<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
SEPTEMBER 11, 1997
NUTRAMAX PRODUCTS, INC.
------------------------------
(Exact name of registrant as specified in charter)
DELAWARE 000-18671 061200464
- -------------------- ------------------ ------------------
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
9 BLACKBURN DRIVE, GLOUCESTER, MA 01930
---------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (508) 283-1800
--------------
The Exhibit Index is located on page 5.
<PAGE>
Item 2 - Acquisition or Disposition of Assets
- ---------------------------------------------
On September 11, 1997, NutraMax Products, Inc. (the "Registrant"), through
three wholly-owned subsidiaries, acquired the first aid products business (the
"Business") of American White Cross, Inc. ("AWC") and Weaver Manufacturing Corp.
("Weaver"), AWC's wholly-owned subsidiary. Pursuant to the terms of the
definitive Asset Purchase Agreement, the Registrant purchased the Business for
$37.5 million and assumed $3.5 million in post-petition liabilities, subject to
post-closing adjustments for inventory, accounts receivable and assumed
liabilities as of the closing date. The acquisition of the Business was
approved by the United States Bankruptcy Court for the District of Delaware, in
which the bankruptcy case of AWC and Weaver has been pending.
Financing for the acquisition included approximately $11 million from the
private placement of 846,154 shares of the Registrant's common stock to an
institutional investor. Concurrently with the acquisition, the Registrant
entered into an amendment to its senior secured credit facility with its banks
which increased the aggregate principal amount under the credit facility from
$60 million to $92.1 million. Of the increase amount, approximately $26 million
was used for the acquisition and the remaining $6.1 million will be used to
support working capital needs.
Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits
- ---------------------------------------------------------------------------
(a) and (b) Financial Statements of Properties Acquired and Pro Forma
Financial Information.
At the time of the filing of this Form 8-K, it is impracticable
for the Registrant to provide (a) the required financial
information concerning the Business and (b) the pro forma
financial information relating to the acquisition of the
Business. Such required financial information will be filed by
amendment not later than November 25, 1997, in accordance with
Item 7, paragraphs (a)(4) and (b)(2) of Form 8-K.
(c) Exhibits.
Exhibit Name
- ------- ----
2.1 Asset Purchase Agreement dated as of July 21, 1997 (the "Asset
Purchase Agreement") by and among NutraMax Products, Inc.,
American White Cross, Inc. and Weaver Manufacturing Corp. (1)
2.2 Amendment No. 1 to Asset Purchase Agreement dated as of August
15, 1997, by and among NutraMax Products, Inc. American White
Cross, Inc. and Weaver Manufacturing Corp.
2.3 Stock Purchase Agreement dated as of August 12, 1997 (the
"Stock Purchase Agreement") by and between NutraMax Products,
Inc. and Cape Ann Investors, L.L.C. (1)
2.4 Amendment No. 1 to Stock Purchase Agreement dated as of
September 9, 1997 by and between NutraMax Products, Inc. and
Cape Ann Investors, L.L.C.
<PAGE>
2.5 Amendment No.1 dated as of September 11, 1997 to the Revolving
Credit and Term Loan Agreement dated as of December 30, 1996
among NutraMax Products, Inc., the Banks (as defined therein)
and BankBoston, N.A., as agent (1)
- ---------------------
(1) Schedules are omitted. The Registrant hereby agrees to furnish
supplementally a copy of any omitted schedule to the Commission upon
request.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NUTRAMAX PRODUCTS, INC.
Date: September 26, 1997 By: /s/ Robert F. Burns
----------------------------------------
Robert F. Burns, Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Name Page
- ------- ---- ----
2.1 Asset Purchase Agreement dated as of July 21, 1997
(the "Asset Purchase Agreement") by and among NutraMax
Products, Inc., American White Cross, Inc. and Weaver
Manufacturing Corp. (1)
2.2 Amendment No. 1 to Asset Purchase Agreement dated as
of August 15, 1997, by and among NutraMax Products, Inc.
American White Cross, Inc. and Weaver Manufacturing Corp.
2.3 Stock Purchase Agreement dated as of August 12, 1997
(the "Stock Purchase Agreement") by and between NutraMax
Products, Inc. and Cape Ann Investors, L.L.C. (1)
2.4 Amendment No. 1 to Stock Purchase Agreement dated as
of September 9, 1997 by and between NutraMax Products,
Inc. and Cape Ann Investors, L.L.C.
2.5 Amendment No. 1 dated as of September 11, 1997 to the Revolving
Credit and Term Loan Agreement dated as of December 30, 1996
among NutraMax Products, Inc., the Banks (a defined therein)
and BankBoston, N.A., as agent (1)
- -------------------------
(1) Schedules are omitted. The Registrant hereby agrees to furnish
supplementally a copy of any omitted schedule to the Commission upon
request.
<PAGE>
Exhibit 2.1
-----------
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- ---------------------------------)
In re: )
)
AMERICAN WHITE CROSS, INC., )
a Delaware corporation, ) Chapter 11
ACME/CHASTON PUERTO RICO, INC., ) Case No. 96-01109 (PJW)
a Delaware corporation, and )
WEAVER MANUFACTURING )
CORPORATION, )
a New Jersey Corporation )
)
Debtors )
- ---------------------------------)
ASSET PURCHASE AGREEMENT AMONG
NUTRAMAX PRODUCTS, INC., AMERICAN WHITE CROSS, INC.
AND WEAVER MANUFACTURING CORPORATION
<PAGE>
ASSET PURCHASE AGREEMENT
AMONG
NUTRAMAX PRODUCTS, INC., AS PURCHASER
AND
AMERICAN WHITE CROSS, INC.
AND
WEAVER MANUFACTURING CORPORATION, AS SELLERS
DATED AS OF JULY 21, 1997
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TABLE OF CONTENTS
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CERTAIN DEFINITIONS................................................................... 2
ARTICLE I
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES.......................... 10
1.1 Acquired Assets......................................................... 10
1.2 Assignment of Contracts, Licenses and Lease............................. 13
1.3 Excluded Assets......................................................... 14
1.4 Assumed Obligations..................................................... 15
1.5 No Other Liabilities Assumed............................................ 16
ARTICLE II
PURCHASE PRICE AND PAYMENT.................................................... 17
2.1 Purchase Price.......................................................... 17
2.2 Payment of Estimated Closing Purchase Price; Purchase Price Adjustments. 17
2.3 Allocation of Purchase Price............................................ 19
2.4 Further Assurances...................................................... 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS..................................... 20
3.1 Due Incorporation, etc.................................................. 20
3.2 Due Authorization....................................................... 20
3.3 Permits; Compliance with Law; Consent................................... 20
3.4 Financial Statements and Obligations.................................... 21
3.5 No Adverse Change....................................................... 21
3.6 Title to and Condition of Properties.................................... 22
3.7 Intellectual Property................................................... 23
3.8 Customer List........................................................... 24
3.9 Suppliers............................................................... 25
3.11 Employee Benefit Plan................................................... 25
3.12 No Defaults or Violations............................................... 25
3.13 Certain Environmental Matters........................................... 26
3.14 Litigation.............................................................. 27
3.15 Taxes................................................................... 27
3.16 Condition of Assets..................................................... 28
3.17 Brokers................................................................. 28
3.18 Insurance Policies...................................................... 28
3.19 Assets Sufficient for Conduct of Business............................... 28
3.20 Products Liability...................................................... 28
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3.21 Labor Disputes; Compliance................................................ 29
3.22 Employees; Officers....................................................... 30
3.23 WARN Act.................................................................. 30
3.24 Collectibility of Accounts Receivable..................................... 30
3.26 FDA Matters............................................................... 30
3.27 Accuracy of Statements.................................................... 31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................... 31
4.1 Due Incorporation, etc.................................................... 31
4.2 Corporate Authority....................................................... 31
4.3 Consents.................................................................. 31
4.4 Financing................................................................. 32
4.5 Brokers................................................................... 32
ARTICLE V
COVENANTS OF SELLERS........................................................... 32
5.1 Implementing Agreement.................................................... 32
5.2 Cooperation of Sellers; Access to Information............................. 32
5.3 Preservation of Business.................................................. 32
5.4 Conduct of the Business................................................... 32
5.5 Books and Records......................................................... 34
5.6 Compensation.............................................................. 34
5.7 Consents and Approvals.................................................... 34
5.8 No Default................................................................ 35
5.9 Compliance with Laws...................................................... 35
5.10 No Modifications.......................................................... 35
5.11 Bankruptcy Actions........................................................ 35
5.12 Approval of Certain Contracts............................................. 36
5.13 Referral of Business Opportunities........................................ 36
5.14 Public Announcements...................................................... 36
5.15 Interim Financial Information............................................. 37
5.16 No Solicitation or Negotiation............................................ 37
5.17 Notice of Developments.................................................... 38
5.18 Break-up Fee.............................................................. 38
5.19 Compliance with WARN Act.................................................. 38
5.20 Environmental Responses................................................... 38
5.21 Lease Amendment........................................................... 39
5.22 Time-Warner/United Features License Assignments........................... 39
5.23 Capitalized Lease Obligations............................................. 39
5.24 Slow Moving Inventory Matters............................................. 39
5.25 Exchange Act Filings...................................................... 39
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ARTICLE VI
COVENANTS OF PURCHASER.......................................................... 40
6.1 Implementing Agreement.................................................... 40
6.2 Consents and Approvals.................................................... 40
6.3 Access to Information..................................................... 40
6.4 Assumed Obligations....................................................... 40
6.5 Payment of Purchase Price................................................. 40
6.6 Silent Nite/Airmax Matters................................................ 40
6.7 Accounts Receivables...................................................... 41
6.8 Lease Amendment........................................................... 41
ARTICLE VII
RIGHT OF FIRST REFUSAL.......................................................... 41
7.1 Overbid Procedures and Right of First Refusal............................. 41
7.2 Survival.................................................................. 43
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER................................ 43
8.1 Warranties True as of Both Present Date and Closing Date.................. 43
8.2 Compliance with Agreement and Covenants; Certificates..................... 43
8.3 Bankruptcy Conditions..................................................... 43
8.4 [Intentionally Omitted]................................................... 44
8.5 No Material Adverse Change................................................ 44
8.6 Business and Legal Review................................................. 44
8.7 Actions or Proceedings.................................................... 44
8.8 Other Agreements.......................................................... 44
8.9 Physical Count............................................................ 44
8.10 Other Documents........................................................... 44
8.11 Equipment and Vehicles Title.............................................. 45
8.12 Bankruptcy Orders......................................................... 45
8.13 Consents and Approvals; Permits........................................... 45
8.14 Non-Compete and Confidentiality Obligations............................... 45
8.15 Lease Amendment........................................................... 45
8.16 Time-Warner/United Features License Assignments........................... 45
8.17 Financing................................................................. 46
8.18 Capitalized Lease Obligations............................................. 46
8.19 Weaver Environmental Matters.............................................. 46
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ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS.................................. 46
9.1 Warranties True as of Both Present Date and Closing Date.................. 46
9.2 Compliance with Agreements and Covenants; Certificates.................... 46
9.3 Actions or Proceedings.................................................... 47
9.4 Bankruptcy Conditions..................................................... 47
9.5 Other Documents........................................................... 47
ARTICLE X
CLOSING......................................................................... 47
10.1 Closing................................................................... 47
10.2 Deliveries by Sellers..................................................... 48
10.3 Deliveries by Purchaser................................................... 48
ARTICLE XI
TERMINATION..................................................................... 48
11.1 Termination............................................................... 48
11.2 Break-up Fee.............................................................. 49
11.3 Effect of Termination..................................................... 50
11.4 Purchaser's Escrow Fund................................................... 50
ARTICLE XII
SURVIVAL AND REMEDY; INDEMNIFICATION............................................ 50
12.1 Survival.................................................................. 50
12.2 Indemnification by Sellers................................................ 51
12.3 Indemnification by Purchaser.............................................. 51
12.4 Indemnity Limits.......................................................... 52
12.5 Third-Party Claims........................................................ 52
12.6 Determination of Indemnification Amount................................... 54
ARTICLE XIII
INSURANCE AND OTHER MATTERS..................................................... 54
13.1 Certain Insurance Matters................................................. 54
13.2 Weaver Environmental Matters.............................................. 55
ARTICLE XIV
NONCOMPETITION AND CONFIDENTIALITY.............................................. 56
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ARTICLE XV
MISCELLANEOUS..................................................................... 58
15.1 Expenses.................................................................. 58
15.2 Amendment; Supplemental Disclosure........................................ 58
15.3 Notices................................................................... 58
15.4 Waivers................................................................... 60
15.5 Counterparts.............................................................. 60
15.6 Headings.................................................................. 60
15.7 APPLICABLE LAW............................................................ 60
15.8 Binding Nature; Assignment................................................ 60
15.9 No Third Party Beneficiaries.............................................. 61
15.10 Tax Matters............................................................... 61
15.11 Other Instruments......................................................... 61
15.12 Construction.............................................................. 61
15.13 Entire Understanding...................................................... 62
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EXHIBITS
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EXHIBIT A Form of Sellers' Escrow Agreement
EXHIBIT 5.11 Form of Sale Procedures Order
EXHIBIT 7.1(a) Form of 363 Order and 365 Order
SCHEDULES
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1.1(g) Owned Real Property and Leased Real Property
1.1(n) Intellectual Property
1.1(o) Claims, Deposits, Leasehold Improvement, Prepaids, etc.
1.2(b) Open Purchase Orders and Contracts (at signing and closing)
1.2(c) Open Customer Orders and Customer Agreements (at signing and closing)
1.2(e) Assumed Contracts
1.3(a) Excluded Fixed Assets
1.3(b) Excluded Inventory
1.3(d) Certain Excluded Assets and Rights Not Relating to the Business
2.3 Allocation of Purchase Price
3.3 Permits and Required Consents
3.4(a) AWC Financial Statements
3.4(b) Business and Interim Financial Statements
3.5 Adverse Changes to Business
3.6 Title to and Condition of Properties
3.7 Encumbrances on the AWC Mark
3.8 Customer List and Lost Customers
3.9 Suppliers
3.10 Material Contracts
3.11 Benefit Plans
3.12 No Defaults or Violations
3.13 Environmental Breaches
3.14 Litigation
3.15 Taxes
3.16 Condition of Assets
3.18 Insurance Policies
3.20 Product Liability Claims
3.21 Labor Disputes; Compliance
3.22 Employees; Officers
3.25 Inventories
3.26 FDA Matters
5.23 Capitalized Lease Obligations
5.6 Changes in Compensation
APPENDICES
- ----------
Appendix A Exceptions to Slow Moving Inventory
(vi)
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT is dated as of July 21, 1997, by and among
NutraMax Products, Inc., a corporation organized under the laws of the State of
Delaware ("Purchaser"), and American White Cross, Inc., a corporation organized
---------
under the laws of the State of Delaware ("AWC"), and AWC's wholly owned
---
subsidiary, Weaver Manufacturing Corporation, a corporation organized under the
laws of the State of New Jersey ("Weaver" and, together with AWC, the
"Sellers"). In consideration of the mutual covenants, agreements and warranties
-------
herein contained, the parties hereto agree as follows:
CERTAIN DEFINITIONS
-------------------
Unless otherwise defined herein, terms used herein shall have the meanings
set forth below:
"Accounts Receivable" is defined in Section 1.1(f).
------------------- --------------
"Accounts Receivable Adjustment Value" is defined in Section 2.1(d).
------------------------------------ --------------
"Acquired Assets" is defined in Section 1.1.
--------------- -----------
"Acquisition Proposal" is defined in Section 5.16.
-------------------- ------------
"Active Account" means any account that would have purchased a product it
--------------
carries from Sellers in the last 90 days, except for those accounts deemed to be
lost accounts set forth on Schedule 3.8.
------------
"Affiliate Obligations" means Sellers' debt and other obligations and
---------------------
liabilities to affiliates and stockholders of Sellers, and includes all
interest, fees, costs and similar amounts payable by Sellers in respect thereof.
"Agreement" means this Asset Purchase Agreement, including all Exhibits and
---------
Schedules hereto, as it may be amended from time to time in accordance with its
terms.
"Alternative Transaction" means an Acquisition Proposal made by a Third
-----------------------
Party, or a plan of reorganization of Sellers not involving Purchaser which the
Bankruptcy Court approves, endorses or accepts instead of the transactions
contemplated by this Agreement.
"Article XIV Parties" means each of the Sellers, Mr. Howard Koenig and Mr.
-------------------
Scott Vertrees.
"Assumed Obligations" is defined in Section 1.4.
------------------- -----------
"Assumed Contracts" is defined in Section 1.2(e).
----------------- --------------
<PAGE>
"Authority" is defined within the definition of "Environmental Lien."
---------
"AWC Financial Statements" means the consolidated financial statements of
------------------------
AWC as of and for the years ended December 31, 1996 and 1995, the six month
period ended June 30, 1997, consisting of the balance sheet at such dates and
the related statements of operations and cash flows for the periods then ended,
audited (in the case of the financial statements for the years ended December
31, 1996 and 1995) by Arthur Andersen LLP, certified public accountants, copies
of which are attached hereto as Schedule 3.4(a).
---------------
"AWCL" is defined in Section 1.1(o).
---- --------------
"AWCL Purchase Agreement" is defined in Section 1.1(o).
----------------------- --------------
"AWC Mark" means the name "American White Cross" and all of its
--------
derivatives.
"Bankruptcy Code" means title 11 of the United States Code, sections 101-
---------------
1330.
"Bankruptcy Court" means the United States Bankruptcy Court for the
----------------
District of Delaware, having jurisdiction over Seller and its assets in the
Chapter 11 Cases.
"Break-up Fee" means an amount equal to $1,000,000.
------------
"Bulk Sales Laws" means the Uniform Commercial Code Bulk Transfer
---------------
provisions of any jurisdiction relating to bulk sales which are applicable to
the sale of the Acquired Assets by Sellers hereunder.
