization listed or
required to be listed in Part 3.14 of the Disclosure Letter, or (B)
result directly or indirectly in the revocation, withdrawal,
suspension, cancellation, or termination of, or any modification
to, any Governmental Authorization listed or required to be listed
in Part 3.14 of the Disclosure Letter;
(iii) the Company has not received, at any time, any notice or
other communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of or failure to comply with any
term or requirement of any Governmental Authorization, or (B) any
actual, proposed, possible, or potential revocation, withdrawal,
suspension, cancellation, termination of, or modification to any
Governmental Authorization; and
(iv) all applications required to have been filed for the renewal
of the Governmental Authorizations listed or required to be listed
in Part 3.14 of the Disclosure Letter have been duly filed on a
timely basis with the appropriate Governmental Bodies, and all
other filings required to have been made with
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respect to such Governmental Authorizations have been duly made on
a timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the Disclosure Letter
collectively constitute all of the Governmental Authorizations necessary to
permit the Company to lawfully conduct and operate their businesses in the
manner they currently conduct and operate such businesses and to permit the
Company to own and use their assets in the manner in which they currently own
and use such assets, except for those which individually or in the aggregate
would not have a material adverse effect on the Company.
3.15 LEGAL PROCEEDINGS; ORDERS
(a) There is no pending Proceeding:
(i) that has been commenced by or against the Company or that
otherwise relates to or may affect the business of, or any of the
assets owned or used by, the Company; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
To the Knowledge of Sellers and the Company, (1) no such Proceeding has been
Threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding.
Sellers have delivered to Buyer copies of all pleadings, correspondence, and
other documents relating to each Proceeding listed in Part 3.15 of the
Disclosure Letter. The Proceedings listed in Part 3.15 of the Disclosure Letter
will not have a material adverse effect on the business, operations, assets,
condition, or prospects of the Company.
(b) (i) there is no Order to which any of the Company, or any of
the assets owned or used by the Company, is subject;
(ii) no Seller is subject to any Order that relates to the business
of, or any of the assets owned or used by, the Company; and
(iii) no officer, director, agent, or employee of the Company is
subject to any Order that prohibits such officer, director, agent,
or employee from engaging in or continuing any conduct, activity,
or practice relating to the business of the Company.
(iv) the Company is, and at all times has been, in full compliance
with all of the terms and requirements of each Order to which it,
or any of the assets owned or used by it, is or has been subject;
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(v) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of
any Order to which the Company, or any of the assets owned or used
by the Company, is subject; and
(vi) the Company has received no notice or other communication
(whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible, or potential
violation of, or failure to comply with, any term or requirement of
any Order to which the Company, or any of the assets owned or used
by the Company, is or has been subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.16 of the Disclosure Letter or as specifically
permitted by this Agreement, since the Interim Balance Sheet Date, the Company
have conducted their businesses only in the Ordinary Course of Business and
there has not been any:
(a) change in the Company's authorized or issued capital stock; grant of
any stock option or right to purchase shares of capital stock of the
Company; issuance of any security convertible into such capital stock;
purchase, redemption, retirement, or other acquisition by the Company of
any shares of any such capital stock; or declaration or payment of any
dividend or other distribution or payment in respect of shares of capital
stock;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses, salaries, or other
compensation to any stockholder, director, officer, or (except in the
Ordinary Course of Business) employee or entry into any employment,
severance, or similar Contract with any director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any
employees of the Company;
(e) damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or
prospects of the Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination of
(i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any Contract or
transaction involving a total remaining commitment by or to the Company
of at least $50,000;
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(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of the
Company or mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset or property of the Company, including
the sale, lease, or other disposition of any of the Intellectual Property
Assets;
(h) cancellation or waiver of any claims or rights with a value to the
Company in excess of $50,000;
(i) material change in the accounting methods used by the Company; or
(j) agreement, whether oral or written, by the Company to do any of the
foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Letter contains a complete and
accurate list, and Sellers have delivered to Buyer true and complete
copies, of:
(i) each Applicable Contract that involves performance of services
or delivery of goods or materials by the Company of an amount or
value in excess of $50,000;
(ii) each Applicable Contract that involves performance of services
or delivery of goods or materials to the Company of an amount or
value in excess of $50,000;
(iii) each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or
receipts of the Company in excess of $50,000;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of,
or any leasehold or other interest in, any real or personal
property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments of less than $25,000);
(v) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property Assets;
(vi) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee
representative of a group of employees;
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(vii) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by the Company with any other Person;
(viii) each Applicable Contract containing covenants that in any
way purport to restrict the business activity of the Company or any
Affiliate of the Company or limit the freedom of the Company or any
Affiliate of the Company to engage in any line of business or to
compete with any Person;
(ix) each Applicable Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct
payments for goods;
(x) each power of attorney that is currently effective and
outstanding;
(xi) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an
express undertaking by the Company to be responsible for
consequential damages;
(xii) each Applicable Contract for capital expenditures in excess
of $50,000;
(xiii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by the
Company other than in the Ordinary Course of Business; and
(xiv) each amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.
Part 3.17(a) of the Disclosure Letter sets forth reasonably complete details
concerning such Contracts, including the parties to the Contracts, the amount
of the remaining commitment of the Company under the Contracts, and the
Company' office where details relating to the Contracts are located.
(b) Except as set forth in Part 3.17(b) of the Disclosure Letter:
(i) no Seller (and no Related Person of any Seller) has or may
acquire any rights under, and neither Seller has or may become
subject to any obligation or liability under, any Contract that
relates to the business of, or any of the assets owned or used by,
the Company; and
(ii) no officer, director, agent, employee, consultant, or
contractor of the Company is bound by any Contract that purports to
limit the ability of such officer, director, agent, employee,
consultant, or contractor to (A) engage in or continue any conduct,
activity, or practice relating to the business of the Company, or
(B) assign to the Company or to any other Person any rights to any
invention, improvement, or discovery.
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(c) Each Contract identified or required to be identified in Part 3.17(a)
of the Disclosure Letter is in full force and effect and is valid and
enforceable in accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the Disclosure Letter:
(i) the Company is, and at all times has been, in full compliance
with all applicable terms and requirements of each Contract under
which the Company has or had any obligation or liability or by
which the Company or any of the assets owned or used by the Company
is or was bound;
(ii) each other Person that has or had any obligation or liability
under any Contract under which the Company has or had any rights
is, and at all times has been, in full compliance with all
applicable terms and requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give the Company or other
Person the right to declare a default or exercise any remedy under,
or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; and
(iv) no Acquired Company has given to or received from any other
Person, at any time any notice or other communication (whether oral
or written) regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to
the Company under current or completed Contracts with any Person and no
such Person has made written demand for such renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or provision
of products or services by the Company have been entered into in the
Ordinary Course of Business and have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in
violation of any Legal Requirement.