"Business" means the business conducted utilizing those operating assets
--------
and operations of Sellers for the manufacture, sale and distribution of
disposable first aid products such as adhesive bandages, patented easy-opening
bandages, sterile pads, medical tape, waterproof tape and other wound dressings,
surgical sponges, eye pads, stockinette and esmark products, surgical cauteries
and podiatry products, sold under Sellers' customers' private or store brand
labels or under Sellers' own national brands labels, principally to the consumer
and healthcare markets, and first aid kits and related first aid products
marketed to various industrial safety suppliers and automotive manufacturers.
"Business Financial Statements" means the internal, unaudited statements
-----------------------------
for the Business reflecting sales and direct material costs on a product line
basis and direct costs of labor and direct manufacturing overhead costs for the
year ended December 31, 1996 and for the four months ended May 6, 1997, copies
of which are attached as Schedule 3.4(b).
---------------
"Cape Ann" means Cape Ann Investors, L.L.C.
--------
"Cash" means all cash (including Restricted Cash), certificates of deposit,
----
bank deposits and other cash equivalents, together with all accrued but unpaid
interest thereon.
2
<PAGE>
"Chapter 11 Cases" means the cases commenced by Sellers and ACME/Chaston
----------------
Puerto Rico, Inc. pending in the Bankruptcy Court under docket Nos. 96-01109
(PJW) through 96-01111 (PJW) and jointly administered under chapter 11 of the
Bankruptcy Code.
"Chilmark" means Chilmark Fund II, L.P.
--------
"Claim" means any claim, lawsuit, demand, suit, inquiry made, hearing,
-----
investigation, notice of violation, litigation, proceeding, mediation,
arbitration or other dispute, whether civil, criminal, administrative or
otherwise.
"Closing" means the consummation of the transactions contemplated herein in
-------
accordance with Article X hereof.
---------
"Closing Date" means the date on which the Closing occurs or is to occur.
------------
"Closing Date Balance Sheet" is defined in Section 2.2.
-------------------------- -----------
"Code" means the United States Internal Revenue Code of 1986, as amended.
----
"Collections" is defined in Section 1.1(j).
----------- --------------
"Competitive Business" is defined in Article XIV.
-------------------- -----------
"Confidential Information" is defined in Article XIV.
------------------------ -----------
"Contaminant" means any substance regulated under any Environmental Law, or
-----------
any substance defined as or included in the statutory or regulatory definitions
of pollutant, hazardous substances, hazardous or toxic wastes, hazardous
materials, or "toxic substances" under any Environmental Law.
"Contract" means any agreement, contract, commitment, capital lease,
--------
operating lease or other binding arrangement or understanding, whether written
or oral, including without limitation, any agreement, commitment, arrangement or
understanding relating to promotions, marketing campaigns and the like.
"Customer Orders" is defined in Section 1.2(c).
--------------- --------------
"Disclosure Schedule" means the disclosure schedules hereto.
-------------------
"Dollars" or "$" means dollars of the United States of America.
------- -
"1129 Order" is defined in Section 5.11.
---------- ------------
3
<PAGE>
"Environmental Law" means any Regulation, federal, State or local, which
-----------------
relates to or otherwise imposes liability or standards of conduct concerning
discharges, releases or threatened releases of any Contaminants into ambient
air, water or land, or otherwise relating to the manufacture, processing,
generation, distribution, use, treatment, storage, disposal, cleanup, transport
or handling of Contaminants.
"Environmental Liabilities and Costs" means all Losses from any claim, by
-----------------------------------
any Person, whether based on Contract, tort, implied or express warranty, strict
liability, criminal or civil statute, including without limitation, under any
Remedial Action, Environmental Law, Environmental Permit, Environmental Lien,
Order or agreement with any Authority, arising from environmental, health or
safety conditions, or the Release of a Contaminant into the environment.
"Environmental Lien" means any Lien in favor of any governmental authority
------------------
(an "Authority") for Environmental Liabilities and Costs.
"Environmental Permit" means any of the Permits required by or pursuant to
--------------------
any applicable Environmental Law.
"Equipment and Vehicles" is defined in Section 1.1(k).
---------------------- --------------
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Estimated Accounts Receivables Value" is defined in Section 2.2.
------------------------------------ -----------
"Estimated Closing Purchase Price" is defined in Section 2.2.
-------------------------------- -----------
"Estimated Inventory Book Value" is defined in Section 2.2.
------------------------------ -----------
"Estimated Post-Petition Liabilities Value" is defined in Section 2.2.
----------------------------------------- -----------
"Excluded Assets" is defined in Section 1.3.
--------------- -----------
"Expenses" is defined in Section 11.2.
-------- ------------
"Federal Securities Laws" is defined in Section 5.25.
----------------------- ------------
"Financial Statements" means the AWC Financial Statements and the Business
--------------------
Financial Statements.
"GAAP" means the U.S. generally accepted accounting principles at the time
----
in effect, consistently applied.
4
<PAGE>
"Guarantee" means any guarantee or other contingent liability (other than
---------
any endorsement for collection or deposit in the ordinary course of business),
direct or indirect, with respect to any Indebtedness or obligations of another
Person, through a Contract or otherwise, including, without limitation, (a) any
other endorsement or discount with recourse or undertaking substantially
equivalent to, or having economic effect similar to, a guarantee in respect of
any such obligation, or to assure the owner thereof against loss regardless of
the delivery or nondelivery of the property, products, materials or supplies or
transportation or services or (b) the obligation to make any loan, advance or
capital contribution to, or other investment in, or to otherwise provide funds
to or for, such other Person in respect of enabling such Person to satisfy an
obligation (including any liability for a dividend, stock liquidation payment or
expense), or to assure a minimum equity, working capital or other balance sheet
condition in respect of any such obligation.
"Indebtedness" with respect to any Person means any obligation of such
------------
Person for borrowed money, and in any event shall include (i) any obligation
incurred for all or any part of the purchase price of property or other assets
or for the cost of property or other assets constructed or of improvements
thereto, other than accounts payable included in current liabilities and
incurred in respect of property purchased in the ordinary course of business,
(ii) the face amount of all letters of credit issued for the account of such
Person, (iii) obligations (whether or not such Person has assumed or become
liable for the payment of such obligation) secured by Liens on the assets of
such Person, (iv) capitalized lease obligations, (v) all Guarantees of such
Person, (vi) all accrued interest, fees and charges in respect of any
indebtedness, and (vii) all prepayment premiums and penalties, and any other
fees, expenses, indemnities and other amounts payable as a result of the
prepayment and/or discharge of any Indebtedness.
"Intellectual Property" is defined in Section 1.1(n).
--------------------- --------------
"Interim Business Financial Statements" means (i) the unaudited monthly
-------------------------------------
interim statements of assets and liabilities as of, and unaudited statements of
income and cash flows for each month ended May, June and July 1997 (and the last
day of each month thereafter if the Closing shall not have occurred in the first
twenty-one days of the succeeding month) for AWC, copies of which are attached
as Schedule 3.4(b), and in the case of any statement for any period not yet
---------------
having occurred, copies of which will be attached to form a part of Schedule
--------
3.4(b).
- ------
"Inventory" is defined in Section 1.1(l).
--------- --------------
"Inventory Adjustment Value" is defined in Section 2.1.
-------------------------- -----------
"Inventory Book Value" means all inventory which has been appropriately
--------------------
valued on the basis of the lower of historical cost or market standards
consistent with GAAP and determined in accordance with such procedures and
assumptions to the reasonable satisfaction of Purchaser and Sellers.
Notwithstanding anything in this Agreement to the contrary, the
5
<PAGE>
term "Inventory," for purposes of determining the Inventory Book Value only,
shall exclude all such items which are Slow Moving Inventory.
"ISRA" is defined in Section 13.2.
----
"Lease" means the Lease Agreement by and between Bradford Realty, as
-----
lessor, and Sellers, as lessees, relating to Seller's facility consisting of
253,000 square feet at 15200 I-45 North, Houston, Texas 77090, which expires on
April 30, 2013, as amended to date and including all supplements, amendments and
other documents relating thereto.
"Lease Amendment" is defined in Section 5.21.
--------------- ------------
"Lease Assignment Documents" means all contracts, agreements and other
--------------------------
documents required to be entered into in order to assign all of AWC's or any of
its affiliate's rights and interests in the Lease to Purchaser, together with
all estoppel letters and non-disturbance agreements that relate to the Lease
which Purchaser may request.
"Leased Real Property" is defined in Section 3.6.
-------------------- -----------
"Lien" means any security interest, lien, charge, mortgage, deed,
----
assignment, pledge, hypothecation, encumbrance, easement, restriction or
interest of another Person of any kind or nature.
"Losses"mean all liabilities of every kind, losses, costs, claims,
------
judgments, awards, damages (including punitive, consequential and treble
damages), penalties or expenses (including, without limitation, reasonable
attorneys' fees and expenses and costs of investigation and litigation), and
also including any expenditures or expenses incurred to cover, remedy or rectify
any such Losses.
"Material Adverse Change" means any circumstances, developments, changes,
-----------------------
occurrences, state of facts or matters which have, or would reasonably be
expected to have, a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on the business,
-----------------------
operations, properties, assets, condition (financial or otherwise), results or
plans of the Business or, to the best knowledge of Sellers after due inquiry,
the prospects of the Business.
"Mortgages" is defined in Section 3.6.
--------- -----------
"Names" is defined in Section 1.1.
----- -----------
"NJDEP" is defined in Section 13.2.
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6
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"Occurrence" is defined in Section 3.20.
---------- ------------
"Order" means any decree, order, injunction, rule, judgment, consent of or
-----
by an authority.
"Outside Collection Date" is defined in Section 6.7.
----------------------- -----------
"Outside Date" is defined in Section 5.11.
------------ ------------
"Overbid Auction" is defined in Section 7.1.
--------------- -----------
"Owned Real Property" is defined in Section 3.6.
------------------- -----------
"Past Property" is defined in Section 3.13.
------------- ------------
"Permits" means any licenses, permits, registrations, variances, interim
-------
permits, permit applications, certificates, approvals or other authorizations
under any Regulation applicable to the Business.
"Person" means any corporation, partnership, joint venture, organization,
------
entity, authority or natural person.
"Plant Closing Costs and Liabilities" means all Losses from any Claim, by
-----------------------------------
any Person, whether based on Contract, tort, implied or express warranty, strict
liability, criminal or civil statute, including under WARN or any state or local
plant closing law, arising from the discharge by either of the Sellers of any or
all of Sellers' employees and relocation of the Business.
"Post-Petition Liabilities" means all of Sellers' post-petition liabilities
-------------------------
incurred in the ordinary course of their respective businesses, including
without limitation, accounts payable, accrued vacation pay, payroll,
contribution obligations under Sellers' 401(k) plan, medical plan insurance
premiums, taxes, commissions and rebates, allowances, deductions and/or price
discrepancies relating in any manner to products sold in pursuit of the Business
prior to the Closing Date, but excluding any and all Unassumed Liabilities,
including without limitation, Indebtedness and costs, fees or expenses of
professional advisors (legal, accounting, financial or otherwise) in connection
with Sellers' reorganization efforts.
"Post-Petition Liabilities Adjustment Value" is defined in Section 2.1.
------------------------------------------ -----------
"Post-Petition Liabilities Value" means the dollar amount of all Post-
-------------------------------
Petition Liabilities.
"Premises" is defined in Section 13.2.
--------
7
<PAGE>
"Purchaser's Auditors" is defined in Section 2.2.
-------------------- -----------
"Purchaser Escrow Agreement" means the Escrow Agreement dated as of the
--------------------------
date of this Agreement, among Purchaser, Sellers and the Escrow Agent named
therein.
"Purchase Price" is defined in Section 2.1.
-------------- -----------
"Recalls" is defined in Section 3.20.
------- ------------
"Regulation" means any law, statute, ordinance, regulation, ruling, rule,
----------
Order or Permit, of, administered or enforced by or on behalf of any Authority,
and the certificate or articles of incorporation and by-laws of Sellers.
"Release" means any release, spill, emission, leaking, pumping, disposal,
-------
discharge, dispersal or migration into the indoor or outdoor environment or into
or out of any property or assets (including the Acquired Assets) owned or leased
by Sellers, including the movement of Contaminants through or in the air, soil,
surface water, groundwater or property.
"Remedial Action" means all actions required under any applicable
---------------
Environmental Law to (1) clean up, remove, treat or in any other way address
Contaminants in the indoor or outdoor environment; (2) prevent the Release or
threat of Release or minimize the further Release of Contaminants so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; or (3) perform pre-remedial studies and
investigations and post-remedial monitoring and care.
"Reorganization Plan" is defined in Section 5.16.
------------------- ------------
"Restricted Cash" means any cash identified on the AWC Financial Statements
---------------
as "restricted cash," including without limitation, any items on such statements
entitled "accounts receivable escrow," together with all funds held in the Megas
Escrow Account.
"Sale Procedures Approval Date" is defined in Section 5.11.
----------------------------- ------------
"Sale Procedures Motion Date" is defined in Section 5.11.
--------------------------- ------------
"Sale Procedures Order" is defined in Section 5.11.
--------------------- ------------
"Section 5.16 Parties" means each of the Sellers, Electra Fleming, Inc. and
--------------------
the Official Committee of Unsecured Creditors in the Chapter 11 Cases.
"Sellers' D&O Policies" is defined in Section 1.3(k).
--------------------- --------------
"Sellers' Escrow Agreement" means the Escrow Agreement, to be dated the
-------------------------
Closing Date, among Purchaser, Sellers and the Escrow Agent named therein (the
"Escrow Agent"), in
- -------------
8
<PAGE>
substantially the form attached hereto as Exhibit A together with such changes
---------
reasonably requested by the Escrow Agent consistent with the terms of this
Agreement.
"Sellers' Escrow Fund" means the sum of $3,500,000 and the aggregate amount
--------------------
of all funds held in the Escrow Account established pursuant to the Escrow
Agreement, dated as of April 22, 1997 (the "Megas Escrow Agreement"), by and
----------------------
among Megas Beauty Care, Inc. ("Megas"), AWC, ACME/Chaston Puerto Rico, Inc.
-----
("ACME/Chaston") and Republic National Bank of New York (the "Megas Escrow
------------ ------------
Account").
- -------
"Sellers' Purchase Orders" is defined in Section 1.2(b).
------------------------ --------------
"Slow Moving Inventory" means those items of Inventory which are either (a)
---------------------
of an SKU or item where usage during the twelve full months immediately
preceding the Closing Date is equal to or less than 20% of the on hand quantity
of such SKU or item as of the Closing Date, as determined in accordance with
Section 2.2 hereof, and for which customer purchase orders on hand at the
- -----------
Closing Date do not exceed 20% of the on hand quantity of such SKU or item, or
(b) inventory which is otherwise unusable or non-salable, irrespective of clause
(a). Notwithstanding the foregoing, Slow Moving Inventory does not include new
SKUs or items introduced to Active Accounts within nine months prior to the date
hereof and set forth on Appendix A ("New SKUs/Items"), which shall be delivered
---------- --------------
by Sellers pursuant to Section 5.24.
"Software" is defined in Section 1.1(e).
-------- --------------
"Taxes" means all taxes, charges, fees, duties, levies or other
-----
assessments, including, without limitation, income, gross receipts, net
proceeds, ad valorem, turnover, real and personal property (tangible and
intangible), sales, use, franchise, excise, value added, license, payroll,
unemployment, environmental, customs duties, capital stock, disability, stamp,
leasing, lease, user, transfer, fuel, excess profits, occupational and interest
equalization, windfall profits, severance and employees' income withholding and
Social Security taxes imposed by the United States or any other country or by
any state, municipality, subdivision or instrumentality of the United States or
of any other country or by any other tax authority (collectively, "Taxing
Authorities" and each, a "Taxing Authority"), including all applicable penalties
and interest, and such term shall include any interest, penalties or additions
to tax attributable to such Taxes.
"Tax Return" means any report, return or other information required to be
----------
supplied to a Taxing Authority in connection with Taxes.
"Third Party" means any Person other than Sellers, Purchasers or any of
-----------
their respective affiliates.
"Time-Warner/United Feature Characters" means any rights, including without
-------------------------------------
limitation, such rights as service names, service marks, tradenames and
trademarks relating to
9
<PAGE>
such characters as Bugs Bunny, Daffy Duck, the Tazmanian Devil, Batman(TM),
Space Jam(TM) characters (including Michael Jordan), and the Peanuts(TM)
characters Charlie Brown, Snoopy and Lucy, granted to Sellers by the Warner
Bros. Division of Time-Warner Entertainment Co., L.P. or by United Features
Syndicate, L.P., or any of the affiliates of either of them.
"Time-Warner/United Features License Assignments" is defined in Section
----------------------------------------------- -------
5.22.
- ----
"Time-Warner/United Feature Licenses" means those licenses or any other
-----------------------------------
Contracts under which the Sellers market or have marketed adhesive bandages with
imprints of or bearing the likenesses of any image produced in connection with a
Time-Warner/United Features Character.
"363 Hearing" is defined in Section 7.1.
----------- -----------
"363 Order" means an order of the Bankruptcy Court, substantially in the
---------
form set forth on Exhibit 7.1(a) hereto.
"365 Order" means an order of the Bankruptcy Court, substantially in the
---------
form set forth on Exhibit 7.1(a) hereto.
"Topping Offer" is defined in Section 7.1.
------------- -----------
"Unassumed Liabilities" is defined in Section 1.5.
--------------------- -----------
"WARN" means the Worker Adjustment and Retraining Notification Act of 1988,
----
as amended.
"Waste or Contamination Site" means any site or location, wherever located
---------------------------
(including, but not limited to, any well, pit, pond, lagoon, impoundment, ditch,
trench, drain, landfill), where Contaminants used at or generated by the
Business or Sellers relating to any of the Owned Real Property or Leased Real
Property, or, to the best knowledge of Sellers, any current or previous owner,
tenant, lessee, subtenant or sublessee of any of the Owned Real Property or the
Leased Real Property or any portion thereof, or any predecessor of the Business
or of Sellers, shall have been deposited, stored, treated, reclaimed, disposed
of, placed or otherwise come to be located.
ARTICLE I
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES
1.1 Acquired Assets. Subject to the terms and conditions set forth in
---------------
this Agreement, including without limitation Section 1.3, at the Closing,
Sellers shall sell, assign, transfer and deliver to Purchaser, and Purchaser (or
a nominee thereof) shall purchase, acquire and take assignment and delivery of,
the following assets owned by Sellers (wherever located)
10
<PAGE>
related to, or used in conjunction with, the Business, and all of Sellers'
right, title and interest therein and thereto, but not including those assets
specifically excluded in Section 1.3 (all of the assets sold, assigned,
transferred and delivered to Purchaser hereunder are referred to collectively
herein as the "Acquired Assets"):
---------------
(a) all supplier and vendor lists and all files, books and records,
including all records, documents, written information, computer tapes, programs
and files concerning past, present and future dealings and arrangements with
suppliers and vendors relating to the Business;
(b) all computer hardware, cabling and peripherals, tools and supplies
relating to the Business to the extent of Sellers' interest therein;
(c) all of Sellers' rights, interests and obligations under the
contracts, agreements and powers of attorney relating to the Business including
without limitation those referred to in this Section 1.1 and those referred to
in Section 3.10 and the schedules thereto and all of Sellers' and ACME/Chaston's
rights, interests and obligations under the Megas Escrow Agreement;
(d) all Permits, privileges, grants, franchises, licenses and consents
used in the Business, to the extent transferable;
(e) all of Sellers' title and interest in and to any and all of the
databases used in the Business and all software, source codes, object codes,
documentation, technical data, manuals, comments and instructions, and computer
processes used in the Business (collectively, the "Software"), whether owned or
licensed;
(f) all of Sellers' right, title and interest in accounts receivable
and payments for services rendered prior to the Closing (collectively, the
"Accounts Receivable");
(g) all of Sellers' right, title and interest in and to all real
property and real property leases set forth on Schedule 1.1(g) together with all
---------------
Sellers' right, title and interest to leasehold improvements, including without
limitation, the Lease;
(h) all of Sellers' right, title and interest to all leased personal
property (including without limitation all right, title and interest under
capital leases), including all options to purchase leased personal property,
relating to the Business;
(i) all goodwill related to the Business and all associated trade and
fictitious names and all variations and derivatives thereof, together with all
other names under which the Business has been carried on, in each case, whether
or not registered or filed, and all symbols and logos utilized in connection
with the Business or as all or part of a trade or corporate name relating to the
Business (collectively the "Names") or otherwise, and any other intangible
-----
assets including without limitation all prepaid expenses and any and all
relationships with
11
<PAGE>
brokers and representatives relating to the sales, marketing, distribution or
promotion of products manufactured in the Business;
(j) all Cash and cash equivalents relating to the Business held in
accounts as of the Closing, including without limitation Restricted Cash, plus
Cash in an amount equal to all payments received by Sellers relating to the
Business on or after the Closing Date, excluding any payments from Purchaser to
Sellers under this Agreement ("Collections");
(k) all of the machinery, equipment, installations, lift trucks,
vehicles, patterns, dies, tools, maintenance equipment and production machinery
and equipment of every kind and description which relate in any manner to the
Business (collectively, the "Equipment and Vehicles"), and all manufacturers'
----------------------
and suppliers' warranties relating to any of the Acquired Assets;
(l) all of the inventories existing on the Closing Date and used in
connection with the Business, including all raw materials, packaging materials,
work in process and finished goods inventories, wherever located, whether Slow
Moving Inventory or not, and which relate in any manner to the Business,
including without limitation, all such materials utilized or to be utilized in
the Business whether or not containing the name "American White Cross" or any of
its derivatives, or any of the first aid and safety kits (for use in automobiles
or otherwise), or, subject to Section 5.12 and Section 8.16, any of the Time-
Warner/United Features Characters (collectively, the "Inventory");
---------
(m) all spare parts and manufacturing and operating supplies, wherever
located, which relate in any manner to the Business;
(n) all (i) patents, patent applications, licenses, service names,
service marks, trade names, trademarks, trade name and trademark registrations
(and applications therefor), copyrights and copyright registrations (and
applications therefor), inventions and designs therefor relating to the
Business, including without limitation, those set forth on Schedule 1.1(n), (ii)
---------------
the AWC Mark, (iii) all right, title and interest in and to the Time-
Warner/United Feature Licenses, and (iv) goodwill, trade secrets, processes,
know-how and formulae which relate in any manner to the Business (collectively,
the "Intellectual Property");
---------------------
(o) subject to Section 1.3, any Claims, deposits, leasehold
improvements, prepayments, refunds, causes of action, choses in action, rights
of recovery, rights of set-off, and rights of recoupment which relate to the
Business and are set forth on Schedule 1.1(o), including without limitation, (i)
---------------
rights of indemnification in respect of environmental matters arising under that
certain Stock Purchase Agreement (the "AWCL Purchase Agreement"), dated as of
April 19, 1993, among AWC and the former stockholders of The American White
Cross Laboratories, Inc. ("AWCL"), excluding claims made under the AWCL Purchase
Agreement prior to the date of this Agreement, provided, however, that Sellers
shall also have such rights of indemnification in respect of environmental
matters arising under the AWCL
12
<PAGE>
Purchase Agreement, and (ii) Claims or rights of recovery of Sellers and
ACME/Chaston under the Megas Escrow Agreement;
(p) copies of all production records, product files, technical
information, designs, drawings, confidential information, price lists, marketing
plans and strategies, sales records, product development techniques or plans,
customer lists and files (including customer credit and collection information),
details of client or consultant contracts, operational methods, historical,
business, operational, personnel and financial books, records and files, forms,
plans, systems, methods, designs, procedures and other proprietary information
relating to the Business;
(q) all of the assets and rights of the Sellers relating to the
Business located at Sellers' Dayville, Connecticut facility not specifically set
forth on Schedule 1.3(f); and
---------------
(r) any and all other assets and rights that are not of the type or
character referenced in Section 1.1(a) - (q) and which relate to, or are
necessary for the continuation after the Closing Date of, the Business in at
least the same manner and magnitude as of the date hereof.
1.2 Assignment of Contracts, Licenses and Lease. Subject to the terms and
-------------------------------------------
conditions set forth in this Agreement, (i) Sellers will assign and transfer to
Purchaser, effective as of the Closing Date, all of Sellers' right, title and
interest in and to, and Purchaser will take assignment of, the following rights
and interests that are exclusively used in connection with, or relate
exclusively to, the Business, and (ii) solely with respect to Section 1.2(f),
ACME/Chaston will assign and transfer to Purchaser, effective as of the Closing
Date, all of ACME/Chaston's right, title and interest in and to, and Purchaser
will take assignment of, ACME/Chaston's rights and interests in connection with
and relating to the Megas Escrow Agreement (and all of the following contained
in the foregoing clauses (i) and (ii) shall be deemed included in the term
"Acquired Assets" as used herein):
---------------
(a) The Lease;
(b) All of the unfilled purchase orders, and executory contracts and
agreements for the purchase of goods, materials and services and such other
contracts (i) at the date of this Agreement and set forth in Schedule 1.2(b) or
---------------
(ii) entered into after the date of this Agreement and on or prior to the
Closing Date (x) that are on commercially reasonable terms and consistent with
past practices and are individually (and not in the aggregate) for a
consideration of less than $30,000, and (y) that are on commercial reasonable
terms, consistent with past practices and on conditions reasonably satisfactory
to Purchaser and are individually (and not in the aggregate) for a consideration
of greater than $30,000; in each case, and subject to the foregoing, as set
forth on Schedule 1.2(b) as supplemented in accordance with this Agreement prior
---------------
to the Closing (collectively, the "Sellers' Purchase Orders");
------------------------
13
<PAGE>
(c) All of the unfilled purchase orders, and executory contracts and
agreements for the sale of goods and services and such other purchase orders,
sales contracts and agreements with customers (i) at the date of this Agreement
and set forth in Schedule 1.2(c) or (ii) entered into after the date of this
---------------
Agreement and prior to the Closing Date (x) that are on commercially reasonable
terms and consistent with past practices and are individually (and not in the
aggregate) for a consideration of less than $30,000 and (y) that are on
commercially reasonable terms, consistent with past practices and on conditions
reasonably satisfactory to Purchaser and are individually (and not in the
aggregate) for a consideration of greater than $30,000; in each case, and
subject to the foregoing, as set forth on Schedule 1.2(c) as supplemented in
---------------
accordance with this Agreement prior to the Closing (collectively, the "Customer
--------
Orders");
- ------
(d) All Permits relating to the Business;
(e) Those Contracts concerning rights and property used or useful in
connection with the conduct of the Business ("Assumed Contracts"), that are set
forth on Schedule 1.2(e) hereto; and
---------------
(f) The Megas Escrow Agreement.
1.3 Excluded Assets. The following assets of Sellers, as well as any
---------------
other assets not defined as Acquired Assets, shall be retained by Sellers and
are not being sold or assigned to Purchaser hereunder (all of the following are
referred to collectively as the "Excluded Assets"):
---------------
(a) Those items of machinery, equipment, installations, lift trucks,
vehicles, patterns, dies, tools, spare parts, maintenance equipment and
production machinery and equipment set forth on Schedule 1.3(a);
---------------
(b) Those items of raw materials, packaging materials, work in process
and finished goods inventories, spare parts, manufacturing operating supplies
set forth on Schedule 1.3(b);
---------------
(c) Any of the rights of Sellers under this Agreement (or under any
other agreement between either of the Sellers on the one hand and Purchaser on
the other hand entered into on or after the date of this Agreement);
(d) All assets and rights of the Sellers not relating to the Business
including those listed on Schedule 1.3(d);
---------------
(e) The corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock
14
<PAGE>
certificates, and other documents relating to the organization, maintenance and
existence of Sellers as corporations;
(f) The assets and rights of the Sellers relating to the Dayville,
Connecticut cotton products business sold to Megas Beauty Care, Inc. ("Megas")
pursuant to that certain Asset Purchase Agreement, dated as of March 20, 1997,
among Megas, AWC and ACME/Chaston Puerto Rico, Inc.;
(g) Any and all causes of action or claims arising out of events,
conditions or occurrences prior to the Closing Date, including without
limitation, any claims against the former stockholders of AWCL arising under the
AWCL Purchase Agreement; excepting therefrom however, the rights of
indemnification as set forth in Section 1.1(o) above;
(h) Any and all Tax refunds, including actual or deemed interest
thereon, relating to Sellers' Form 1120X Tax returns for the Tax periods ending
December 31, 1991, 1992 and 1993, and any Tax returns, Tax books and Tax records
relating to income Taxes paid or owed by Sellers during any Tax periods;
(i) Any and all prepaid costs and expenses relating to professional
advisors (legal, financial, accounting or otherwise) incurred by Sellers in
connection with the Reorganization Plan;
(j) Any and all cash receivables arising after the Closing Date that
result from Sellers' performance under the Manufacturing and Supply Agreement,
dated as of April 22, 1997, between Megas Beauty Care, Inc. and AWC; and
(k) Any and all rights, claims and obligations of Sellers under
Sellers' insurance policies in effect as of the date of this Agreement,
including without limitation, Sellers' directors' and officers' insurance
policies, except with respect to any rights of Purchaser set forth in Section
13.1 hereof (the "Sellers' Insurance Policies").
---------------------------
1.4 Assumed Obligations. At the Closing, except as provided in Section
-------------------
1.5, Purchaser shall assume, and agree to pay, perform, fulfill and discharge
only those obligations which are required to be performed, and which accrue,
after the Closing Date under the following Contracts: (A) Sellers' Purchase
Orders; (B) the Customer Orders; (C) the Lease, as the same shall have been
amended pursuant to the provisions of Section 5.22 and Section 8.17 hereof, (D)
the Post-Petition Liabilities, (E) the Assumed Contracts, (F) any and all
employee severance obligations resulting from the termination of any employee of
the Business hired by Purchaser in connection with the transactions contemplated
hereby and terminated by Purchaser subsequent to the Closing Date, and (G) any
Claim that any of the products known as Silent Nite or Airmax or any other nasal
dilating products manufactured, produced, marketed or sold in the Business prior
to the Closing Date, or any process, method, part, design or material in any way
related thereto, infringes any intellectual property of another Person, but only
in the event that Purchaser, pursuant to Section 6.6, notifies Sellers of its
15
<PAGE>
intent to manufacture, produce, market or sell any such products after the
Closing Date and Purchaser so manufactures, produces, markets or sells any such
products after the Closing Date (the "Assumed Obligations"); except in each case
-------------------
where (i) such obligations are not disclosed in accordance with the Agreement or
exist or are entered into or accepted in contravention of this Agreement, (ii)
such obligations arise due to any breach of warranty, tort, infringement, or
violation of a Regulation or any Claim, in each case, arising prior to the
Closing Date, (iii) such obligations arise due to any breach of Contract prior
to the Closing Date or violation of any Regulation prior to the Closing Date, or
(iv) the consent of any third party is required for the assignment of such
Contract and such consent has not been obtained. Notwithstanding the foregoing,
Purchaser shall have the right in its sole discretion to revise the content of
the Assumed Contracts or assume any of the Unassumed Obligations by written
notice delivered to Seller on or prior to August 15, 1997. Seller shall cure
any defaults under all executory contracts and unexpired leases to be assigned
to Purchaser at the Closing, and shall be solely responsible to any party to
such contracts or leases to be assigned to Purchaser at the Closing Date for any
loss suffered or incurred, from any such default as provided in (S) 365 of the
Bankruptcy Code.
1.5 No Other Liabilities Assumed. Sellers acknowledge and agree that
----------------------------
pursuant to the terms and provisions of this Agreement and under any Contract,
Purchaser will not assume any Obligation of Sellers, other than the Assumed
Obligations. In furtherance and not in limitation of the foregoing, neither
Purchaser nor any of its affiliates shall assume, and shall not be deemed to
have assumed, any debt, claim, obligation or other liability of Sellers or any
of its affiliates whatsoever other than as specifically set forth in Section
1.4, including, but not limited to (i) any Environmental Costs and Liabilities
for any act, omission, condition, event or circumstance to the extent occurring
or existing prior to the Closing Date, including without limitation all
Environmental Costs and Liabilities relating in any manner to Sellers' direct or
indirect handling, transportation or disposal of any Contaminants, (ii) any of
Sellers' liabilities in respect of Taxes, (iii) to the extent that under the
applicable law of any authority any Tax or fee is payable exclusively by
Sellers, any Taxes or any fees arising in connection with the consummation of
the transactions contemplated hereby, including any Tax or liability of any
stockholder of Sellers or their affiliates and any of Sellers' fees or expenses
incurred in connection with the transfer of the Acquired Assets (other than as
expressly provided in this Agreement), (iv) any brokers' or finders' fees, or
other liability of Sellers for costs and expenses (including fees and expenses
relating to professional advisors (legal, financial, accounting or otherwise))
incurred in connection with this Agreement (or under any other agreement between
Sellers on the one hand and Purchaser on the other hand entered into on or after
the date of this Agreement), (v) any liability or obligation of Sellers under
this Agreement (or under any other agreement between Sellers on the one hand and
Purchaser on the other hand entered into on or after the date of this
Agreement), (vi) any Indebtedness, (vii) any liability related to retiree
medical and other retiree benefits and obligations, (viii) any obligations or
liabilities, including severance, pension plan benefits (including without
limitation, any liabilities, withdrawal or otherwise, relating to any multi-
employer plans subject to Title IV of ERISA) and compensation, for Sellers'
employees, except in such circumstances where such obligations are expressly
assumed hereunder by Purchaser, (ix) any
16
<PAGE>
obligation or liability arising as a result of or whose existence is a breach of
Sellers' representations, warranties, agreements or covenants, (x) any Excluded
Assets, (xi) Affiliate Obligations, (xii) any Loss relating to any defective or
allegedly defective product manufactured, sold or distributed by Sellers on or
prior to the Closing Date or any other product liability Claim relating to any
product manufactured, sold or distributed by Sellers on or prior to the Closing
Date, (xiii) any Plant Closing Cost or Liability, (xiv) any costs of curing any
breach of any and all Contracts and Leases occurring or accruing on or prior to
the Closing Date, that are to be assumed by Seller and assigned to Purchaser
pursuant to (S) 365 of the Bankruptcy Code, (xv) any Claim that any of the
products known as Silent Nite or Airmax or any other nasal dilating products
manufactured, produced, marketed or sold in the Business prior to the Closing
Date, or any process, method, part, design or material in any way related
thereto, infringes any intellectual property of another Person, but only in the
event that Purchaser, pursuant to Section 6.6, notifies Sellers of its intent
not to manufacture, produce, market or sell any such products after the Closing
Date and Purchaser does not so manufacture, produce, market or sell any such
products after the Closing Date, (xvi) any of Sellers' Liabilities set forth on
the Closing Date Balance Sheet as "liabilities subject to compromise," and
(xvii) any obligation or liability of Sellers in respect of the Sellers'
Insurance Policies (collectively, "Unassumed Liabilities"). Disclosure of any
---------------------
obligation or liability on any schedule to this Agreement shall not create an
Assumed Obligation or other liability of the Purchaser, except where such
disclosed obligation has been expressly assumed by Purchaser as an Assumed
Obligation in accordance with the provisions of Section 1.4 hereof.
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.1 Purchase Price. The aggregate purchase price for the Acquired Assets
--------------
(the "Purchase Price") shall be payable in cash as follows: (a) $40,000,000
--------------
minus, on a dollar-for-dollar basis, the amount that the Inventory Book Value
determined in accordance with Section 2.2 hereof is less than $12,250,000 on the
Closing Date (the "Inventory Adjustment Value"), (b) minus, on a dollar-for-
--------------------------
dollar basis, the amount that the Post-Petition Liabilities Value determined in
accordance with Section 2.2 hereof is more than $3,600,000 on the Closing Date
(the "Post-Petition Liabilities Adjustment Value"), and (c) minus, on a dollar-
------------------------------------------
for-dollar basis, the amount that the Accounts Receivables Value determined in
accordance with Section 2.2 hereof is less than $6,000,000 on the Closing Date
(the "Accounts Receivables Adjustment Value").