3.18 INSURANCE
(a) Sellers have delivered to Buyer:
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(i) true and complete copies of all policies of insurance to which
the Company is a party or under which the Company, or any director
of the Company, is covered; and
(ii) true and complete copies of all pending applications for
policies of insurance.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting the Company,
including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of insurance,
for the transfer or sharing of any risk by the Company; and
(iii) all obligations of the Company to third parties with respect
to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is
provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year, for the
current policy year and each of the two (2) preceding policy years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance policy
for an amount in excess of $10,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance, and period of coverage; and
(C) the amount and a brief description of the claim; and
(iii) a statement describing the loss experience for all claims
that were self-insured, including the number and aggregate cost of
such claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure Letter or as
contemplated by this Agreement:
(i) All policies to which the Company is a party or that provide
coverage to any Seller, the Company, or any director or officer of
the Company:
(A) are valid, outstanding, and enforceable;
(B) are issued by an insurer that is financially sound and
reputable;
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(C) taken together, provide adequate insurance coverage for
the assets and the operations of the Company;
(D) are sufficient for compliance with all Legal Requirements
and Contracts to which the Company is a party or by which any
of them is bound;
(E) will continue in full force and effect following the
consummation of the Contemplated Transactions; and
(F) do not provide for any retrospective premium adjustment
or other experienced-based liability on the part of the
Company.
(ii) No Seller or the Company has received (A) any refusal of
coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any
other indication that any insurance policy is no longer in full
force or effect or will not be renewed or that the issuer of any
policy is not willing or able to perform its obligations
thereunder.
(iii) The Company has paid all premiums due, and have otherwise
performed all of their respective obligations, under each policy to
which the Company is a party or that provides coverage to the
Company or director thereof.
(iv) The Company has given notice to the insurer of all claims that
may be insured thereby.
3.19 ENVIRONMENTAL MATTERS
Except as set forth in Part 3.19 of the Disclosure Letter:
(a) To the Sellers knowledge and except as reported by ENSR Phase I and
II Reports, the Company is, and at all times has been, in full compliance
with, and has not been and is not in violation of or liable under, any
Environmental Law. No Seller or the Company has any basis to expect, nor
has any of them or any other Person for whose conduct they are or may be
held to be responsible received, any actual or Threatened order, notice,
or other communication from (i) any Governmental Body or private citizen
acting in the public interest, or (ii) the current or prior owner or
operator of any Facilities, of any actual or potential violation or
failure to comply with any Environmental Law, or of any actual or
Threatened obligation to undertake or bear the cost of any Environmental,
Health, and Safety Liabilities with respect to any of the Facilities or
any other properties or assets (whether real, personal, or mixed) in
which the Company has had an interest, or with respect to any property or
Facility at or to which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used, or processed by the Company, or any
other Person for whose conduct the Company is or
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may be held responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled,
or received.
(b) To the Sellers knowledge and except as reported by ENSR Phase I and
II Reports, there are no pending or, to the Knowledge of Sellers and the
Company, Threatened claims, Encumbrances, or other restrictions of any
nature, resulting from any Environmental, Health, and Safety Liabilities
or arising under or pursuant to any Environmental Law, with respect to or
affecting any of the Facilities or any other properties and assets
(whether real, personal, or mixed) in which the Company has or had an
interest.
(c) To the Sellers knowledge and except as reported by ENSR Phase I and
II Reports, no Seller or the Company has any basis to expect, nor has any
of them or any other Person for whose conduct they are or may be held
responsible, received, any citation, directive, inquiry, notice, Order,
summons, warning, or other communication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential
violation or failure to comply with any Environmental Law, or of any
alleged, actual, or potential obligation to undertake or bear the cost of
any Environmental, Health, and Safety Liabilities with respect to any of
the Facilities or any other properties or assets (whether real, personal,
or mixed) in which the Company had an interest, or with respect to any
property or facility to which Hazardous Materials generated,
manufactured, refined, transferred, imported, used, or processed by the
Company, or any other Person for whose conduct the Company is or may be
held responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(d) To the Sellers knowledge and except as reported by ENSR Phase I and
II Reports, no Seller or the Company, or any other Person for whose
conduct they are or may be held responsible, has any Environmental,
Health, and Safety Liabilities with respect to the Facilities or with
respect to any other properties and assets (whether real, personal, or
mixed) in which the Company (or any predecessor), has or had an interest,
or at any property geologically or hydrologically adjoining the
Facilities or any such other property or assets.
(e) To the Sellers knowledge and except as reported by ENSR Phase I and
II Reports, there are no Hazardous Materials present on or in the
Environment at the Facilities or at any geologically or hydrologically
adjoining property, including any Hazardous Materials contained in
barrels, above or underground storage tanks, landfills, land deposits,
dumps, equipment (whether moveable or fixed) or other containers, either
temporary or permanent, and deposited or located in land, water, sumps,
or any other part of the Facilities or such adjoining property, or
incorporated into any structure therein or thereon. Neither the Company
nor any other Person for whose conduct the Company is or may be held
responsible, or to the Knowledge of Sellers and the Company, any other
Person, has permitted or conducted, or is aware of, any Hazardous
Activity conducted with respect to the Facilities or any other properties
or assets (whether real, personal, or mixed) in which the Company has or
had an interest.
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(f) To the Sellers knowledge and except as reported by ENSR Phase I and
II Reports, there has been no Release or, to the Knowledge of Sellers
and the Company, Company, Threat of Release, of any Hazardous Materials
at or from the Facilities or at any other locations where any Hazardous
Materials were generated, manufactured, refined, transferred, produced,
imported, used, or processed from or by the Facilities, or from or by any
other properties and assets (whether real, personal, or mixed) in which
the Company has or had an interest, or to the Knowledge of Sellers and
the Company any geologically or hydrologically adjoining property,
whether by the Company, or any other Person, however Sellers will have no
liability for any geological or hydrological adjoining property. In
addition, Sellers will have no liability for any release, threat of
release, environmental hazard or communication except as provided in
paragraph 5.9 and paragraph 10.4 herein. It is acknowledged and
understood that Sellers make no representation or warranty pursuant to
Section 3.19 with respect to any properties adjoining any of the
Facilities as well as the property located at 640 Crawford St.,
Fitchburg, Massachusetts.