-------------------------------------
2.2 Payment of Estimated Closing Purchase Price; Purchase Price
-----------------------------------------------------------
Adjustments. On or promptly before the Closing Date, but in any event effective
- -----------
as of the Closing Date, Sellers and Purchaser and/or their representatives shall
perform to Purchaser's reasonable satisfaction a complete and accurate physical
count and inspection of the Acquired Assets. Five (5) business days prior to
the Closing Date, Sellers shall notify Purchaser in writing of their good faith
estimate of (i) the Inventory Book Value as of the Closing Date (the "Estimated
---------
Inventory
- ---------
17
<PAGE>
Book Value"), (ii) the Post-Petition Liabilities Value as of the Closing Date
- ----------
(the "Estimated Post-Petition Liabilities Value"), and (iii) the Accounts
-----------------------------------------
Receivables Value as of the Closing Date (the "Estimated Accounts Receivables
------------------------------
Value"). The estimated closing purchase price (the "Estimated Closing Purchase
- ----- --------------------------
Price") shall be equal to (a) $40,000,000 minus, on a dollar-for-dollar basis,
- -----
the amount that the Estimated Inventory Book Value is less than $12,250,000, (b)
minus the Purchaser Escrow Fund, (c) minus, on a dollar-for-dollar basis, the
amount that the Estimated Post-Petition Liabilities Value is more than
$3,600,000, and (d) minus, on a dollar-for-dollar basis, the amount that the
Estimated Accounts Receivables Value is less than $6,000,000. At the Closing,
Purchaser shall pay to Sellers in cash payable by certified or official bank
check or wire transfer in immediately available funds an amount equal to the
Estimated Closing Purchase Price. Of the Estimated Closing Purchase Price, AWC
shall deposit with the Escrow Agent the Sellers' Escrow Fund pursuant to the
terms and provisions of the Sellers' Escrow Agreement. In addition,
contemporaneously with the execution of this Agreement, Purchaser has deposited
with the Escrow Agent $400,000 pursuant to the terms and provisions of the
Purchaser Escrow Agreement (the "Purchaser's Escrow Fund").
Within 14 calendar days after the Closing Date, Sellers shall prepare and
deliver to Purchaser, a balance sheet for the Business as of the Closing Date
(the "Closing Date Balance Sheet"), together with a statement setting forth
--------------------------
Sellers' determination of the Inventory Book Value, the Post-Petition
Liabilities Value and the Accounts Receivables Value, in each case as of the
Closing Date. Within 30 days after receipt of such items, Purchaser may deliver
to Sellers a detailed written statement setting forth its objections, if any, to
the Closing Date Balance Sheet and determination of the Inventory Book Value,
the Post-Petition Liabilities Value and the Accounts Receivables Value. If
Purchaser does not raise any objections within the 30-day period, the Closing
Date Balance Sheet and Sellers' determination of the Inventory Book Value, the
Post-Petition Liabilities Value and the Accounts Receivables Value, in each case
as of the Closing Date, shall be conclusive and binding upon the parties, shall
not be subject to dispute or review and shall be the final determination of such
matters. Upon request by Purchaser at any time after receipt of the Closing
Date Balance Sheet and statements, Sellers shall make available to Purchaser and
Deloitte & Touche LLP or another accounting firm of national reputation
designated by Purchaser (the "Purchaser's Auditors"), the work papers used in
--------------------
preparing them together with such other documents as Purchaser may reasonably
request in connection with its review thereof. If Purchaser raises any
objections within the 30-day period in respect of the the Closing Date Balance
Sheet and Sellers' determination of the Inventory Book Value, the Post-Petition
Liabilities Value and the Accounts Receivables Value, Sellers and Purchaser
shall use reasonable efforts to resolve any such objections. If a final
resolution is not obtained within 10 days after Purchaser shall have submitted
its objections to Sellers, any remaining disputes shall be resolved by an
accounting firm mutually agreeable to Purchaser and Sellers. If Purchaser and
Sellers are unable to mutually agree on such an accounting firm within 5 days
after the expiration of said 10-day period, either Coopers & Lybrand LLP, Ernst
& Young LLP, KPMG Peat Marwick LLP or Price Waterhouse LLC (excepting any of
which are Purchaser's Auditors) shall be selected by lot after elimination of
one firm by Purchaser and one firm by Sellers. The determination of the
accounting firm so selected of Purchaser's and Sellers' dispute in respect of
the Closing
18
<PAGE>
Date Balance Sheet and the Inventory Book Value, the Post-Petition Liabilities
Value and the Accounts Receivables Value shall be made no later than 30 days
following selection of such firm by the parties and shall be set forth in
writing and shall be conclusive and binding upon the parties, shall not be
subject to dispute or review and shall be the final determination of such
matters. The fees and expenses of such accounting firm shall be paid by the
party whose last proposed offer for settlement of the Inventory Book Value, the
Post-Petition Liabilities Value and the Accounts Receivables Value was farther
from the determination of such accounting firm; provided, however, that in the
-------- -------
event that Purchaser's and Sellers' determinations of the Inventory Book Value,
the Post-Petition Liabilities Value and the Accounts Receivables Value were each
within five percent (5%) of the determination of such amounts by such accounting
firm then the fees and expenses of such accounting firm shall be equally split
between Purchaser and Sellers.
Following the final determination pursuant to the foregoing paragraph of
the Inventory Book Value, the Post-Petition Liabilities Value and the Accounts
Receivables Value, the Purchase Price shall be determined in accordance with
Section 2.1 hereof and (i) in the event that the Purchase Price is less than the
Estimated Closing Purchase Price, Sellers shall pay to Purchaser in cash (which
obligation shall first be satisfied out of the Sellers' Escrow Fund pursuant to
the terms of the Sellers' Escrow Agreement) payable by certified or official
bank check or wire transfer in immediately available funds within two business
days immediately following the date of such final determination an amount equal
to the difference between the Estimated Closing Purchase Price and the Purchase
Price, (ii) in the event that the Purchase Price is greater than the Estimated
Closing Purchase Price, Purchaser shall pay to Sellers in cash payable by
certified or official bank check or wire transfer, immediately available funds
within two business days immediately following the date of such final
determination an amount equal to the difference between the Purchase Price and
the Estimated Closing Purchase Price, and (iii) in the event that the Purchase
Price is equal to the Estimated Closing Purchase Price, neither Purchaser nor
Sellers shall be obligated to make any further payments to the other pursuant to
Section 2.1 or this Section 2.2. Notwithstanding anything contained in this
Article II, in no event shall the Purchase Price payable by Purchaser to Sellers
hereunder exceed $40,000,000.
2.3 Allocation of Purchase Price. For tax reporting purposes only, the
----------------------------
Purchase Price shall be allocated as described in Schedule 2.3 hereto to the
------------
satisfaction of Sellers and Purchaser. Sellers and Purchaser agree to file all
income tax returns or reports, including, without limitation, IRS Form 8954, for
their respective taxable years in which the Closing occurs and to reflect the
allocation of the Purchase Price described in Schedule 2.3 hereto on any such
------------
return or report and agree not to take any position inconsistent therewith
before any governmental agency charged with the collection of any Taxes or in
any judicial proceeding relating solely to tax reporting.
2.4 Further Assurances. From time to time after the Closing at the
------------------
request of Purchaser and without further consideration, Sellers shall execute
and deliver such further instruments of transfer and assignment and take such
other action as Purchaser may reasonably
19
<PAGE>
require to more effectively transfer and assign to, and vest in, Purchaser each
of the Acquired Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Purchaser as of the date of this Agreement
and the Closing Date, as follows:
3.1 Due Incorporation, etc. Each of the Sellers is a corporation duly
----------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with all requisite corporate and other power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of the Sellers is duly organized and in
good standing as a foreign corporation authorized to do business in each
jurisdiction where the failure to be qualified would, in the aggregate, have a
Material Adverse Effect.
3.2 Due Authorization.
-----------------
(a) The Board of Directors of each of the Sellers has approved the
entry of each of the Sellers into this Agreement and the transactions
contemplated hereby. Sellers have full power and authority to enter into this
Agreement and to carry out the transactions contemplated herein, and this
Agreement has been duly and validly executed and delivered by Sellers, to the
extent a party thereto and constitute the legal, valid and binding obligations
of Sellers, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws from time to time in effect that affect
creditors' rights generally, and by legal and equitable limitations on the
availability of specific remedies.
(b) The execution, delivery and performance by each of the Sellers of
this Agreement, and the consummation of the transactions contemplated hereby, do
not and will not (i) violate any provision of the certificate or articles of
incorporation or by-laws of Sellers, (ii) with the passage of time, the giving
of notice or otherwise, result in a violation or breach of, or conflict with or
constitute a default or result in the termination or in a right of termination
or cancellation of, or accelerate the performance required by, or require notice
under, any written Contract or result in the creation of any Lien upon any of
its properties, or (iii) violate any Regulation, which in the case of clause
------
(ii) or (iii) could have a Material Adverse Effect.
- ---- -----
3.3 Permits; Compliance with Law; Consent. Sellers hold all of the
-------------------------------------
Permits listed on Schedule 3.3, and no other Permits are currently necessary in
------------
any way for the lawful operation by Sellers of the Business as currently
conducted by Sellers, including without limitation, Permits issued or granted by
the United States Food and Drug Administration (the "FDA"), except for those
---
Permits the absence of which would not have a Material Adverse
20
<PAGE>
Effect. Except as set forth on Schedule 3.3, Sellers have complied with each,
------------
and are not in violation of any Regulation to which the Acquired Assets or
Assumed Obligations are subject, including export and import licensing and other
laws. Except consents, approvals or authorizations of, or filings with, the
Bankruptcy Court and those set forth on Schedule 3.3, no notice to, filing with,
------------
authorization of, exemption by, or consent of any Authority as required in order
for Sellers to consummate the transaction contemplated hereby.
3.4 Financial Statements and Obligations.
------------------------------------
(a) The AWC Financial Statements present fairly the financial position
of AWC as of and for the periods set forth therein in conformity with GAAP and
the past accounting practices of AWC, and the AWC Financial Statements,
including the notes thereto, make full and adequate disclosure of, and provision
for, all material obligations and liabilities of AWC and the Business, as
applicable, as of the date thereof, to the extent required by GAAP.
(b) The Business Financial Statements are based on the books and
records of the Sellers and fairly represent the results of the Business.
(c) Each item of Inventory that is not Slow Moving Inventory is
merchantable and usable in the ordinary operations of the Business, none of such
items is obsolete and non-salable. The Inventory (other than Slow Moving
Inventory) is fairly reflected in the inventory accounts on the balance sheet
included in the Financial Statements and are valued at the lower of cost or
market and determined in accordance with GAAP (it being understood, however,
that each item of inventory will be independently valued and that the age of
inventory will not be the exclusive determinant of value).
3.5 No Adverse Change. Except as listed on Schedule 3.5, since December
----------------- ------------
31, 1996 there has not been (i) any Material Adverse Change, (ii) any material
loss or damage (whether or not covered by insurance) to any of the Acquired
Assets, which materially affects or impairs the ability of Sellers to conduct
the business of the Business, or any other event or condition of any character
which has materially and adversely affected the business or operation of the
Business, (iii) any contract or other transaction entered into by Sellers
relating to, or otherwise affecting in any way, the Business or the operation
thereof, other than in the ordinary course of business, (iv) any sale or
transfer of any of the Acquired Assets, except items of the Inventories which
have been sold in the ordinary course of business, or any cancellation of any
debts due to, or claims of, Sellers, except in the ordinary course of business,
(v) any material changes in the terms of any instruments, accounts, notes,
Contracts, or other instruments that are Assumed Obligations, except as
consented to in writing by Purchaser, or (vi) consistent with being a debtor in
possession under the Bankruptcy Code, failure to use reasonable best efforts to
preserve for Sellers the goodwill of its suppliers, franchisees, customers and
others having business relations with Sellers, in each case, which would have a
Material Adverse Effect. Since December 31, 1996, the business of the Business
has been conducted in all respects only in the ordinary course, and there has
not been any
21
<PAGE>
material change in the affairs of the Business which has not been fully
disclosed in writing to Purchaser which would have a Material Adverse Effect.
3.6 Title to and Condition of Properties.
------------------------------------
(a) At and as of the Closing Date, and subject to Bankruptcy Court
approval, Sellers will have good and marketable title to, and will have the
right to sell, convey, transfer, assign and deliver the Acquired Assets free and
clear of any Lien, Claim and right of first refusal other than Liens assumed or
granted thereon in connection with the Purchaser's financing or business. At
and as of the Closing Date, and subject to Bankruptcy Court approval, Sellers
will convey the Acquired Assets to Purchaser by bills of sale, certificates of
title and other instruments of assignment and transfer effective to vest in
Purchaser, and Purchaser will have, good and valid record and marketable title
to all of the Acquired Assets, free and clear of all Liens, Claims and rights of
first refusal.
(b) All of the Acquired Assets that consist of real property owned by
Sellers is identified on Schedule 3.6 (collectively referred to herein as the
------------
"Owned Real Property"). Seller will have as of the Closing Date, and except as
- --------------------
set forth on Schedule 3.6 has as of the date of this Agreement, good, clear,
------------
record and marketable fee simple title to the Owned Real Property, free and
clear of all Liens, Claims, rights of first refusal, deeds of trust, ground
leases, assessments, leases and tenancies, covenants, conditions, restrictions,
easements or other encumbrances and free of encroachments onto or off of the
Owned Real Property, except for (x) easements, covenants, restrictions and
similar encumbrances that do not and could not reasonably be expected to
materially interfere with the use of the Owned Real Property as currently used
and improved, and (y) minor encroachments that do not and could not materially
adversely affect the value or use of the Owned Real Property as currently used
and improved and that could be removed without material cost, and except for
matters set forth on Schedule 3.6. All of the mortgages, deeds of trust, ground
------------
leases, security interests or similar encumbrances on the Owned Real Property
are set forth on Schedule 3.6 (collectively, the "Mortgages"). Except as set
------------ ---------
forth on Schedule 3.6, Sellers have obtained the consent of the holder of any
------------
Mortgage if the transfer of the Owned Real Property to Purchaser would otherwise
cause a default under the Mortgage, and such transfer will not give the holder
of any Mortgage any remedy, or the right to charge any premium or penalty. All
of the real property leased by Sellers as tenants or lessees, including, without
limitation, the Lease, is identified on Schedule 3.6 (such premises are referred
------------
to herein as the "Leased Real Property"). The copies of the leases of the
--------------------
Leased Real Property delivered by Sellers to Purchaser and the information with
respect to each of such leases set forth in Schedule 3.6 is complete, accurate,
------------
true and correct. Such leases are in full force and effect and have not been
modified, amended, or altered, in writing or otherwise, other than as
contemplated by Section 5.22 and Section 8.17; all obligations of the landlords
or lessors under such leases which have accrued and have not been performed are
set forth on Schedule 3.6; all obligations of the tenant or lessee under such
------------
leases which have accrued and have not been performed are set forth on Schedule
--------
3.6 and all such obligations will be cured or performed on or prior to the
- ---
Closing Date, and Sellers, except as set forth on Schedule 3.6, are not in
------------
default under any of the leases of Leased Real
22
<PAGE>
Property, and no circumstance presently exists which, with notice or the passage
of time, or both, would give rise to a default by Sellers; and Sellers have
obtained or will obtain on or prior to the Closing the consent of each landlord
or lessor under any leases of the Leased Real Property whose consent is required
to the transfer of the Leased Real Property to Purchaser, and such transfer will
not give any landlord or lessor under any such leases any remedy, including,
without limitation, any right to declare a default under such leases. Seller
holds a good, clear, marketable, valid and enforceable leasehold interest in the
Leased Real Property pursuant to such leases, subject only to the right of
reversion of the landlord or lessor in the Leased Real Property, free and clear
of all other prior or subordinate interests, including, without limitation,
Liens, Claims, rights of first refusal, deeds of trust, ground leases,
assessments, leases and tenancies, covenants, conditions, restrictions,
easements or other encumbrances, and free of encroachments onto or off of the
Leased Real Property, except for (x) easements, covenants, restrictions and
similar encumbrances that do not and could not reasonably be expected to
materially interfere with the use of the Leased Real Property as currently used
and improved, and (y) minor encroachments that do not and could not reasonably
be expected to materially adversely affect the value or use of the Leased Real
Property as currently used and improved and that could be removed without
material cost, and except for matters set forth on Schedule 3.6. Except as set
------------
forth on Schedule 3.6, there are no material defects in the physical condition
------------
of any improvements constituting a part of the Owned Real Property or Leased
Real Property, including, without limitation, structural elements, mechanical
systems, roofs or parking and loading areas, and all of such improvements are in
good operating condition and repair, have been well maintained and are free from
infestation by rodents or insects. Except as set forth on Schedule 3.6, none of
------------
the Owned Real Property or Leased Real Property is subject to special flood or
mudslide hazards or within the 100 year flood plain. All water, sewer, gas,
electric, telephone, drainage and other utilities required by law or necessary
for the current or planned operation of the Owned Real Property or Leased Real
Property have been installed and connected pursuant to valid permits, and are
sufficient to service the Owned Real Property or Leased Real Property. Except as
set forth on Schedule 3.6, Sellers have received no notice from any governmental
------------
authority of any violation of any law, ordinance, regulation, license, permit or
authorization issued with respect to any of the Owned Real Property or Leased
Real Property that has not been corrected heretofore, and no such violation
exists which could have an adverse effect on the operation or value of any of
the Owned Real Property or Leased Real Property. All improvements constituting
part of the Owned Real Property or Leased Real Property have been completed and
are now in compliance in all material respects with all applicable laws,
ordinances, regulations, licenses, permits and authorizations, and there are
presently in effect all licenses, permits and authorizations required by law,
ordinance, or regulation. Except as set forth on Schedule 3.6, Sellers have
------------
received no notice of any pending or threatened real estate tax deficiency or
reassessment or condemnation of all or any portion of any of the Owned Real
Property or Leased Real Property.