(g) Sellers have delivered to Buyer true and complete copies and results
of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Sellers or the Company pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or concerning
compliance by Sellers, the Company, or any other Person for whose conduct
they are or may be held responsible, with Environmental Laws.
3.20 EMPLOYEES
(a) Part 3.20 of the Disclosure Letter contains a complete and accurate
list of the following information for each employee or director of the
Company, including each employee on leave of absence or layoff status:
name; job title; current compensation paid or payable and any change in
compensation since January 1, 1996; vacation accrued; and service
credited for purposes of vesting and eligibility to participate under the
Company's pension, retirement, profit-sharing, thrift-savings, deferred
compensation, stock bonus, stock option, cash bonus, employee stock
ownership (including investment credit or payroll stock ownership),
severance pay, insurance, medical, welfare, or vacation plan, other
Employee Pension Benefit Plan or Employee Welfare Benefit Plan, or any
other employee benefit plan or any Director Plan.
(b) To the knowledge of Sellers and the Company, no employee or director
of the Company is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such employee or director and any
other Person ("Proprietary Rights Agreement") that in any way adversely
affects or will affect (i) the performance of his duties as an employee
or director of the Company, or (ii) the ability of the Company to conduct
its business, including any Proprietary Rights Agreement with Sellers or
the Company by
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any such employee or director. To Sellers' Knowledge, no director,
officer, or other key employee of the Company intends to terminate his
employment with the Company.
3.21 LABOR RELATIONS; COMPLIANCE
Except as disclosed on Part 3.21 of the Disclosure Letter, the Company has not
been and is not a party to any collective bargaining or other labor Contract.
There has not been, there is not presently pending or existing, and there is
not Threatened, (a) any strike, slowdown, picketing, work stoppage, or employee
grievance process, (b) any Proceeding against or affecting the Company relating
to the alleged violation of any Legal Requirement pertaining to labor relations
or employment matters, including any charge or complaint filed by an employee
or union with the National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable Governmental Body, organizational
activity, or other labor or employment dispute against or affecting any of the
Company or their premises, or (c) any application for certification of a
collective bargaining agent. No event has occurred or circumstance exists that
could provide the basis for any work stoppage or other labor dispute. There is
no lockout of any employees by the Company, and no such action is contemplated
by the Company. The Company has complied in all respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. The Company is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
3.22 INTELLECTUAL PROPERTY
(a) The term "Intellectual Property Assets" includes:
(i) the name Tamor Plastics Corp., all fictional business names,
trading names, registered and unregistered trademarks, service
marks, and applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published works and unpublished works
(collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, "Trade
Secrets"); owned, used, or licensed by the Company as licensee or
licensor.
(b) Part 3.22(b) of the Disclosure Letter contains a complete and
accurate list and summary description, including any royalties paid or
received by the Company, of all
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Contracts relating to the Intellectual Property Assets to which the
Company is a party or by which the Company is bound, except for any
license implied by the sale of a product and perpetual, paid-up licenses
for commonly available software programs with a minimal value under which
the Company is the licensee. There are no outstanding and, to Sellers'
Knowledge, no Threatened disputes or disagreements with respect to any
such agreement.
(c) (i) The Intellectual Property Assets are all those necessary
for the operation of the Company's Business as it is currently
conducted. The Company is the owner of all right, title, and
interest in and to each of the Intellectual Property Assets, free
and clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims, and has the right to use without
payment to a third party all of the Intellectual Property Assets.
(ii) Except as set forth in Part 3.22(c) of the Disclosure Letter,
all former and current employees of the Company have executed
written Contracts with the Company that assign to the Company all
rights to any inventions, improvements, discoveries, or information
relating to the business of the Company. No employee of the Company
has entered into any Contract that restricts or limits in any way
the scope or type of work in which the employee may be engaged or
requires the employee to transfer, assign, or disclose information
concerning his work to anyone other than one or more of the
Company.
(d) (i) Part 3.22(d) of the Disclosure Letter contains a complete
and accurate list and summary description of all Patents. The
Company is the owner of all right, title, and interest in and to
each of the Patents, free and clear of all liens, security
interests, charges, encumbrances, entities, and other adverse
claims.
(ii) All of the issued Patents are currently in compliance with
formal legal requirements (including payment of filing,
examination, and maintenance fees and proofs of working or use),
are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety days after the
Closing Date.
(iii) No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding. To Sellers'
Knowledge, there is no potentially interfering patent or patent
application of any third party.
(iv) No Patent is infringed or has been challenged or threatened in
any way. None of the products manufactured and sold, nor any
process or know-how used, by the Company infringes or is alleged to
infringe any patent or other proprietary right of any other Person.
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(v) All products made, used, or sold under the Patents have been
marked with the proper patent notice.
(e) (i) Part 3.22(e) of Disclosure Letter contains a complete and
accurate list and summary description of all Marks. The Company is
the owner of all right, title, and interest in and to each of the
Marks, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims.
(ii) All Marks that have been registered with the United States
Patent and Trademark Office are currently in compliance with all
formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to
any maintenance fees or taxes or actions falling due within ninety
days after the Closing Date.
(iii) No Mark has been or is now involved in any opposition,
invalidation, or cancellation and, to Sellers' Knowledge, no such
action is Threatened with the respect to any of the Marks.
(iv) To Sellers' Knowledge, there is no potentially interfering
trademark or trademark application of any third party.
(v) No Mark is infringed or has been challenged or threatened in
any way. None of the Marks used by the Company infringes or is
alleged to infringe any trade name, trademark, or service mark of
any third party.
(vi) All products and materials containing a Mark bear the proper
federal registration notice where permitted by law.
(f) (i) Part 3.22(f) of the Disclosure Letter contains a complete
and accurate list and summary description of all Copyrights. The
Company is the owner of all right, title, and interest in and to
each of the Copyrights, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse
claims.
(ii) All the Copyrights have been registered and are currently in
compliance with formal legal requirements, are valid and
enforceable, and are not subject to any maintenance fees or taxes
or actions falling due within ninety days after the date of
Closing.
(iii) To the Knowledge of Sellers and the Company, no Copyright is
infringed or has been challenged or threatened in any way. None of
the subject matter of any of the Copyrights infringes or is
alleged to infringe any copyright of any third party or is a
derivative work based on the work of a third party.
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(iv) All works encompassed by the Copyrights have been marked with
the proper copyright notice.
(g) (i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient
in detail and content to identify and explain it and to allow its
full and proper use without reliance on the knowledge or memory of
any individual.