23
<PAGE>
3.7 Intellectual Property.
---------------------
(a) Schedule 1.1(n) is an accurate and complete list of all of the
---------------
Intellectual Property. All of such Intellectual Property will be owned by
Sellers as of the Closing Date free and clear of all Liens, Claims and rights of
first refusal or will be duly licensed for use by Sellers except as set forth in
Schedule 1.1(n). Except as set forth on Schedule 1.1(n), at and as of the
- --------------- ---------------
Closing Date and subject to Bankruptcy Court approval, none of the Intellectual
Property will be the subject of any pending adverse Claim, or to the knowledge
of Sellers, any threatened or potential Claim or infringement. Except as set
forth on Schedule 1.1(n), the products Sellers manufacture or which are produced
---------------
by or in connection in any way with the operation of the Business, or which the
Business sells, do not, and any process, method, part, design or material it
employs, or the marketing and use by the Business of any such product or any
service does not, infringe any intellectual property of another Person, and
Sellers have not received any notice contesting their right to use any
Intellectual Property now used by them in connection in any way with the
Business or the operation thereof. Except as set forth on Schedule 3.7, Sellers
------------
have not granted any license in respect of any Intellectual Property. Sellers
have taken all commercially reasonable actions necessary to maintain the
Intellectual Property, including the use and practice thereof, and any and all
registrations with respect to the Intellectual Property except where the failure
to take any such action could not reasonably be expected to have a Material
Adverse Effect. In the reasonable opinion of Sellers, they own or possess
adequate rights in and to all Intellectual Property necessary to conduct the
Business as presently conducted by Sellers.
(b) Except as set forth on Schedule 3.7, Sellers own the AWC Mark as
------------
of the Closing Date free and clear of all encumbrances. At and as of the
Closing Date and subject to Bankruptcy Court approval, the AWC Mark will not be
the subject of any pending adverse Claim, or to the knowledge of Sellers, any
threatened or potential Claim of infringement. The products Sellers
manufacture, produce or sell using the AWC Mark do not, and any process, method,
part, design or material they employ in connection with the use of the AWC Mark,
or the marketing and use by them of any products or any services which contain
the AWC Mark do not infringe any intellectual property of another Person, and
Sellers have not received any notice contesting their right to use the AWC Mark
in any way. Except as set forth on Schedule 3.7, prior to the Closing Date,
------------
Sellers have not granted any license in respect of the AWC Mark and have taken
all commercially reasonable actions necessary to maintain the AWC Mark,
including the use and practice thereof, and any and all registrations with
respect to the AWC Mark.
3.8 Customer List. Schedule 3.8 contains a true and complete list of all
------------- ------------
customers and accounts of Sellers in respect of the Business which produced
gross sales in excess of $25,000 during any of the fiscal years ended December
31, 1995 and 1996 and the six months ended June 30, 1997. Other than as set
forth on Schedule 3.8, (i) to the best knowledge of Sellers after due inquiry,
------------
none of such customers has terminated, or materially reduced, and no such
customer has given written notice that it will terminate or materially reduce
its
24
<PAGE>
relationship with Sellers prior to the Closing, and (ii) to the best knowledge
of Sellers, such customers will continue equivalent relationships with Purchaser
subsequent to the Closing.
3.9 Suppliers. Schedule 3.9 contains a true and complete list of all
--------- ------------
suppliers of Sellers in respect of the Business which furnished products or
supplies in excess of $25,000 to Sellers during any of the fiscal years ended
December 31, 1995 and 1996 and the six months ended June 30, 1997. Other than
as set forth on Schedule 3.9, (i) to the best knowledge of Sellers after due
------------
inquiry, none of such suppliers has terminated, or materially reduced, and no
such supplier has given written notice that it will terminate or materially
reduce its relationship with Sellers prior to the Closing.
3.10 Contracts. Schedule 3.10 is a true and complete list of all material
--------- -------------
Contracts as of the date hereof relating to the Acquired Assets and/or the
Assumed Obligations. Sellers have delivered to Purchaser true and correct
copies of each listed document and a written description of each oral Contract
so listed. Schedule 3.10 includes all the material Contracts to which Sellers
-------------
are party, or to which any of the Acquired Assets or Assumed Obligations are
subject.
3.11 Employee Benefit Plan.
---------------------
(a) Except as set forth on Schedule 3.11, Sellers do not maintain or
-------------
have any liability with respect to any "employee benefit plan" (as defined in
Section 3(3) of ERISA) or any plan or fringe benefit arrangement or employment
agreement for any employee, consultant or agent which does not constitute an
employee benefit plan.
(b) No circumstance exists and there have been no acts or omissions
which have given rise or may give rise to any liability, fine, tax or other
penalty with respect to the plans, arrangements and agreements listed on
Schedule 3.11 (referred to hereinafter as "Employee Benefit Plans") for which
- ------------- ----------------------
Purchaser could be liable, except to the extent expressly assumed hereunder by
Purchaser.
(c) Except as set forth on Schedule 3.11, there are no actions, suits
-------------
or claims (other than routine claims for benefits) pending or threatened
involving any Employee Benefit Plan or the assets thereof for which Purchaser
could be liable and no facts exist which could give rise to any such actions,
suits or claims.
(d) Except as set forth on Schedule 3.11, Sellers do not have any
-------------
liability for providing any post-retirement medical or life insurance benefits
for any employee or eligible dependent that could become the liability of
Purchaser.
3.12 No Defaults or Violations. Except (i) as set forth on Schedule 3.12
------------------------- -------------
and (ii) as may occur or may have occurred as a consequence of Sellers'
compliance with the Bankruptcy Code and applicable rules (a) Sellers have not
materially breached any provision of, nor are they in material default under the
terms of, any Contract described in Section 3.10, Permit or
25
<PAGE>
Order to which they are a party or under which they have any rights or by which
they are bound and which relates to the business or operation of the Business,
the Acquired Assets and/or the Assumed Obligations (including, without
limitation, the Lease, Sellers' Purchase Orders, or Customer Orders), nor has
any event occurred nor does any condition exist which, with the giving of notice
or the passage of time or both, could constitute any such material breach or
material default, and to the knowledge of Sellers no other party to the Lease or
any such contract, commitment or agreement is in default thereunder in any
material respect and (b) Sellers are not in violation or default of, or with
respect to, any Regulation that is applicable to the Acquired Assets or the
Assumed Obligations, nor has any event occurred nor does any condition exist
which, with the giving of notice or the passage of time or both, could
constitute any such violation or breach, except for such violations or breaches
which could not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
3.13 Certain Environmental Matters. Except as disclosed on Schedule 3.13:
----------------------------- -------------
(a) neither the Business nor any of the Acquired Assets or Assumed Obligations
violates any applicable Environmental Law in effect as of the date hereof in any
material respect, and neither the Business nor any of the Acquired Assets or
Assumed Obligations is subject to any material Environmental Liabilities and
Costs; (b) Sellers have not stored or used any Contaminants at any of the Owned
Real Property or Leased Real Property or, to Sellers' best knowledge, in any
manner connected with its operation of the Business or the use of any of the
Acquired Assets, except for inventories of chemicals and raw materials which are
or were to be used in the ordinary course of business of Sellers (which
inventories have been stored or used in accordance in all material respects with
all applicable Environmental Permits and all Environmental Laws in effect as of
the date hereof); (c) Sellers have not received any notice from any Authority or
private entity advising it that any of the Owned Real Property or Leased Real
Property or the operation thereof is in violation in any material respect of any
Environmental Law in effect as of the date hereof or any applicable
Environmental Permit, or that they are or were responsible (or potentially
responsible) for the cleanup of any Contaminants at, on or beneath such
properties or assets or at, on or beneath any land adjacent thereto or in
connection with any Waste or Contamination Site, nor have Sellers filed any
notice with respect of the Business, the Acquired Assets or the Assumed
Obligations under any applicable Environmental Law in effect as of the date
hereof reporting a Release of a Contaminant into the environment; (d) neither
the Business, the Acquired Assets or the Assumed Obligations, nor the operation
thereof, is the subject of foreign, Federal, State, local or private litigation
or proceedings or judicial or administrative Claim involving a demand for
damages or other potential liability with respect to violations of Environmental
Laws in effect as of the date hereof; (e) neither Sellers, nor, to the best of
Sellers' knowledge, any current or previous owner, tenant, lessee, subtenant or
sublessee of any of the Owned Real Property or Leased Real Property or any
portion thereof, or any predecessor of the Business or of Sellers, have buried,
dumped, disposed of, spilled or released any Contaminants on, beneath or about
its properties relating to the operation of the Business or the Acquired Assets
or any property adjacent thereto that individually or in the aggregate could
result in any Material Adverse Effect; (f) Sellers and all of their present
property, assets and operations as well as their past property ("Past Property")
-------------
(defined as real property, assets and operations of Sellers which
26
<PAGE>
were owned or conducted, but are not owned or conducted as of the date hereof),
in each case, relating to the Business, the Acquired Assets or the Assumed
Obligations, are not subject to any outstanding Order from or Contract with any
Authority respecting (i) any Environmental Law, (ii) any Remedial Action, or
(iii) any Environmental Liabilities and Costs, whether arising from the Release
of a Contaminant into the environment or otherwise; (g) Sellers have not been
notified that any of Sellers' present property, assets or operations or Past
Property, in each case, relating to the Business, the Acquired Assets or the
Assumed Obligations, are the subject of any Claim by any Authority evaluating
whether any Remedial Action is needed to respond to a Release or threatened
Release of a Contaminant into the environment, which Claim is still pending as
of the date of this Agreement; (h) Sellers have not filed any notice in respect
of Sellers, or their properties, assets or operations, under any Environmental
Law indicating treatment, storage or disposal of a hazardous waste in connection
with their present property, assets and operations or their Past Property in
each case, relating to the Business, the Acquired Assets or the Assumed
Obligations; (i) no by-products of any manufacturing process or operation of the
Business, Acquired Assets or Assumed Obligations, which may constitute
Contaminants are currently stored or otherwise located at such properties or
assets except in compliance in all material respects with all applicable
Environmental Laws in effect as of the date hereof; (j) Sellers have obtained
all Environmental Permits necessary for their operations, in each case, relating
to the Business, the Acquired Assets or the Assumed Obligations, and all such
Environmental Permits are in good standing, and Sellers are in compliance in all
material respects with such Environmental Permits; and (k) Sellers have timely
filed all reports required to be filed with respect to the Business, the
Acquired Assets and the Assumed Obligations, and have generated and maintained
all required data, documentation and records, in each case, under all applicable
Environmental Laws in effect as of the date hereof with respect thereto. Solely
for purposes of this Section 3.13, any representation or warranty contained in
this Section 3.13 qualified by the words or phrases "material," "in any material
respect," "in all material respects," or "Material Adverse Effect" shall mean
that no act or omission by Sellers, or other state of facts, matters or
circumstances exist or have occurred with respect to the subject matter of any
such representation or warranty which individually or in the aggregate could
result in Losses of $100,000 or more.
3.14 Litigation. Except as disclosed in Schedule 3.14 or released or
---------- -------------
otherwise terminated as a result of either the 363 Order and the 365 Order or in
the alternative, the 1129 Order, there are no Claims pending or, to the
knowledge of Sellers, threatened, against or affecting in any way Sellers, the
Business, the Acquired Assets or the Assumed Obligations, or any officers,
directors, employees or the stockholders thereof in their capacity as such, or
any of the properties or business thereof, or relating to the transactions
contemplated by this Agreement. Except as disclosed in Schedule 3.14, Sellers
-------------
are not subject to any Order which has or may have a Material Adverse Effect.
3.15 Taxes. Except as set forth on Schedule 3.15, (i) all Taxes relating
----- -------------
to the Business have been properly determined in accordance with applicable
rules and regulations and have been paid in full on time, (ii) Sellers have duly
and timely filed all Tax Returns relating to the Business of every nature
required to be filed by it, in every jurisdiction in which
27
<PAGE>
the same may have been so required, and have paid all Taxes disclosed on such
returns, (iii) all Taxes relating to the Business of which notice has been
received or which shall accrue on or prior to the Closing Date have been paid or
shall be paid by Sellers in due course and in a timely manner, (iv) all amounts
required by law to be paid by Sellers with respect to employees' withholding
taxes relating to the Business have been paid, (v) there are no tax liens on any
Acquired Assets, except liens for Taxes not yet due, (vi) Sellers have not filed
a consent under Section 341(f)(1) of the Code, relating to collapsible
corporations, and none of the assets of Sellers is subject to such a consent;
(vii) there are no Claims pending against Sellers for past due Taxes, and
Sellers do not know of any such threatened claim or the basis for any such Claim
relating to the Business, and (viii) there are not now any matters under
discussion with any Authority with respect to any additional Taxes or
assessments relating to Sellers. Except to the extent expressly assumed
hereunder by Purchaser, Purchaser will not be liable for any of Sellers' Taxes
as a result of the consummation of the transactions contemplated by this
Agreement. None of the Acquired Assets is subject to a lease or other
arrangement pursuant to which Sellers are not entitled to depreciation
allowances under the Code and for which Sellers are taking a depreciation
allowance.
3.16 Condition of Assets. Except as disclosed on Schedule 3.16, all of the
------------------- -------------
Acquired Assets which consist of personal, owned or leased property, other than
Owned Real Property or Leased Real Property, (a) are in normal operating
condition (ordinary wear and tear excepted), (b) have been maintained in a
manner consistent with applicable law, industry standards and past practices,
and (c) are free from defects other than such minor defects as do not interfere
with the continued use thereof in the conduct of normal operations.
3.17 Brokers. Sellers have not paid or become obligated to pay any fee or
-------
commission to any broker, finder, investment banker or other intermediary in
connection with the transactions contemplated by this Agreement.
3.18 Insurance Policies. Sellers have been adequately insured with respect
------------------
to risks normally insured against, and in amounts normally carried by, companies
similarly situated and engaged in similar businesses. Sellers are current on
all insurance obligations, including, but not limited to, employee health and
accident insurance, and environmental, property, general liability, product
liability and worker's compensation insurance, as described on Schedule 3.18.
-------------
Schedule 3.18 contains a list of each insurance policy currently providing
- -------------
coverage for the assets of Sellers relating to the Business and the Acquired
Assets and a copy of each such policy has been delivered to Purchaser.
3.19 Assets Sufficient for Conduct of Business. The Acquired Assets and
-----------------------------------------
the Excluded Assets, taken together, include sufficient assets necessary for the
conduct of the Business as presently conducted by Sellers.
3.20 Products Liability. Except as set forth on Schedule 3.20, in
------------------ -------------
connection with the Business, (i) there is no Claim by or before any court or
Authority against or involving Sellers concerning any product designed,
manufactured, shipped, sold or delivered by or on behalf of
28
<PAGE>
Sellers which is pending or, to the best knowledge of Sellers, threatened,
relating to or resulting from an alleged defect in design, manufacture,
materials or workmanship of any such product, an alleged failure to warn as to
the condition or use of any such product, or an alleged breach of implied
warranties or representations made with respect to any such product, nor is
there any valid basis for any such Claim, (ii) there has not been any Occurrence
(as hereinafter defined) for the periods shown on Schedule 3.20 involving Claims
-------------
or threatened Claims in writing in excess of $10,000 in the aggregate, (iii)
there has not been any product recall, rework or post-sale warning or similar
action (collectively "Recalls") conducted with respect to any products designed,
-------
manufactured, shipped, sold or delivered by or on behalf of Sellers, or any
investigation or consideration of or decision made by Sellers concerning whether
to undertake or not undertake, any Recalls and (iv) there are no material
defects in design, manufacturing and materials or workmanship, including,
without limitation, any failure to warn, or any breach of express or implied
warranties or representations, which involve any product designed manufactured,
shipped, sold or delivered by or on behalf of Sellers. For the purposes of this
Section 3.20, the term "Occurrence" means any accident, happening or event which
occurs or has occurred or will have occurred at any time prior to the Closing
Date which is caused or allegedly caused by hazard or defect in manufacture,
design, materials or workmanship, including without limitation, any failure or
alleged failure to warn or any breach or alleged breach of express or implied
warranties or representations with respect to a product designed, manufactured,
shipped, sold or delivered by or on behalf of Sellers, which results or is
alleged to have resulted in injury or death to any person or damage to or
destruction of property (including damage to or destruction of the product
itself, except for products returned, repaired or replaced in the ordinary
course of business), or for which any person seeks consequential damages.
3.21 Labor Disputes; Compliance. Except as set forth on Schedule 3.21,
-------------------------- -------------
Sellers are not a party to or bound by any union or collective bargaining
agreement for employees associated with the Business. In connection with the
Business, Sellers have complied in all material respects with all laws relating
to the employment and safety of labor, including provisions relating to wages,
hours, benefits, collective bargaining, the occupational safety and health acts,
laws and regulations. Sellers are not liable for any arrears in wages or any
taxes or penalties for failure to comply with any of the foregoing. Except as
set forth in Schedule 3.21, there are no charges of employment discrimination or
-------------
unfair labor practices, nor are there any strikes, slowdowns, stoppages of work,
or any other concerted interference with normal operations existing, pending or,
to the knowledge of Sellers, threatened against or involving either of the
Sellers. Except as set forth on Schedule 3.21, to the best knowledge of
-------------
Sellers, no employees of the Business are represented by any labor organization
and no labor organization or group of Sellers' employees has made a demand for
recognition, filed a petition seeking a representation proceeding, or given
Sellers notice of any intention to hold an election of a collective bargaining
representative. To the knowledge of the of Sellers, except as set forth on
Schedule 3.21, there are no grievances, complaints or charges that have been
- -------------
filed against either of the Sellers under any dispute resolution procedure
(including, but not limited to, any proceedings under any dispute resolution
procedure under any collective bargaining
29
<PAGE>
agreement) that might have a Material Adverse Effect. Except as set forth on
Schedule 3.21, no arbitration or similar proceeding is pending and no claim the
- -------------
has been asserted.