(ii) Sellers and the Company have taken all reasonable precautions
to protect the secrecy, confidentiality, and value of their Trade
Secrets.
(iii) To the Knowledge of Sellers and the Company, the Company has
good title and an absolute right to use the Trade Secrets. The
Trade Secrets are not part of the public knowledge or literature,
and have not been used, divulged, or appropriated either for the
benefit of any Person (other than one or more of the Company) or to
the detriment of the Company. No Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way.
3.23 CUSTOMERS AND SUPPLIERS
(a) Part 3.23 of the Disclosure Letter contains a complete and accurate
list of
(i) the 25 largest customers of the Company in terms of sales, and
the amount of such sales to each such customer, during the last
fiscal year, and
(ii) the 15 largest suppliers of Seller in terms of purchases, and
the amount of such purchases from each such Supplier, during the
last fiscal year.
(b) The Sellers have provided to buyer its internal open order report
and open purchase order report as of December 31, 1996, and will
provide such reports as of the Closing. Such reports are and will
be accurate in all respects.
(c) (i) There exists no actual or threatened termination,
cancellation, limitation or any modification or change in the
business relationship of the Company with any customer or group of
customers;
(ii) There is no customer who accounts for more than three percent
of sales who has filed (or has had a filing made on its behalf) for
protection under Chapter 7 or 11 of the Bankruptcy Code, and the
Company has not received written notice that any customers filed
for any such protection;
(iii) There has been no notice from any supplier of an item
material to the Company that such supplier will not continue to
make deliveries on the same
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price, quality and delivery terms and conditions consistent with
past practices of such suppliers;
(iv) No condition or state of facts exists concerning the customers
or suppliers of the Company which would materially and adversely
affect the business of the Company or prevent the Company from
conducting its business after the consummation of the Contemplated
Transactions;
(v) There are no claims against the Company to return merchandise
by reason of alleged overshipments, defective merchandise or
otherwise, in excess of $10,000 except for a $50,000 return from
K-Mart which is being resold to Builder's Square; and
(vi) There is no merchandise in the hands of customers under an
understanding that such merchandise would be returned.
3.24 CERTAIN PAYMENTS
Neither the Company nor any director, officer, agent, or employee of the
Company, or any other Person associated with or acting for or on behalf of the
Company, has directly or indirectly (a) made any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other payment to any Person,
private or public, regardless of form, whether in money, property, or services
(i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special concessions
or for special concessions already obtained, for or in respect of the Company
or any Affiliate of the Company, or (iv) in violation of any Legal Requirement,
(b) established or maintained any fund or asset that has not been recorded in
the books and records of the Company.
3.25 DISCLOSURE
(a) No representation or warranty of Sellers in this Agreement and no
statement in the Disclosure Letter omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any untrue
statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in
which they were made, not misleading.
(c) There is no fact known to any Seller that has specific application to
any Seller or the Company (other than general economic or industry
conditions) and that materially adversely affects or, as far as Sellers
can reasonably foresee, materially threatens, the assets, business,
prospects, financial condition, or results of operations of the Company
that has not been set forth in this Agreement or the Disclosure Letter.
3.26 RELATIONSHIPS WITH RELATED PERSONS
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No Seller or any Related Person of Sellers or of the Company has, or since July
1, 1996 has had, any interest in any property (whether real, personal, or mixed
and whether tangible or intangible), used in or pertaining to the Company'
businesses. No Seller or any Related Person of Sellers or of the Company is, or
since January 1, 1996 has owned (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in, a Person that has (i)
had business dealings or a material financial interest in any transaction with
the Company or (ii) engaged in competition with the Company with respect to any
line of the products or services of the Company (a "Competing Business") in any
market presently served by the Company. Except as set forth in Part 3.26 of the
Disclosure Letter, no Seller or any Related Person of Sellers or of the Company
is a party to any Contract with, or has any claim or right against, the
Company.
3.27 BROKERS OR FINDERS
The Company, Sellers and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms. Upon
the execution and delivery by Buyer of the Employment Agreements, and the
Research Agreements (collectively, the "Buyer's Closing Documents"), the
Buyer's Closing Documents will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the right, power, and authority to execute
and deliver this Agreement and the Buyer's Closing Documents and to
perform its obligations under this Agreement and the Buyer's Closing
Documents.
(b) Except as set forth in Schedule 4.2, neither the execution and
delivery of this Agreement by Buyer nor the consummation or performance
of any of the Contemplated Transactions by Buyer will give any Person the
right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents;
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(ii) any resolution adopted by the board of directors or the
stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be subject;
or
(iv) any Contract to which Buyer is a party or by which Buyer may
be bound.
Except as set forth in Schedule 4.2, Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
4.3 INVESTMENT INTENT
Buyer is acquiring the Shares for its own account and not with a view to their
distribution within the meaning of Section 2(11) of the Securities Act.
4.4 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
4.5 BROKERS OR FINDERS
Buyer and its officers and agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement and will indemnify
and hold Sellers harmless from any such payment alleged to be due by or through
Buyer as a result of the action of Buyer or its officers or agents. Buyer
acknowledges that it has received a telephone call from one George Stevenson
claiming a brokerage commission with respect to this Agreement, which claim for
which Buyer agrees to be fully responsible.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Sellers will, and will
cause the Company and its Representatives to, (a) afford Buyer and its
Representatives and prospective lenders and their Representatives
(collectively, "Buyer's Advisors") full and free access to the Company's
personnel, properties (including subsurface testing), contracts, books and
records, and other documents and data, (b) furnish Buyer and Buyer's Advisors
with copies of all such contracts, books and records, and other existing
documents and data as Buyer may
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reasonably request, and (c) furnish Buyer and Buyer's Advisors with such
additional financial, operating, and other data and information as Buyer may
reasonably request. Buyer's investigation of the Company pursuant to the
foregoing shall not modify, diminish, alter nor in any way affect the scope,
content or legal effect of the Sellers' representations and warranties set
forth in this Agreement.
5.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES
Between the date of this Agreement and the Closing Date, Sellers will, and will
cause the Company to:
(a) conduct its business only in the Ordinary Course of Business;
(b) use their Best Efforts to preserve intact the current business
organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with the
Company;
(c) confer with Buyer concerning operational matters of a material
nature; and
(d) otherwise report periodically to Buyer concerning the status of the
business, operations, and finances of the Company.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement, between the date of
this Agreement and the Closing Date, Sellers will not, and will cause the
Company not to, without the prior consent of Buyer, take any affirmative
action, or fail to take any reasonable action within their or its control, as a
result of which any of the changes or events listed in Section 3.16 is likely
to occur.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Sellers will, and
will cause the Company to, make all filings required by Legal Requirements to
be made by them in order to consummate the Contemplated Transactions. Between
the date of this Agreement and the Closing Date, Sellers will, and will cause
the Company to cooperate with Buyer with respect to all filings that Buyer
elects to make or is required by Legal Requirements to make in connection with
the Contemplated Transactions and in obtaining all consents identified in
Schedule 4.2.
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5.5 NOTIFICATION
Between the date of this Agreement and the Closing Date, each Seller will
promptly notify Buyer in writing if such Seller or the Company becomes aware of
any fact or condition that causes or constitutes a Breach of any of Sellers'
representations and warranties as of the date of this Agreement, or if such
Seller or the Company becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly contemplated
by this Agreement) cause or constitute a Breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any such fact or
condition require any change in the Disclosure Letter if the Disclosure Letter
were dated the date of the occurrence or discovery of any such fact or
condition, Sellers will promptly deliver to Buyer a supplement to the
Disclosure Letter specifying such change. During the same period, each Seller
will promptly notify Buyer of the occurrence of any Breach of any covenant of
Sellers in this Section 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 7 impossible or unlikely.
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
Except as expressly provided in this Agreement, Sellers will cause all
indebtedness owed to the Company by either Seller or any Related Person of any
Seller to be paid in full prior to Closing.
5.7 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant to Section 9,
Sellers will not, and will cause the Company and each of their Representatives
not to, directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or proposals from, any
Person (other than Buyer) relating to any transaction involving the sale of the
business or assets (other than in the Ordinary Course of Business) of the
Company, or any of the capital stock of the Company, or any merger,
consolidation, business combination, or similar transaction involving the
Company.
5.8 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Sellers will use
their Best Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
5.9 ENVIRONMENTAL MATTERS
Buyer has retained ENSR to conduct Phase I and Phase II examinations of
the Facilities of the Company, copies of which are and will be attached as
Exhibit 5.9. Sellers agree that all clean-up or other remedial or other work
required to be done at the Facilities and all costs and expenses related
thereto as disclosed in Exhibit 5.9, will be at Sellers' sole cost.
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The payments made by Sellers pursuant to this Section 5.9 shall not be subject
to the Damage Threshold described in Article X. Any such work shall be
controlled jointly by Buyer and Sellers. Buyer and Sellers agree to retain
ENSR to complete the necessary work. To secure Sellers' obligation pursuant to
this Section, the sum of $200,000 will be deposited with the escrow agent
described in the Escrow Agreement, to be held and distributed as provided in
the Escrow Agreement. The Phase II examinations for the Leominster, MA;
Thomasville, GA; and Louisiana, MO facilities will be complete grid borings.
Sellers shall not be liable for remediation of the Fitchburg, MA Facility.
Sellers liability shall be limited to as provided in this paragraph. Sellers
will have no future liability for any environmental issue whether known,
unknown or existing at the time of this Agreement except to the specific and
express remediation, clean-up or other remediation or other work as provided by
the above studies. Sellers liability after closing with respect to Section
3.19 shall be limited to the shareholders actual knowledge with respect to the
representations and warranties of Section 3.19. It is acknowledged and
understood that Sellers make no representation or warranty pursuant to Section
3.19 with respect to any properties adjoining any of the Facilities as well as
the property located at 640 Crawford St., Fitchburg, MA.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, Buyer will, and
will cause each of its Related Persons to, make all filings required by Legal
Requirements to be made by them to consummate the Contemplated Transactions.
Between the date of this Agreement and the Closing Date, Buyer will, and will
cause each Related Person to, cooperate with Sellers with respect to all
filings that Sellers are required by Legal Requirements to make in connection
with the Contemplated Transactions, and (ii) cooperate with Sellers in
obtaining all consents identified in Part 3.2 of the Disclosure Letter;
provided that this Agreement will not require Buyer to dispose of or make any
change in any portion of its business or to incur any other burden to obtain a
Governmental Authorization.
6.2 BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between the date of this
Agreement and the Closing Date, Buyer will use its Best Efforts to cause the
conditions in Sections 7 and 8 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
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7.1 ACCURACY OF REPRESENTATIONS
All of Sellers' representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement, and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Letter.
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that Sellers are required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered pursuant to Section 2.5 must
have been delivered, and each of the other covenants and obligations in
Sections 5.4 must have been performed and complied with in all material
respects.
7.3 INTENTIONALLY DELETED
7.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to Buyer:
(a) an opinion of Bodanza & Bodanza, counsel for Sellers, dated the
Closing Date, in the form of Exhibit 7.4(a);
(b) such estoppel certificates as Buyer shall reasonably request, dated
as of a date not more than 5 days prior to the Closing Date, each in the
form of Exhibit 7.4(b);
(c) resignations of the Sellers and all of the Sellers' appointees from
their respective positions as officers and directors of the Company and
as Trustees of any plan; and
(d) such other documents as Buyer may reasonably request for the purpose
of (i) enabling its counsel to provide the opinion referred to in Section
8.4(a), (ii) evidencing the accuracy of any of Sellers' representations
and warranties, (iii) evidencing the performance by either Seller of, or
the compliance by either Seller with, any covenant or obligation required
to be performed or complied with by such Seller, (iv) evidencing the
satisfaction of any condition referred to in this Section 7, or (v)
otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
7.5 NO PROCEEDINGS
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Since the date of this Agreement, there must not have been commenced or
Threatened against Buyer, or against any Person affiliated with Buyer, any
Proceeding (a) involving any challenge to, or seeking damages or other relief
in connection with, any of the Contemplated Transactions, or (b) that may have
the effect of preventing, delaying, making illegal, or otherwise interfering
with any of the Contemplated Transactions.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person any claim asserting
that such Person (a) is the holder or the beneficial owner of, or has the right
to acquire or to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, any of the Company, or (b) is
entitled to all or any portion of the Purchase Price payable for the Shares.
(See Release amongst Sellers regarding a certain stock redemption agreement
dated January 2, 1995).
7.7 NO PROHIBITION
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any Person affiliated with Buyer to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise proposed by or before any Governmental Body.
7.8 DUE DILLIGENCE
The Purchaser obtains a satisfactory report, based on reasonable objective
standards, from its Due Diligence Investigation; provided, however, that if
buyer does not provide notice to Sellers of dissatisfaction by December 16,
1996, this condition shall be deemed waived and satisfied.