3.22 Employees; Officers. Schedule 3.22 hereto lists the name and address
------------------- -------------
of each officer and employee of Sellers and consultant exclusively associated
with the Business not terminable at will by Sellers as of the date of this
Agreement whose current annual salary or aggregate annual cash compensation from
Sellers or one of their affiliates equals $50,000 or more, together with the
current job title and the aggregate annual cash compensation paid to each such
person, including a description of applicable bonus or benefit plans applicable
to such persons.
3.23 WARN Act. No circumstance exists, and there have been no acts or
--------
omissions which have given rise or may give rise to, any liability, fine, tax or
other penalty under WARN for which Purchaser could be liable.
3.24 Collectibility of Accounts Receivable. All of the Accounts Receivable
-------------------------------------
(less the reserve for bad debts set forth on the Financial Statements) are or
will be at the Closing valid and enforceable claims, fully collectible and
subject to no setoff or counterclaim. Except as set forth on Schedule 1.1(o),
---------------
Sellers have no accounts or loans receivable from any person, firm or
corporation which is affiliated with Sellers or from any director, officer or
employee of Sellers.
3.25 Inventories. Except as disclosed in Schedule 3.25, all items in
----------- -------------
Sellers' Inventories are of a quality and quantity usable and/or saleable in the
ordinary course of business at profit margins consistent with the Sellers'
experience during the fiscal year ended December 31, 1996 and the six months
ended June 30, 1997. The values of the inventories stated in the AWC Financial
Statements and any subsequent financial statements of Sellers reflect the normal
inventory valuation policies of Sellers and were determined at the lower of cost
or market in accordance with generally accepted accounting principles, practices
and methods consistently applied. Purchase commitments for raw materials and
parts are not in excess of normal requirements and none are at prices materially
in excess of current market prices. All inventory items are located on the
Owned Real Property or the Leased Real Property, except as set forth on Schedule
--------
3.25.
- ----
3.26 FDA Matters. Sellers are registered with the FDA as manufacturers of
-----------
Class I and Class II medical devices, including without limitation, wound-
management devices. Sellers are in compliance with all Regulations promulgated
or enforceable by the FDA, including the FDA's guidelines relating to the
manufacture, storage, packaging and distribution of medical products, including
without limitation, guidelines governing "good manufacturing practices," "good
laboratory practices" and promotional claims regarding health and personal care
products. Neither of the Sellers have received any notice, citation, inquiry,
warning letter, "483" letter, request for information or other communication
from the FDA in respect of any of the Acquired Assets or the Business
(collectively, "FDA Inquiries"), other than
-------------
30
<PAGE>
set forth on Schedule 3.26, and all such FDA Inquiries have been resolved by
-------------
Sellers to the satisfaction of the FDA.
3.27 Accuracy of Statements. Neither this Agreement nor any statement,
----------------------
list, certificate or other information, taken as a whole, furnished or to be
furnished by or on behalf of Sellers to Purchaser in connection with this
Agreement or any of the transactions contemplated hereby contains or will
contain any untrue statement of a material fact regarding Sellers, the Acquired
Assets, the Assumed Obligations or the business or operation of the Business, or
omits or will omit to state a material fact necessary to make the statements
regarding Sellers, the Acquired Assets, the Assumed Obligations or the business
or operation of the Business contained herein or therein, in light of the
circumstances in which they are made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers as follows:
4.1 Due Incorporation, etc. Purchaser is a corporation duly organized,
----------------------
validly existing and in good standing under the laws of Delaware, with all
requisite corporate power and authority (including necessary authorization to do
business as a foreign corporation where required) to own, lease and operate its
properties and to carry on its business as now being conducted.
4.2 Corporate Authority. Purchaser has all requisite corporate and other
-------------------
power and authority to enter into this Agreement and to carry out its
obligations under this Agreement and the Contracts and transactions contemplated
hereby and thereby. The execution, delivery and performance of this Agreement
and the Contracts and transactions contemplated hereby and thereby by Purchaser
will, by the Closing Date, have been duly authorized by all necessary corporate
action on the part of Purchaser. This Agreement and such Contracts have been
duly executed and delivered by Purchaser, to the extent a party thereto, and
constitute the legal, valid and binding obligations of Purchaser, enforceable in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
from time to time in effect that affect creditors' rights generally, and by
legal and equitable limitations on the availability of specific remedies. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provisions of the
certificate of incorporation or by-laws of Purchaser or violate any provision of
any Contract, Permit or Order to which Purchaser is a party or by which it or
any of its properties is bound.
31
<PAGE>
4.3 Consents. Subject to the satisfaction of the condition set forth in
--------
Section 8.17 hereof, no notice to, filing with, authorization of, exemption by,
or consent of any authority is required in order for Purchaser to consummate the
transactions contemplated hereby.
4.4 Financing. Subject to the satisfaction of the condition set forth in
---------
Section 8.17 hereof, Purchaser will have, at the Closing Date, sufficient funds
available to it to pay the Purchase Price. Purchaser is, and after giving
effect to the transactions contemplated hereby will be, solvent.
4.5 Brokers. Purchaser has not paid or become obligated to pay any fee or
-------
commission to any broker, finder, investment banker or other intermediary in
connection with the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF SELLERS
5.1 Implementing Agreement. Sellers agree that from the date hereof to
----------------------
the Closing Date, they will use their reasonable best efforts to fulfill their
obligations under the terms of this Agreement.
5.2 Cooperation of Sellers; Access to Information. Sellers agree that
---------------------------------------------
from the date hereof to the Closing Date, Sellers shall give Purchaser and
Purchaser's officers, directors, employees, agents or advisors (including
without limitation, attorneys, accountants, consultants, bankers and financial
advisors) (collectively, "Representatives") access during normal business hours,
---------------
without unreasonable interference with business operations, to all of the
facilities, properties, books, Contracts and records of Sellers relating to the
Business and shall make Sellers' Representatives available to Purchaser as
Purchaser shall from time to time reasonably request (upon reasonable notice).
Purchaser and its Representatives will be furnished all information concerning
the Business which Purchaser reasonably requests. Sellers shall cooperate with
all reasonable requests of Purchaser and Purchaser's Representatives in
connection with the consummation of the transactions contemplated hereby.
5.3 Preservation of Business. Sellers agree that from the date hereof
------------------------
until the Closing Date, Sellers shall use reasonable best efforts to (subject to
the requirement of the Bankruptcy Code and applicable rules thereunder) (i)
preserve intact the present business organization and personnel of the Business
and (ii) preserve the present goodwill and relationships of Sellers with respect
to the Business.
5.4 Conduct of the Business. Between the date of this Agreement and the
-----------------------
Closing Date, Sellers (other than in connection with the Reorganization Plan,
or, prior to the effective date of the Reorganization Plan, in the ordinary
course of business as debtors in possession) shall do the following, unless
Purchaser shall otherwise consent in writing:
32
<PAGE>
(a) conduct the Business only in the ordinary course consistent with
past practices, refrain from changing or introducing any method of management or
operations except in the ordinary course of business and in a manner consistent
with past practices;
(b) refrain from making any purchase, sale or disposition of any asset
or property of the Business, including any of the Acquired Assets, other than in
the ordinary course of business, from purchasing or selling any capital asset
costing more than $10,000 and from mortgaging, pledging, subjecting to a lien or
otherwise encumbering (other than to Congress Financial Corporation (New
England) ("Congress")), any of the properties or assets of the Business,
including any of the Acquired Assets;
(c) refrain from incurring or modifying any contingent liability as a
guarantor or otherwise with respect to the obligations of others relating to the
Business or the Acquired Assets;
(d) refrain from making any change in its incorporation documents, by-
laws or authorized or issued capital stock or from acquiring any securities
issued by any other business organization other than short-term investments in
the ordinary course of business;
(e) refrain from (i) declaring, setting aside or paying any dividend,
making any other distribution in respect of its capital stock, (ii) making any
direct or indirect redemption, purchase or other acquisition of its capital
stock or options with respect thereto, (iii) issuing, granting, awarding,
selling, pledging, disposing of or encumbering or authorizing the issuance,
grant, award, sale, pledge, disposition or encumbrance of any shares of, or
securities convertible or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital stock of
any class thereof or (iv) entering into any agreement or commitment with respect
to any of the foregoing;
(f) refrain from prepaying any loans, including without limitation
loans from its stockholders, officers or directors (if any), making any change
in the borrowing arrangements of the Business (other than any refinancing of
Sellers' revolving or term loan under existing credit agreements between Sellers
and Congress or Bank One of Texas, N.A.) or modifying, amending or terminating
any material contracts of the Business except in the ordinary course of
business, or waiving, releasing or assigning any material rights or claims
relating to the Business;
(g) use its best efforts to prevent any material change with respect
to its management and supervisory personnel or banking arrangements of the
Business;
(h) pay all Post-Petition Liabilities in the ordinary course of
business in a manner consistent with past practice unless they are being
disputed in good faith, and otherwise refrain from paying, discharging or
satisfying any claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise) relating to the Business, other than the
payment, discharge or satisfaction in the ordinary course of business and in a
33
<PAGE>
manner consistent with past practices of liabilities reflected or reserved
against in the Business Financial Statements or incurred since the date of the
balance sheet contained in the Business Financial Statements in the ordinary
course of business and in a manner consistent with past practices (provided that
it shall in no event prepay any indebtedness for borrowed money);
(i) use its best efforts to have in effect and maintain at all times
all insurance of the kind, in the amount and with the insurers set forth in
Schedule 3.18 or equivalent insurance with any substitute insurers approved by
- -------------
Purchaser;
(j) refrain from materially changing accounting policies or procedures
(including, without limitation, procedures with respect to the payment of
accounts payable and collection of Accounts Receivable) relating to the Business
or from making any tax election or settling or compromising any federal, state,
local or foreign income tax liability;
(k) refrain from entering into any executory agreement, commitment or
undertaking to do any of the activities prohibited by the foregoing provisions;
and
(l) maintain all Restricted Cash in a segregated account and refrain
from distributing, disposing of, pledging or otherwise encumbering or making any
payment from or of all or any portion of such Restricted Cash.
5.5 Books and Records. Sellers agree that from the date hereof to the
-----------------
Closing Date, Sellers shall maintain their books, accounts and records relating
to the Business in the usual, regular and ordinary manner, and on a basis
consistent with the Financial Statements and past practices.
5.6 Compensation. Other than in the ordinary course of business or as set
------------
forth on Schedule 5.6, (a) no increase or other material change shall be made in
------------
the compensation arrangements for any officer, director, employee, stockholder,
consultant or agent of Sellers employed at or in connection with the business or
operation of the Business from that in effect as of the date hereof, (b) no
pension or profit sharing plan, or any other employee benefit arrangement, shall
be in effect, except as listed on Schedule 3.11, and (c) Sellers shall not enter
-------------
into any agreement, arrangement or understanding relating to the employment of
any officer, director, consultant or agent of Sellers in connection with the
business or operation of the Business.
5.7 Consents and Approvals. Sellers shall use their reasonable best
----------------------
efforts to obtain all consents and approvals to the performance of their
obligations under this Agreement and the transactions contemplated hereby from
each party to any of the Assumed Obligations, together with any other necessary
consents and approvals to the performance of Sellers' obligations. Sellers shall
make all filings, applications, statements and reports to all authorities which
are required to be made prior to the Closing Date by or on behalf of Sellers or
any of its affiliates pursuant to any applicable Regulation in connection with
this Agreement and the transactions contemplated hereby. Sellers shall use
their reasonable best efforts to obtain all required
34
<PAGE>
consents and approvals (if any) to assign and transfer the Permits to Purchaser
at Closing and, to the extent that one or more of the Permits are not
transferable, to obtain replacements therefor. In the event that certain Permits
are not transferable or replacements therefor are not obtainable on or before
the Closing, but such Permits are transferable or replacements therefor are
obtainable after the Closing, Sellers shall continue to use such reasonable best
efforts in cooperation with Purchaser after the Closing as may be required to
obtain all required consents and approvals to transfer, or obtain replacements
for, such Permits after Closing and shall do all things necessary to give
Purchaser the benefits which would be obtained under such Permits. In the event
that any asset included in the Acquired Assets cannot be transferred to
Purchaser as a result of the inability of Sellers to obtain on or prior to the
Closing Date any necessary governmental approvals or third party consents,
Purchaser and Sellers shall enter into appropriate arrangements (to the extent
practicable) to provide Purchaser with the right to operate such asset with as
minimal disruption to the conduct of Purchaser's business as possible and an
appropriate portion of the Estimated Closing Purchase Price representative of
the value of such assets shall be escrowed pending receipt of such approvals.
All costs and expenses in connection with Seller's obligations under this
Section will be borne by Sellers.
5.8 No Default. Except to the extent as may occur or may have occurred
----------
as a consequence of Sellers' compliance with the Bankruptcy Code and the
applicable rules, Sellers shall not do any act or omit to do any act, or permit
any act or omission to act, which will cause a material breach of any of the
Assumed Obligations or any other Contract relating to the Business, the breach
of which would have a Material Adverse Effect.
5.9 Compliance with Laws. Sellers shall make all commercially
--------------------
reasonable efforts to comply with all Regulations applicable to the Business or
the Acquired Assets (including, without limitation, all Environmental Laws) or
as may be required for the valid and effective transfer and assignment of the
Acquired Assets and the Assumed Obligations.
5.10 No Modifications. Sellers shall not modify, amend or otherwise
----------------
alter or change any of the material terms or provisions of any of the Assumed
Obligations except to the extent permitted by Section 5.12 of this Agreement.
5.11 Bankruptcy Actions.
------------------
(a) As promptly as practicable after the date hereof, but in no
event later than July 21, 1997 (the "Sale Procedures Motion Date"), Sellers
---------------------------
will file with the Bankruptcy Court a motion, supporting papers and, in the
form attached hereto as Exhibit 5.11, a form of Order (the "Sale Procedures
------------ ---------------
Order"), seeking the Bankruptcy Court's approval nine days after the Sale
- ------
Procedures Motion Date, or the next available Bankruptcy Court date thereafter,
than August 15, 1997 (the "Sale Procedures Approval Date") of the terms of
-----------------------------
but in no event later Article VII and XI of this Agreement and both Sellers'
----------- --
and Purchaser's observance and performance of such terms during the pendency of
the Chapter 11 Cases. The Proposed Order of the Bankruptcy Court approving
the aforementioned items shall be substantially in the form attached hereto as
Schedule 5.11, and shall schedule a hearing for approval of the 363 Order
- -------------
35
<PAGE>
and the 365 Order or, as applicable, the 1129 Order for thirty (30) days after
the Sale Procedures Approval Date, or the next available Bankruptcy Court date
thereafter, but no later than September 22, 1997, or such later date as
Purchaser and Seller mutually shall agree (the "Outside Date").
------------
(b) As promptly as practicable after the date hereof, but in no event
later than July 21, 1997, Sellers will file with a Bankruptcy Court moving
papers including supporting papers and forms of proposed orders, in form and
substance reasonably satisfactory to Purchaser's counsel, seeking the Bankruptcy
Court's approval either (i) of the 363 Order and the 365 Order, as evidence of
the Bankruptcy Court's approval of this Agreement, Sellers' performance under
this Agreement and the assumption and assignment of the Contracts related to the
Business, and/or (ii) at Sellers election, an order of the Bankruptcy Court
under Section 1129 of the Bankruptcy Code providing rights and protections to
Purchaser and Cape Ann, substantially identical to those provided for in the 363
Order and the 365 Order, upon the filing of and hearings on any amended plan and
amended disclosure statement proposed by Sellers, and upon due notice pursuant
to Rule 2002(b) of the Federal Rules of Bankruptcy Procedure (the "1129 Order").
----------
(c) As promptly as practicable, Sellers will provide Purchaser with
copies of all motions, applications, and supporting papers prepared by Sellers
in connection with this Agreement (including forms of Orders and notices to
interested parties) prior to the filing thereof in the Chapter 11 Cases.
5.12 Approval of Certain Contracts. Without the prior consent of
-----------------------------
Purchaser, other than in the ordinary course of business consistent with past
practices, Sellers shall not enter into any Contract relating to the Business
which either (i) requires a payment in excess of, or a series of payments which
in the aggregate exceed, $25,000 or (ii) has a term of, or requires the
performance of any obligations by Sellers or their assignee over a period in
excess of, one year, unless it its terminable by Sellers and their assignee
without penalty or premium upon not more than 30 days' notice.
5.13 Referral of Business Opportunities. From and after the Closing
----------------------------------
Date, Sellers will refer to Purchaser all incoming business inquiries, customer
orders and other matters related to the Business, the Acquired Assets and the
Assumed Obligations including, without limitation, all customer orders received
by Sellers via computer or other automated inventory control systems, and will
timely deliver to Purchaser such customer orders in printed form for use by
Purchaser. To the extent customer orders are delivered to third party electronic
data interchange providers, such providers will be instructed to transmit such
orders to Purchaser or Purchaser's providers. Electronic delivery, if used,
shall be by such method as shall be mutually agreed.
5.14 Public Announcements. Prior to the Closing Date, without the prior
--------------------
written approval of the Purchaser or the Sellers, as the case may be, which
approval shall not be unreasonably withheld, no party hereto will issue,
36
<PAGE>
or permit any agent or affiliate of it to issue, any press releases or otherwise
make, or cause any agent or affiliate of it to make, any public statements with
respect to this Agreement and the transactions contemplated hereby, except as
contemplated by this Agreement or where such release or statement is required by
law or under the rules and regulations of the Nasdaq Stock Market (or any
national stock exchange on which the shares of such party are listed). In each
case to which such exception applies, the releasing party will allow the other
parties to review and comment on such release or statement prior to releasing or
make the same.
5.15 Interim Financial Information. Sellers will supply Purchaser with
-----------------------------
the Interim Business Financial Statements through the Closing Date as promptly
as practicable following the close of the period to which they relate.