7.9 MATERIAL CHANGE
Between the date of this Agreement and the Closing, there shall not be a
material adverse change in the assets, prospects, condition (financial or
otherwise, or properties of the Company or the Company's business. There also
shall not have occurred any material damage to the assets or properties of the
Company, regardless of insurance, nor shall any legislation have been enacted
which materially and adversely affects the Company.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions required
to be taken by Sellers at the Closing is subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be
waived by Sellers, in whole or in part):
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8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.
8.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and
complied with in all material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.5 and must have made the cash
payments required to be made by Buyer pursuant to Section 2.5.
8.3 PAYMENT OF NOTE
Buyer pays or causes the Company to pay an amount equal to 50 percent of the
sum of the principal balance and accrued interest of the Company's Note payable
to the Estate of Lucile M. Tata, dated September 27, 1996.
8.4 ADDITIONAL DOCUMENTS
Buyer must have caused the following documents to be delivered to Sellers:
(a) an opinion of Much Shelist Freed Denenberg Ament Bell & Rubenstein,
P.C. , dated the Closing Date, in the form of Exhibit 8.4(a); and
(b) such other documents as Sellers may reasonably request for the
purpose of (i) enabling their counsel to provide the opinion referred to
in Section 7.4(a), (ii) evidencing the accuracy of any representation or
warranty of Buyer, (iii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be
performed or complied with by Buyer, (iv) evidencing the satisfaction of
any condition referred to in this Section 8, or (v) otherwise
facilitating the consummation of any of the Contemplated Transactions.
8.5 NO INJUNCTION
There must not be in effect any Legal Requirement or any injunction or other
Order that (a) prohibits the sale of the Shares by Sellers to Buyer, and (b)
has been adopted or issued, or has otherwise become effective, since the date
of this Agreement.
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9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of any provision of
this Agreement has been committed by the other party and such Breach has
not been waived;
(b) (i) by Buyer if any of the conditions in Section 7 has not been
satisfied as of the Closing Date or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Buyer to
comply with its obligations under this Agreement) and Buyer has not
waived such condition on or before the Closing Date; or (ii) by Sellers,
if any of the conditions in Section 8 has not been satisfied of the
Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Sellers to comply with
their obligations under this Agreement) and Sellers have not waived such
condition on or before the Closing Date; or
(c) by mutual consent of Buyer and Sellers.
9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of a
right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 9.1, all further obligations of the parties
under this Agreement will terminate, except that the obligations in Sections
11.1 and 11.3 will survive. However, if this Agreement is terminated by a
party because of the material Breach of the Agreement by the other party (which
Breach is not cured within a reasonable period after notice thereof)or because
one or more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its material obligations (after a reasonable period to comply after the
receipt of notice thereof) under this Agreement, the terminating party shall be
entitled to collect from the defaulting party as liquidated damages and as its
sole remedy under this Agreement, the sum of $500,000, payable immediately upon
termination.
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10. INDEMNIFICATION; REMEDIES; RELEASE
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
All representations, warranties, covenants, and obligations in this Agreement,
the Disclosure Letter, the supplements to the Disclosure Letter, the
certificate delivered pursuant to Section 2.5(a)(v), and any other certificate
or document delivered pursuant to this Agreement will survive the Closing.
Except as set forth in Section 2.4 hereof: (a) the right to indemnification,
payment of Damages or other remedy based on such representations, warranties,
covenants, and obligations will not be affected by any investigation conducted
with respect to, or any Knowledge acquired (or capable of being acquired) at
any time, whether before or after the execution and delivery of this Agreement
or the Closing Date, with respect to the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant, or obligation;
and (b) the waiver of any condition (except an express written waiver) based on
the accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Sellers, jointly and severally, will indemnify and hold harmless Buyer, the
Company, and their respective Representatives, and affiliates (collectively,
the "Indemnified Persons") for, and will pay to the Indemnified Persons the
amount of, any loss, liability, claim, damage (including incidental and
consequential damages), expense (including costs of investigation and defense
and reasonable attorneys' fees and, with respect to claims relating to
environmental matters, costs of cleanup, containment or other remediation) or
diminution of value, whether or not involving a third-party claim
(collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any Breach of any representation or warranty made by Sellers in this
Agreement (without giving effect to any supplement to the Disclosure
Letter), the Disclosure Letter, the supplements to the Disclosure Letter,
or any other certificate or document delivered by Sellers pursuant to
this Agreement;
(b) any Breach by any Seller of any covenant or obligation of such Seller
in this Agreement;
(c) any claim by any Person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding alleged to
have been made by any such Person with either Seller or the Company (or
any Person acting on their behalf) in connection with any of the
Contemplated Transactions.
Notwithstanding the foregoing: (a) Sellers will not have any obligation to
indemnify Buyer against Damages until Buyer has suffered aggregate Damages by
reason of all such Breaches of Seventy-Five Thousand Dollars (the "Damage
Threshold"). Sellers iindemnification
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obligation will only extend to those Damages in excess of the Damage Threshold,
but not to exceed an aggregate of Ten Million Dollars ($10,000,000). Each of
Sellers shall not be liable for an indemnity for more than 150% of their
several shares. Buyer agrees to proceed and use reasonable collection efforts
against all of the Sellers. The remedies provided in this Section 10.2 will
not be exclusive of or limit any other remedies that may be available to Buyer
or the other Indemnified Persons.
10.3 ESCROW
To secure the obligations of Sellers pursuant to Section 10.2, the parties
shall enter into an escrow agreement in the form of Exhibit 10.3 (the "Escrow
Agreement"). Buyer shall deposit $100,000 of the Purchase Price with the
escrow agent described in the Escrow Agreement, to be held and distributed
pursuant to the terms of the Escrow Agreement.
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, and will pay to Sellers the
amount of any Damages arising, directly or indirectly, from or in connection
with (a) any Breach of any representation or warranty made by Buyer in this
Agreement or in any certificate delivered by Buyer pursuant to this Agreement,
(b) any Breach by Buyer of any covenant or obligation of Buyer in this
Agreement, (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on
its behalf) in connection with any of the Contemplated Transactions. or (d) any
environmental liability whether known or unknown; resulting from activities
now, in the past or future for which the Sellers could be answerable: except
the Sellers' responsibilities and liabilities pursuant to Section 5.9. Sellers
liability is limited to correcting only those matter for the Facilities defined
in paragraph 5.9 and only to the extent provided in those reports. Buyer shall
deduct from the purchase $150,000 as full consideration for this
indemnification and limitation.
10.5 TIME LIMITATIONS
If the Closing occurs, Sellers will have no liability (for indemnification or
otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date, other
than those in Sections 3.2, 3.3, 3.6, 3.10, 3.11, 3.13, and 3.19, unless on or
before July 1, 1998 Buyer notifies Sellers of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by Buyer. A
claim with respect to Section 3.2, 3.3, 3.6, or 3.19, or a claim for
indemnification or reimbursement not based upon any representation or warranty
or any covenant or obligation to be performed and complied with prior to the
Closing Date, may be made at any time. A claim with respect to Sections 3.10,
3.11, and 3.13 may be made at any time during the applicable statute of
limitations. If the Closing occurs, Buyer will have no liability (for
indemnification or otherwise) with respect to any representation or warranty,
or covenant or obligation to be performed and complied with prior
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to the Closing Date, unless on or before July 1, 1998 Sellers notify Buyer of a
claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Sellers.
10.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Section 10.2 or
10.4, of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying
party under such Section, give notice to the indemnifying party of the
commencement of such claim, but the failure to notify the indemnifying
party will not relieve the indemnifying party of any liability that it
may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.6(a) is brought against
an indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will be entitled
to participate in such Proceeding and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such Proceeding and
the indemnified party determines in good faith that joint representation
would be inappropriate, or (ii) the indemnifying party fails to provide
reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to
such Proceeding), to assume the defense of such Proceeding with counsel
satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will not, as long as
it diligently conducts such defense, be liable to the indemnified party
under this Section 10 for any fees of other counsel or any other expenses
with respect to the defense of such Proceeding, in each case subsequently
incurred by the indemnified party in connection with the defense of such
Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims
made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be
effected by the indemnifying party without the indemnified party's
consent unless (A) there is no finding or admission of any violation of
Legal Requirements or any violation of the rights of any Person and no
effect on any other claims that may be made against the indemnified
party, and (B) the sole relief provided is monetary damages that are paid
in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such
claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any Proceeding and the
indemnifying party does not, within ten days after the indemnified
party's notice is given, give notice to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party
will be bound by any determination made in such Proceeding or any
compromise or settlement effected by the indemnified party.
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(c) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying
party, assume the exclusive right to defend, compromise, or settle such
Proceeding, but the indemnifying party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of any court
in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this
Agreement with respect to such Proceeding or the matters alleged therein,
and agree that process may be served on Sellers with respect to such a
claim anywhere in the world.
10.7 INTENTIONALLY DELETED
10.8 RELEASE
(a) Each Seller on behalf of himself or herself and each of his or her
Related Persons, hereby releases and forever discharges the Buyer, the
Company and each of their respective past, present and future
Representatives, affiliates, successors and assigns (individually, a
"Releasee" and collectively, "Releasees") from any and all claims,
demands, Proceedings, causes of actions, Orders, obligations, contracts,
agreements, debts and liabilities whatsoever, whether known or unknown,
at law and in equity, which each of the Sellers or any of their
respective Related Persons now has, ever had or may hereafter have
against the Releasees arising contemporaneously with or prior to the
Closing Date or on account of or arising out of any matter, cause or
event occurring contemporaneously with or prior to the Closing Date,
including, but not limited to, any rights to indemnification or
reimbursement from the Company, whether pursuant to its Organizational
Documents, contract or otherwise and whether or not relating to claims
pending on or asserted after the Closing Date; provided, however, that
nothing contained herein shall operate to release any obligations of
Buyer arising under this Agreement or any obligation of the Company with
respect to Sellers which is to remain in effect after the Closing as
specifically provided in this Agreement. Each Seller hereby irrevocably
covenants to refrain from, directly or indirectly, asserting any claim or
demand, or commencing, instituting or causing to be commenced, any
proceeding of any kind against any Releasee, based upon any matter
purported to be released hereby. Each Seller's indemnification
obligation pursuant to Section 10.2 shall extend to any Damages arising
directly or indirectly from or in connection with the assertion by or on
behalf of the Sellers or any of their Related Persons of any claim or
other matter purported to be released pursuant to this Section and the
assertion of any third party of any claim or demand against any Releasee
which arises directly or indirectly from or in connection with any
assertion by or on behalf of the Sellers or any of their Related
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Persons against such third party with any claims or other matters
purported to be released hereby.
(b) Each Seller on behalf of himself or herself and each of his or her
Related Persons hereby releases and forever discharges each of the other
Sellers from any and all claims demands, Proceedings, causes of actions,
debts and liabilities whatsoever, whether known or unknown, at law and in
equity, which any such Seller or any of their respected Related Persons
now has, ever had or may hereafter have against any other Seller arising
out of any matter relating to the Company arising contemporaneously with
or prior to the Closing Date or with respect to the Contemplated
Transactions or the Housewares Transaction. Each Seller hereby
irrevocably covenants to refrain from, directly or indirectly, asserting
any claim or demand, or commencing, instituting or causing to be
commenced, any proceeding of any kind against any other Seller based upon
any matter purported to be released hereby.
11. GENERAL PROVISIONS
11.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to this
Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. Sellers will cause the Company not to incur any
out-of-pocket expenses in connection with this Agreement. In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a breach of
this Agreement by another party.
11.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this Agreement or
the Contemplated Transactions will be issued, if at all, at such time and in
such manner as Buyer determines. Unless consented to by Buyer in advance or
required by Legal Requirements, prior to the Closing Sellers shall, and shall
cause the Company to, keep the terms and conditions of this Agreement strictly
confidential and may not make any disclosure of the terms and conditions of
this Agreement to any Person. Sellers and Buyer will consult with each other
concerning the means by which the Company' employees, customers, and suppliers
and others having dealings with the Company will be informed of the
Contemplated Transactions, and Buyer will have the right to be present for any
such communication.
11.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer and Sellers will
maintain in confidence, and will cause the directors, officers, employees,
agents, and advisors of Buyer and the Company to maintain in confidence, any
written, oral, or other information obtained in
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confidence from another party or the Company in connection with this Agreement
or the Contemplated Transactions, unless (a) such information is already known
to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required in connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will return or
destroy as much of such written information as the other party may reasonably
request. Whether or not the Closing takes place, Sellers waive, and will upon
Buyer's request cause the Company to waive, any cause of action, right, or
claim arising out of the access of Buyer or its representatives to any trade
secrets or other confidential information of the Company except for the
intentional competitive misuse by Buyer of such trade secrets or confidential
information.
11.4 NOTICES
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
<TABLE>
<CAPTION>
If to Sellers: If to Buyers:
- -------------- -------------
<S> <C> <C> <C>
Selfix, Inc.