5.16 No Solicitation or Negotiation. Except as provided in Section 7.1,
------------------------------
each of the Section 5.16 Parties represents and warrants that it has terminated
all discussions and negotiations relating to, or that may reasonably be expected
to lead to, any Acquisition Proposal (as defined below). From and after the
date hereof until the termination of this Agreement, none of the Section 5.16
Parties shall, nor shall any of them authorize or permit any of their respective
officers, directors, employees, agents, advisors or representatives to, directly
or indirectly, except in compliance with the Sale Procedures Order, (i) solicit,
initiate or encourage the submission of, any inquiries, proposals or offers from
any Person or entity relating to an Acquisition Proposal, (ii) enter into any
Contract with respect to any Acquisition Proposal, (iii) enter into, engage in,
or participate or continue in, any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes, or
could lead to, any Acquisition Proposal, provided, however, that Sellers may
respond to inquiries from any person seeking to make an Acquisition Proposal
pursuant to the Sale Procedures Order, or (iv) respond to any unsolicited
inquiry or proposal made by any Person or entity that constitutes, or could lead
to, any Acquisition Proposal, provided, however, that from and after the entry
of the Sale Procedures Order, the Section 5.16 Parties may provide necessary
information to any Person who has submitted any unsolicited inquiry or proposal
that constitutes, or could lead to any Acquisition Proposal, and may provide
such notices as the Bankruptcy Court may direct in connection with the actions
contemplated by Sections 5.11, 7.1 and 11.2 hereof.
In the event that any of the Section 5.16 Parties receives any inquiry,
proposal or offer in any way relating to an Acquisition Proposal, such Section
5.16 Party shall promptly notify Purchaser thereof, the terms and conditions
thereof and the identity of the Person or entity making such inquiry, proposal
or offer.
As used herein, the term "Acquisition Proposal" shall mean any proposed or
--------------------
actual transaction or series of transactions of any of the types specified below
between Sellers and one or more Third Parties (other than a stockholder or
creditor of Sellers acting in its capacity as a stockholder or creditor,
respectively, of Sellers pursuant to Sellers' reorganization plan to be filed
with the Bankruptcy Court on July 21, 1997, as it may be amended from time to
time to
37
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provide for substantially similar treatment with respect to the Acquired
Assets (the "Reorganization Plan"): (i) any merger, consolidation or similar
-------------------
transaction involving all or substantially all of the Business or the Acquired
Assets, (ii) any sale, lease or other disposition, directly or indirectly, by
merger, consolidation, share exchange or otherwise, of all or substantially all
of the Business or the Acquired Assets (except with respect to dispositions of
Acquired Assets permitted by Section 5.4 hereof), (iii) any issue, sale or other
disposition of (including by way of merger, consolidation, share exchange or any
similar transaction) securities (or options, rights or warrants to purchase, or
securities convertible into, such securities) representing 5% or more of the
votes attached to the outstanding securities of AWC or Weaver, (iv) any
transaction in which any person shall acquire beneficial ownership (as such term
is defined in Rule 13d-3 under the Exchange Act), or the right to acquire
beneficial ownership, or any "group" (as such term is defined under the Exchange
Act) shall have been formed which beneficially owns or has the right to acquire
beneficial ownership of, 5% or more of the outstanding shares of AWC, (v) any
recapitalization, restructuring, liquidation, dissolution, or other similar type
of transaction with respect to AWC or Weaver, or (vi) any transaction which is
similar in form, substance or purpose to any of the foregoing transactions;
provided, however, that the term "Acquisition Proposal" shall not include the
transactions contemplated by this Agreement.
5.17 Notice of Developments. Sellers will give prompt written notice to
----------------------
Purchaser of any development that could reasonably be expected to have a
Material Adverse Effect or that would affect the ability of Sellers to
consummate the transactions contemplated by this Agreement. No disclosure by
Sellers pursuant to this Section 5.17, however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
5.18 Break-up Fee and Expenses. In connection with the bankruptcy
-------------------------
actions required by Section 5.11 hereof, Sellers will advocate the approval of
the Bankruptcy Court of the payment of the Break-up Fee and Expenses and the
right of first refusal granted to Purchaser pursuant to the terms and provisions
of Article VII hereof.
-----------
5.19 Compliance with WARN Act. Sellers will comply with all applicable
------------------------
provisions of the WARN Act and the regulations promulgated thereunder. Sellers
expressly assume all obligations and liabilities under the WARN Act that may
arise out of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby, including, without limitation, Purchaser's
obligation, if any, to deliver notices to third parties. Notwithstanding the
foregoing, Sellers shall have no liability for actions or omissions made by
Purchaser after the Closing Date.
5.20 Environmental Responses. From and after the Closing Date, Sellers
-----------------------
will, at their sole cost and expense, respond to any and all inquiries and/or
other correspondence from any governmental, regulatory or administrative body,
agency, subdivision or authority, any court or judicial authority, any public,
private or industry regulatory authority, whether Federal, state or local or
otherwise, or any Person lawfully empowered by any of the foregoing
38
<PAGE>
to enforce or seek compliance with any Regulation, including without limitation,
the U.S. Environmental Protection Agency, which relate in any manner to Sellers'
direct or indirect handling, transportation or disposal of any Contaminants at,
inter alia, the Barceloneta Landfill located in Barceloneta, Puerto Rico, or
- ----- ----
any of the Owned Real Property.
5.21 Lease Amendment. Sellers shall use their reasonable best efforts to
---------------
assist Purchaser in its efforts to enter into an amendment to the Lease on or
prior to August 1, 1997 on terms and conditions reasonably satisfactory to
Purchaser (the "Lease Amendment").
5.22 Time-Warner/United Features License Assignments. Sellers shall use
-----------------------------------------------
their reasonable best efforts to effect the assignment of the Time-Warner/United
Features Licenses to Purchaser on terms and conditions substantially similar to
the terms and conditions currently existing under the Time-Warner/United
Features Licenses (the "Time-Warner/United Features License Assignments") and
-----------------------------------------------
shall use their reasonable best efforts to effect the sale, assignment, transfer
and delivery to Purchaser of all of the assets described in Section 1.1(l)
containing any of the Time-Warner/United Features Characters, such that
Purchaser shall acquire all right, title and interest in and to such assets,
free and clear of any Liens or other encumbrances, other than those which may
arise under the Time-Warner/United Features Licenses and the Time-Warner/United
Features License Assignments.
5.23 Capitalized Lease Obligations. Sellers shall pay off and discharge
-----------------------------
in full all obligations under all capitalized leases set forth on Schedule 5.23.
-------------
5.24 Slow Moving Inventory Matters. Sellers shall prepare and deliver to
-----------------------------
Purchaser upon Purchaser's reasonable request, and Purchaser shall cooperate
with Sellers in that endeavor, Appendix A listing New SKUs/Items.
----------
5.25 Exchange Act Filings. In connection with any filing to be made by
--------------------
Purchaser under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended (collectively, the "Federal Securities Laws"),
-----------------------
before or after the Closing Date, Sellers shall (i) to the extent not already in
Purchaser's possession, provide Purchaser such financial and other information
and documents relating to the Business as may be reasonably available to Sellers
as Purchaser may request, and (ii) generally cooperate with Purchaser and its
Representatives in connection therewith; provided, however, that in the event
that Purchaser determines, in its sole discretion after consulting with its
Representatives and Sellers and their Representatives, that the provisions of
the Federal Securities Laws require inclusion in any such filing audited
financial information of the Business relating to the purchase of the Business
by Purchaser hereunder that is not presently available to Sellers, Purchaser and
Sellers shall mutually select a national accounting firm to assist Purchaser and
Sellers in the preparation and filing of such audited financial information, and
the fees and expenses of such firm shall be shared equally by Purchaser and
Sellers, provided that in no event shall Sellers be obligated to pay more than
$50,000 of such fees and expenses.
39
<PAGE>
ARTICLE VI
COVENANTS OF PURCHASER
6.1 Implementing Agreement. Purchaser agrees that from the date hereof to
----------------------
the Closing Date, it will use its reasonable efforts to secure the financing
contemplated by Section 8.17 and fulfill its obligations under the terms of this
Agreement.
6.2 Consents and Approvals. Purchaser shall use its reasonable best
----------------------
efforts to obtain all consents and approvals to the performance of its
obligations under this Agreement and the transactions contemplated hereby.
Purchaser shall make all filings, applications, statements and reports to all
authorities which are required to be made prior to the Closing Date by or on
behalf of Purchaser or any of its affiliates pursuant to any applicable
Regulation in connection with this Agreement and the transactions contemplated
hereby.
6.3 Access to Information. Purchaser agrees that from the Closing Date
---------------------
until the period set forth below, Purchaser shall give Sellers and Sellers'
representatives access during normal business hours, without unreasonable
interference with business operations, to all of the books, records and
personnel of Purchaser relating to the Business which were transferred to
Purchaser pursuant to the terms of this Agreement for the purpose of winding up
Sellers' business and affairs; provided, that prior to obtaining access to such
books, records and personnel Sellers deliver to Purchaser a written statement to
the effect that such information will only be used by Sellers and/or Sellers'
representatives (i) to perform Sellers' obligations under Section 5.20, or (ii)
to resolve any dispute Seller may have with a third party, including Purchaser,
and Sellers agree to pay for all reasonable costs incurred by Purchaser in
connection with its compliance with this Section 6.3. Purchaser shall permit
Sellers and Sellers' representatives such access for a period of three (3) years
after the Closing Date except for information with respect to (i) employee
benefit matters, tax matters and product liability matters, for which access
shall be permitted until the expiration of the applicable statute of limitations
and (ii) environmental matters, for which access shall be permitted for a period
of six (6) years after the Closing Date; provided each such period shall be
extended for so long as any dispute subject to Article XII is unresolved.
-----------
6.4 Assumed Obligations. Subject to Section 1.4 hereof and the
-------------------
consummation of the transactions contemplated by Article X hereof, Purchaser
---------
agrees to assume and perform the Assumed Obligations.
6.5 Payment of Purchase Price. Subject to the consummation of the
-------------------------
transactions contemplated by Article X hereof, Purchaser agrees to pay the
---------
Estimated Closing Purchase Price on the Closing Date.
6.6 Silent Nite/Airmax Matters. Purchaser shall, on or prior to the
--------------------------
Closing, provide written notice to Sellers as to whether Purchaser plans to
manufacture, produce, market or sell any of the products known as Silent Nite or
Airmax or any other nasal dilating
40
<PAGE>
products of the same type as those manufactured, produced, marketed or sold in
the Business by Sellers on or prior to the Closing.
6.7 Accounts Receivables. From and after the Closing Date until the date
--------------------
which is 150 days after the Closing Date (the "Outside Collection Date"),
-----------------------
Purchaser shall use reasonable efforts to pursue the collection of all Accounts
Receivables, but shall in no event be required to resort to litigation with
respect to such collection. Promptly following the Outside Collection Date,
Purchaser shall execute and deliver to Sellers such documentation as is
necessary to assign to Sellers any Accounts Receivables that remain uncollected
as of the Outside Collection Date. From and after the Outside Collection Date,
Purchaser shall have no obligation to pursue collection of Accounts Receivables.
6.8 Lease Amendment. Purchaser shall use its reasonable best efforts to
---------------
enter into the Lease Amendment on or prior to August 1, 1997.
ARTICLE VII
RIGHT OF FIRST REFUSAL
7.1 Overbid Procedures and Right of First Refusal. A Third Party
---------------------------------------------
interested in acquiring the assets of the Business may submit to Sellers an
Acquisition Proposal in accordance with the provisions of the Sale Procedures
Order and this Section 7.1. Such Acquisition Proposal must comply with the Sale
Procedures Order, which shall provide, among other things, that parties
intending to submit Acquisition Proposals must do so not less than five (5) days
prior to the hearing to approve this Agreement, whether such hearing is held in
connection with the confirmation hearing in the Chapter 11 Cases, or otherwise
(the "363 Hearing"). A Third Party's failure to submit a qualified Acquisition
-----------
Proposal shall disqualify that Third Party from bidding at any auction for the
Acquired Assets and the Assumed Obligations or at the 363 Hearing. Upon receipt
of an Acquisition Proposal, Sellers will promptly notify Purchaser and indicate
in such notice the identity of the offeror and a complete and accurate
description of the material terms thereof. Two (2) hours prior to the time of
the 363 Hearing (or at 4:00 P.M., Eastern Time, on the day preceding the date of
the 363 Hearing in the event that the 363 Hearing is scheduled for earlier than
11:00 A.M. Eastern Time), Purchaser and all Third Parties submitting Acquisition
Proposals shall attend an overbid auction to be conducted by Sellers at the law
offices of Young, Conaway, Stargatt & Taylor, 11th Floor, Rodney Square North,
Wilmington, Delaware 19801 (the "Overbid Auction"). Notwithstanding the
---------------
foregoing, no Overbid Auction shall take place if no Third Party has submitted
timely an Acquisition Proposal which complies with the terms of this Agreement
and which in Sellers' sole and absolute discretion (but not in any manner
inconsistent with the Bankruptcy Court proceedings) is superior to the
Purchaser's Acquisition Proposal. Only Third Parties that have made an
Acquisition Proposal may attend the Overbid Auction for the purpose of improving
upon their respective Acquisition Proposals. Purchaser also may attend the
Overbid Auction at which it may, in its sole and absolute discretion, improve
the terms of
41
<PAGE>
this Agreement (a "Topping Offer"). Purchaser and any Third Party
-------------
submitting an Acquisition Proposal may improve upon their respective offers to
Sellers at any time prior to the conclusion of the Overbid Auction, in
increments of at least $100,000 in consideration. The Overbid Auction shall be
deemed concluded in Sellers' discretion, and in any event no later than the time
scheduled for the commencement of the 363 Hearing. Neither Purchaser nor any
Third Party shall be entitled to improve its Acquisition Proposal after the
conclusion of the Overbid Auction without the Bankruptcy Court's express
approval. If upon the conclusion of the Overbid Auction, Purchaser has failed
to make a Topping Offer or a Topping Offer which Sellers determine in their sole
and absolute discretion (but not in any manner inconsistent with the Bankruptcy
Court proceedings) to have been equal to or better than any other Acquisition
Proposal as may have been amended prior to the conclusion of the Overbid Auction
(taking into account any Break-up Fee and reimbursement of Expenses), Sellers
may enter into a definitive agreement with the successful overbidding Third
Party, and Purchaser will be entitled to payment of the Break-up Fee, and the
Expenses shall be promptly reimbursed subject to the terms and conditions set
forth in Section 11.2 of this Agreement. In the event Sellers determine in
their sole and absolute discretion (but not in any manner inconsistent with the
Bankruptcy Court proceedings) that the last offer submitted by Purchaser is
equal to or better than the last offer submitted by all Third Parties at the
Overbid Auction (taking into account any Break-up Fee and Expenses), then within
three (3) business days following the conclusion of the Overbid Auction,
Purchaser and Sellers shall enter into an amendment to this Agreement to reflect
Sellers' acceptance of Purchaser's Topping Offer. If necessary, Purchaser and
Sellers shall consent to a brief continuance of the Outside Date and the 363
Hearing (without any further right to overbidding by any third party) in order
to complete the documentation of a successful Topping Offer.
Notwithstanding anything in this Agreement to the contrary, Sellers may
only enter into an Alternative Transaction which (i) is in writing, (ii)
provides for the acquisition of all or substantially all of the assets of the
Business, but in no event less than the Acquired Assets, (iii) is for a
consideration of at least $41,800,000, subject to adjustment as provided in
Section 2.1 and Section 2.2, (iv) contains terms and conditions no less
favorable to Sellers than the terms and conditions contained in this Agreement,
and assumes at least the Assumed Obligations, (v) provides for a closing date no
later than September 30, 1997, (vi) includes evidence satisfactory to Sellers in
their sole and absolute discretion (but not in any manner inconsistent with the
Bankruptcy Court proceedings) establishing that the Third Party is financially
capable of timely performing in the event it is the successful bidder and (vii)
includes a minimum cash deposit in an amount of at least $400,000 (an additional
deposit may be requested by the Sellers in their sole discretion), which amount
shall be forfeited if the Third Party both (x) is the successful overbidder at
the 363 Hearing and (y) fails to consummate a transaction with the Sellers on or
before September 30, 1997. In addition, prior to disclosing information not
prohibited from being disclosed by Sellers pursuant to the terms and conditions
of this Agreement or otherwise entering into any negotiations with a Third Party
not prohibited pursuant to the terms and conditions of this Agreement, Sellers
shall require such Third Party to execute a confidentiality agreement
substantially similar to the one executed by Purchaser.
42
<PAGE>
7.2 Survival. Following the execution of any amendments to this Agreement
--------
pursuant to Section 7.1 above, unless specifically amended in such amendments,
the provisions of this Article VII shall remain in effect and the receipt by
-----------
Sellers of any other offers, proposals or inquiries relating to any Acquisition
Proposal shall be subject to the provisions of this Article VII.
-----------
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF PURCHASER
The obligations of Purchaser under this Agreement are, at the option of
Purchaser, subject to satisfaction of the following conditions precedent on or
before the Closing Date.
8.1 Warranties True as of Both Present Date and Closing Date. Each of the
--------------------------------------------------------
representations and warranties of Sellers contained herein shall be true and
correct on and as of the date of this Agreement, and shall also be true and
correct in all material respects (except for such changes as are contemplated by
the terms of this Agreement) on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date.
8.2 Compliance with Agreement and Covenants; Certificates. Sellers shall,
-----------------------------------------------------
in all material respects, have performed all of their respective obligations and
agreements and complied with all of their covenants contained in this Agreement
to be performed and complied with by them on or prior to the Closing Date; and
Sellers shall have delivered to Purchaser certificates of good standing for each
of Sellers and a written statement, dated as of the Closing Date, from an
authorized officer of each of AWC and Weaver as to compliance with Section 8.1
and this Section 8.2.