4501 West 47th Street
Chicago, Illinois 60632
Attention: ----------------- Attention: James R. Tennant
Facsimile No.: ----------------- Facsimile No.: 312-890-0523
-----------------
with a copy to: Bodanza & Bodanza with a copy to: Much Shelist Freed
36 School Street Denenberg Ament Bell &
Leominster, MA 01453 Rubenstein, P.C.
200 North LaSalle St.,
Suite 2100
Chicago, IL 60601
Attention: Mark C. Bodanza Attention: Jeffrey C. Rubenstein
Facsimile No.: 508-840-1222 Facsimile No.: 312-621-1750
</TABLE>
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11.5 ARBITRATION
In the event a dispute arises between the parties in connection with this
Agreement, the parties shall cause such dispute to be submitted for
determination by arbitration in accordance with the commercial rules of the
American Arbitration Association ("AAA") then in effect. Such arbitration
proceeding shall be conducted in Harrisburg, Pennsylvania. All disputes within
the scope of the Federal Arbitration Act of the United States shall be governed
by that Act. The arbitrator shall have the right to award or include in any
award such relief which the arbitrator deems proper in the circumstances
included, without limitations, money damages, specific performance, injunctive
relief and legal fees and costs. The award and decision of the arbitrator
shall be conclusive and binding upon all of the parties, and judgment upon the
award may be entered in any court of competent jurisdiction. Each of the
parties reserves the right in a proper case to obtain temporary restraining
orders and temporary or preliminary injunctive relief from a court of competent
jurisdiction, provided such party promptly submits the dispute for arbitration
on the merits as provided by this Section.
11.6 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
11.7 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or
the exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which
it is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with respect
to its subject matter (including the Agreement between Buyer and Sellers dated
October 29, 1996) and constitutes (along with the documents referred to in this
Agreement) a complete and
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exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
11.9 DISCLOSURE LETTER
In the event of any inconsistency between the statements in the body of this
Agreement and those in the Disclosure Letter, the statements in the body of the
Disclosure Letter will control.
11.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties except that Buyer may assign any of its
rights under this Agreement to any Subsidiary of Buyer. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed
to give any Person other than the parties to this Agreement any legal or
equitable right, remedy, or claim under or with respect to this Agreement or
any provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
11.11 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
11.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience only
and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
11.13 GOVERNING LAW
This Agreement will be governed by the laws of the State of Massachusetts
without regard to conflicts of laws principles.
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11.14 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
SELLERS:
/s/ Leonard J. Tocci
----------------------------
Leonard J. Tocci
/s/ Richard M. Tocci
----------------------------
Richard M. Tocci
/s/ Lawrence J. Tata
----------------------------
Lawrence J. Tata
/s/ Michael P. Tata
----------------------------
Michael P. Tata
/s/ Barbara L. Tata
----------------------------
Barbara L. Tata
BUYER:
Selfix, Inc., a Delaware Corporation
By: /s/ James R. Tennant
-------------------------
James R. Tennant, President
<PAGE> 1
EXHIBIT 99.1
HOME PRODUCTS INTERNATIONAL
COMPLETES ACQUISITION OF TAMOR CORPORATION
HPI, INC. TARGETS 1997 SALES OF $130 MILLION
(CHICAGO, MARCH, 4 1997) - HOME PRODUCTS INTERNATIONAL, INC. (HPII:
NASDAQ), a holding company focused on the manufacture and marketing of home
organization and home improvement products, today reported it has completed the
acquisition of Tamor Corporation for $43 million in cash and stock including
the assumption of Tamor debt. Tamor, headquartered in Leominster,
Massachusetts, is one of the top three suppliers of home storage and
organization products in the U.S.
In 1996, Home Products International, Inc. (then operating as Selfix, Inc.)
reported net earnings of $.21 a share, on net sales of $38.2 million. In 1996,
Tamor had net sales of $75.7 million and income from operations before
depreciation of $7.3 million. HPI is targeting 1997 revenue of $130 million.
HPI management stated that with the anticipated contribution of the Tamor
operations, the transaction will be accretive to net income and earnings per
share in 1997. To finance the Tamor acquisition, HPI arranged term loan
financing of $47 million.
Commenting on the Tamor acquisition, James Tennant, Chairman and Chief
Executive Officer of HPI, stated "We are very excited about Tamor's outstanding
record of accelerated revenue and earnings growth. They have had a remarkable
sales growth rate of 21% compounded over the last three years--and we expect
similar revenue growth in the near term. Tamor's management team, led by
Leonard Tocci, will stay in place and working with HPI management, we have
identified numerous operational efficiencies. For example, we have already
implemented a program to immediately optimize capacity among our five
manufacturing facilities."
Speaking of HPI's acquisition strategy, Mr. Tennant said, "We are committed to
leading a consolidation in the housewares category and the completion of the
Tamor acquisition is yet another important step in that strategy. We intend to
pursue additional earnings-accretive acquisitions as part of this strategy.
As retailers consolidate, they are seeking 'power vendors' that can supply a
broader product line for maximum merchandising efficiencies. HPI clearly has
the core competencies in manufacturing, product development and outstanding
customer service to support our major retail partners."
Commenting on prospects for 1997, Mr. Tennant noted, " During 1996 the Company
significantly improved its operating results. This was particularly true
during the last nine months when pre-tax profits rose to $1.9 million or $0.51
per share. We believe that this level of earnings for Selfix and Shutters,
Inc. is sustainable and indicative of the performance to come in 1997."
Home Products International, Inc. is listed on the NASDAQ National Market
System, under the ticker symbol HPII. The company is an international consumer
products company specializing in the manufacture and marketing of quality home
organization and home improvement products sold through virtually all domestic
and international retail trade channels.
<PAGE> 2
For further information, contact Mr. James Tennant, Chairman and Chief
Executive Officer, Home Products International, Inc., 4501 W. 47th Street,
Chicago, IL 60632, (773) 890-1010.
The statements in this release regarding the anticipated effect of the Tamor
acquisition on HPI, Inc. sales and earnings are "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 and
involve known and unknown risks, uncertainties and other factors which may
cause the actual results to be materially different from the forecasted
amounts. The future financial performance of HPI, Inc. will depend on a number
of factors beyond its control. Such factors include, among other things, (1)
increased competition; (2) changes in demand for its products; (3) fluctuations
in the market; (4) economic conditions; (5) the retail sales environment; (6)
the Company's ability to execute its acquisition strategy; (7) the extent to
which the Company is able to retain and attract key personnel; (8)
relationships with retailers; (9) the Company's leverage; and (10) fluctuations
in plastic resin prices.