8.3 Bankruptcy Conditions.
---------------------
(a) (i) The 363 Order and the 365 Order and/or (ii) an 1129 Order
shall have been entered by the Bankruptcy Court in accordance with this
Agreement. Any motion for rehearing or reconsideration or the 363 Order, the
365 Order or the 1129 Order shall have been denied or withdrawn. The time
allowed for appeals of the 363 Order, the 365 Order or the 1129 Order shall have
expired without any appeal having been taken or, if the 363 Order, the 365 Order
or the 1129 Order shall have been appealed, no stay shall be in effect.
(b) Nothing in this Section 8.3, or any other section of this
Agreement, shall preclude Sellers and Purchaser from consummating the
transactions contemplated herein if Purchaser, in its sole discretion, waives
the requirement that the 363 Order, the 365 Order, the 1129 Order or any other
order be final orders. No notice of such waiver of this or any other condition
to Closing need to be given except to Sellers or Purchaser, as explicitly
required in this Agreement, it being the intention of the parties hereto that
Purchaser shall be entitled to, and is not waiving, the protection of Section
363(m), or as the case may be Section 1129 of the
43
<PAGE>
Bankruptcy Code, the mootness doctrine and any similar statute or body of law if
the closing occurs in the absence of final orders.
8.4 [Intentionally Omitted].
8.5 No Material Adverse Change. There shall not have occurred a
--------------------------
Material Adverse Change, and no event shall have occurred which, in the
reasonable, good faith judgment of Purchaser may have a Material Adverse Effect.
Sellers shall have delivered to Purchaser a written statement, dated as of the
Closing Date, from an authorized officer of each of AWC and Weaver to the effect
that, to the best knowledge of such officers after due inquiry, there has not
occurred a Material Adverse Change, and no event has occurred which, in the
reasonable, good faith judgment of Sellers may have a Material Adverse Effect.
8.6 Business and Legal Review. Purchaser shall have completed its own
-------------------------
business, legal, financial and accounting review of Sellers and the Business,
and their operations, finances, records and affairs, which review shall be
satisfactory in all material respects to Purchaser in its sole discretion.
Notwithstanding anything set forth in this Agreement to the contrary,
Purchaser's rights under this Section 8.6 shall terminate on, and have no
further force and effect subsequent to, August 15, 1997. Purchaser shall have
the right to terminate this Agreement pursuant to this Section 8.6 by delivering
written notice of such effect to AWC on or prior to August 15, 1997.
8.7 Actions or Proceedings. No action or proceeding shall have been
----------------------
instituted or threatened by or before any governmental or judicial authority
which would enjoin, restrain or prohibit, or might result in substantial Losses
in respect of, this Agreement or the complete consummation of the transactions
as contemplated by this Agreement, including, among other things, the
integration of the operation of the Business with those of Purchaser and its
affiliates or which would, in the reasonable judgment of Purchaser, make it
inadvisable to consummate such transactions, and no court order shall have been
entered in any action or proceeding instituted by any party which enjoins,
restrains or prohibits this Agreement or the complete consummation of the
transactions as contemplated by this Agreement including, among other things,
the integration of the operation of the Business with those of Purchaser and its
affiliates.
8.8 Other Agreements. Each of the Sellers' Escrow Agreement and Lease
----------------
Assignment Documents shall have been fully executed and delivered by the parties
and will be in full force and effect.
8.9 Physical Count. Sellers and Purchaser and/or their respective
--------------
Representatives shall have completed to Purchaser's reasonable satisfaction a
complete and accurate physical count and inspection of the Acquired Assets.
8.10 Other Documents. Sellers will furnish Purchaser with such other and
---------------
further documents and certificates, including certificates of Sellers' officers
and others, as Purchaser
44
<PAGE>
shall reasonably request to evidence compliance with the conditions set forth in
this Agreement.
8.11 Equipment and Vehicles Title. Sellers shall have discharged,
----------------------------
terminated or otherwise removed to the satisfaction of Purchaser all leases
(other than those assumed by Purchaser), conditional sales contracts or any
other type of rental arrangements relating in any manner to the Equipment and
Vehicles.
8.12 Bankruptcy Orders. The Sale Procedures Order, the 363 Order, the
-----------------
365 Order and/or the provisions of the 1129 Order shall be substantially in the
forms set forth in Exhibit 5.11 and Exhibit 7.1(a), respectively or otherwise
------------ --------------
reasonably acceptable to Purchaser.
8.13 Consents and Approvals; Permits. Sellers shall have delivered (a)
-------------------------------
consents and approvals (which may be included in or covered by binding orders
under the 365 Order and/or the 1129 Order) in form and substance to the
reasonable satisfaction of Purchaser, from (i) each party to any of the Assumed
Obligations, (ii) any Authority whose consent and approval is required for the
consummation of the transactions contemplated hereby, including but not limited
to, the transfer and assignment to Purchaser of the Permits, and (iii) any
lenders, lessors, vendors, vendees or other persons or entities whose consent or
approval is required for this transaction, and (b) certified resolutions of each
Sellers' Board of Directors and the sole stockholder of Weaver.
8.14 Non-Compete and Confidentiality Obligations. On or prior to July
-------------------------------------------
30, 1997, the Article XIV Parties other than Sellers shall have executed this
Agreement with respect to their rights and obligations under Article XIV only
and shall have delivered this Agreement, as so executed, to Purchaser.
8.15 Lease Amendment. On or before August 1, 1997, Purchaser shall have
---------------
entered into the Lease Amendment on terms and conditions reasonably satisfactory
to Purchaser. Notwithstanding the foregoing, in the event that Purchaser has
not entered into the Lease Amendment on terms and conditions reasonably
satisfactory to Purchaser on or prior to August 1, 1997, this Agreement shall
terminate pursuant to clause (ii) of the last sentence of Section 11.1, unless
Purchaser determines to extend the period of time during which Purchaser shall
have entered into the Lease Amendment.
8.16 Time-Warner/United Features License Assignments. Sellers shall have
-----------------------------------------------
entered into the Time-Warner/United Features License Assignments to license on
terms substantially similar to those terms currently existing under the Time-
Warner/United Features Licenses and shall have effected the sale, assignment,
transfer and delivery to Purchaser of all of the assets described in Section
1.1(l) containing any of the Time-Warner/United Features Characters, such that
Purchaser shall acquire all right, title and interest in and to such assets,
free and clear of any Liens or other encumbrances, other than those which may
arise under the Time-Warner/United Features License and the Time-Warner/United
Features License Assignments.
45
<PAGE>
8.17 Financing. On or before August 1, 1997, Purchaser shall have
---------
received a commitment letter of its lender or other bank or financial
institution satisfactory to Purchaser to provide debt financing on terms and
conditions satisfactory to Purchaser. Purchaser shall, on or before August 1,
1997, notify Sellers of the receipt thereof and whether any notice to, filing
with, authorization of, exemption by, or consent of any authority is required in
order for Purchaser to consummate the transactions contemplated hereby in
connection with receipt of the financing commitment. Notwithstanding the
foregoing, in the event that Purchaser has not received such a commitment on or
before August 1, 1997, this Agreement shall terminate pursuant to clause (i) of
the last sentence of Section 11.1, unless Purchaser and Sellers mutually agree
in writing to extend the period of time during which Purchaser shall obtain such
a commitment letter.
8.18 Capitalized Lease Obligations. Concurrently with the Closing,
-----------------------------
Sellers shall have paid off and discharged in full all obligations under all
capitalized leases set forth on Schedule 5.23.
-------------
8.19 Weaver Environmental Matters. Purchaser shall be reasonably
----------------------------
satisfied, as to Sellers' compliance with Sellers' obligations under Section
13.2 that are to be performed prior to the Closing, and any remediation
agreement entered into or to be entered into by Sellers' or other approval
obtained or to be obtained by Sellers in connection therewith shall be
reasonably satisfactory to Purchaser.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
The obligations of Sellers under this Agreement are, at the option of
Sellers, subject to the satisfaction of the following conditions precedent on or
before the Closing Date:
9.1 Warranties True as of Both Present Date and Closing Date. The
--------------------------------------------------------
representations and warranties of Purchaser contained herein shall be true and
correct on and as of the date of this Agreement, and shall also be true in all
material respects (except for such changes as are contemplated by the terms of
this Agreement) on and as of the Closing Date with the same force and effect as
though made by Purchaser on and as of the Closing Date.
9.2 Compliance with Agreements and Covenants; Certificates. Purchaser
------------------------------------------------------
shall, in all material respects, have performed all obligations and agreements
and complied with all covenants contained in this Agreement, to be performed and
complied with by it on or prior to the Closing Date; and Purchaser shall have
delivered to Sellers a written statement, dated as of the Closing Date, from an
authorized officer of Purchaser as to compliance, to the best knowledge of such
officer after due inquiry with Section 9.1 and this Section 9.2.
46
<PAGE>
9.3 Actions or Proceedings. No action or proceeding by any authority
----------------------
shall have been instituted or threatened by or before any governmental or
judicial authority which would enjoin, restrain or prohibit, or might result in
substantial Losses in respect of, this Agreement or the complete consummation of
the transactions as contemplated by this Agreement (including any failure to
obtain any required approval from the NJDEP with respect to the matters
addressed in Section 13.2 hereof), or which would, in the reasonable judgment of
Sellers, make it inadvisable to consummate such transactions, and no court order
shall have been entered in any action or proceeding instituted by any party
which enjoins, restrains, or prohibits this Agreement or the complete
consummation of the transactions as contemplated by this Agreement.
9.4 Bankruptcy Conditions.
---------------------
(a) Either (i) the 363 Order and 365 Order and/or (ii) the 1129
Order shall have been entered by the Bankruptcy Court. Any motion for rehearing
or reconsideration of the 363 Order, the 365 Order or the 1129 Order shall have
been denied or withdrawn. The time allowed for appeals of the 363 Order, the 365
Order or the 1129 Order shall have expired without any appeal having been taken
or, if the 363 Order, the 365 Order or the 1129 Order shall have been appealed,
no stay shall be in effect.
(b) Nothing in this Section 9.4, or any other section of this
Agreement, shall preclude Sellers and Purchaser from consummating the
transactions contemplated herein if Purchaser, in its sole discretion, waives
the requirement that the 363 Order, the 365 Order, the 1129 Order or any other
order be final orders. No notice of such waiver of this or any other condition
to Closing need to be given except to Sellers or Purchaser, as explicitly
required in this Agreement, it being the intention of the parties hereto that
Purchaser shall be entitled to, and is not waiving, the protection of Section
363(m), or as the case may be Section 1129 of the Bankruptcy Code, the mootness
doctrine and any similar statute or body of law if the closing occurs in the
absence of final orders.
9.5 Other Documents. Purchaser will furnish Sellers with such other and
---------------
further documents and certificates, including certificates of Purchaser's
officers and others, as Sellers shall reasonably request to evidence compliance
by Purchaser with its conditions set forth in this Agreement.
ARTICLE X
CLOSING
10.1 Closing. The Closing shall take place at the offices of Goodwin,
-------
Procter & Hoar LLP, Exchange Place, Boston, Massachusetts at 10:00 A.M. Eastern
Time on the fifth business day after the conditions set forth in Articles VIII
-------------
and IX hereof have been satisfied or waived by the party entitled to do so, or
--
such other place or date as mutually agreed by the parties.
47
<PAGE>
10.2 Deliveries by Sellers. At the Closing, Sellers will deliver the
---------------------
following to Purchaser: (a) such deeds, bills of sale, assignments, releases,
consents to assignments and other instruments of sale, conveyance, assignment,
assumption and transfer satisfactory in form and in substance to Purchaser and
its counsel as may reasonably be required in order to convey to Purchaser all of
Sellers' rights, title and interest in and to the Acquired Assets and to assign
to Purchaser all of the Assumed Obligations in the manner provided for in this
Agreement; (b) originals of, and duly executed assignments of, all of the
following: (i) the Lease; (ii) the Sellers' Purchase Orders; and (iii) the
Customer Orders; (c) copies (or if available, originals) of all of the Permits
related to the Acquired Assets, the Assumed Obligations and the demised premises
under the Lease, and reasonably necessary for the Business as conducted by
Purchaser and Closing; (d) title for each of the Equipment and Vehicles, duly
endorsed for transfer by sellers; (e) the written statements referred to in
Section 8.2 and Section 8.5; (f) the opinion referred to in Section 8.4; (g)
executed trademark assignments; (h) executed patent assignments; (i) originals
of the Lease Assignment Documents and the Sellers' Escrow Agreement; (j) a
receipt for the Estimated Closing Purchase Price paid to Sellers at the Closing;
(k) all such documents as shall be required by the title insurance company
selected by Purchaser with respect to the Owned Real Property; and (l) such
other agreements, certificates and instruments as Purchaser shall reasonably
request to consummate the transactions contemplated by this Agreement.
10.3 Deliveries by Purchaser. At the Closing, Purchaser will deliver the
-----------------------
following to Sellers: (a) the Estimated Closing Purchase Price payable to
Sellers at the closing pursuant to Section 2.1; (b) the statement referred to in
Section 9.2; (c) the opinion referred to in Section 9.5; and (d) such other
agreements, certificates and instruments as Sellers shall reasonably request to
consummate the transactions contemplated by this Agreement.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated at any time on or
-----------
prior to the Closing Date: (a) by the written agreement of Purchaser and
Sellers; (b) by Purchaser or Sellers if there shall be in effect a final
nonappealable Order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby; (c) by either Purchaser or
Sellers (provided that the terminating party is not then in material breach of
any representation, warranty, covenants or other agreement contained herein) if
there shall have been a material breach of any of the representations or
warranties set forth in this Agreement on the part of the other party and such
party has not waived such failure of satisfaction; (d) by either Purchaser or
Sellers (provided that the terminating party is not then in material breach of
any representation, warranty, covenant or other agreement contained herein) if
there shall have been a material breach of any of the covenants or agreements
set forth in this Agreement on the part of the other party, which breach
continues for more than 15 days after written notice by the terminating party,
and such party has not waived such failure of satisfaction; (e) by Purchaser at
any time during or after completion of its due diligence investigation, but in
no
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event subsequent to the date of August 15, 1997, in the event that it
determines, in its sole discretion, that the transactions contemplated by this
Agreement are inadvisable for any reason; (f) by Purchaser or Sellers, if the
Bankruptcy Court has not entered the Sale Procedures Order by August 15, 1997;
(g) by Purchaser or Sellers, if (i) the 363 Order and the 365 Order, or, in the
alternative, (ii) the 1129 Order, has not been entered by September 30, 1997;
(h) by Purchaser or Sellers, if the Closing Date shall not have occurred on or
prior to October 10, 1997, or such later date as may be mutually agreed to in
writing by Purchaser and Sellers; (i) by Purchaser or Sellers, if (A) a
qualified Acquisition Proposal (as provided in the Sale Procedures Order) has
been timely submitted, and (B) Purchaser (x) has not delivered a Topping Offer
to Sellers at any time prior to the deadline set forth in the Sale Procedures
Order or (y) has delivered a Topping Offer to Sellers at any time prior to the
deadline set forth in the Sale Procedures Order which Sellers, in the case with
respect to clause (y), have determined, in their sole and absolute discretion,
not to be equal to or better than all Acquisition Proposals; (j) by Purchaser if
the Bankruptcy Court fails to approve the Break-up Fee and Expenses as part of
the Sale Procedures Order by August 15, 1997; or (k) by Purchaser or Sellers if
it or they shall have reasonably determined that it has become apparent that one
or more of the conditions set forth in Article VIII (other than Section 8.6,
------------
Section 8.15 and Section 8.17) or Article IX, respectively, cannot be fulfilled
or satisfied on or prior to the date specified for fulfillment thereof.
Notwithstanding the foregoing, this Agreement shall terminate if (i) Purchaser
has failed to notify Sellers of the receipt by Purchaser of the commitment
letter referred to in Section 8.17 within the time period specified in said
section, or (ii) Purchaser has not entered into the Lease Amendment pursuant to
Section 8.15 within the time period specified in said section.
11.2 Break-up Fee. In the event that this Agreement is terminated by
------------
Purchaser pursuant to Section 11.1(i), then Sellers shall pay to Purchaser
promptly, but in no event more than 45 days following the date of the
termination event, by wire transfer of immediately available funds, to such
account as Purchaser shall designate, the Break-up Fee. In the event this
Agreement is terminated pursuant to any of Section 11.1(a) through Section
11.1(d), Section 11.1(f) through Section 11.1(h) or Section 11.1(k) (other than
as a result of a material breach by Purchaser of its obligations,
representations, warranties or other agreements hereunder, which breach has
continued for more than 15 days after written notice to Purchaser (provided such
breach was not caused by or did not result from a breach of this Agreement by
either of the Sellers), then Sellers shall pay to Purchaser, Chilmark and Cape
Ann promptly, but in no event more than 15 days following the date of the
termination event, by wire transfer of immediately available funds, to such
account as Purchaser shall designate, all of Purchaser's, Chilmark's and Cape
Ann's actual expenses based on reasonably detailed documentation up to an
aggregate amount of $300,000 incurred by them in connection with the
transactions contemplated by this Agreement ("Expenses"). If at any time after
the date of any termination of this Agreement pursuant to Section 11.1 hereof
(other than pursuant to Section 11.1(e) or the last sentence of Section 11.1 or
as a result of a material breach of Purchaser's obligations, representations,
warranties or other agreements hereunder, which breach has continued for more
than 15 days after written notice to Purchaser (provided such breach was not
caused by or did not result from a breach of this Agreement by either of the
Sellers)), and
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assuming Purchaser has not previously received the Break-up Fee, and Sellers
endorse or accept an Alternative Transaction that is consummated within one year
from the date of termination of this Agreement, then simultaneous with such
consummation, Sellers shall pay the Break-up Fee and reimburse the Expenses. In
any event, the total amount of fees and expenses paid pursuant to this Section
11.2 shall not exceed $1,300,000. Payment of any fees and expenses paid pursuant
to Section 11.2 is conditioned on approval by the Bankruptcy Court as part of
the Sale Procedures Order.
11.3 Effect of Termination. if this Agreement is terminated in
---------------------
accordance with Section 11.1 hereof and the transactions contemplated hereby
are not consummated, this Agreement shall become null and void and of no
further force and effect, except for the provisions of Articles VII and XII,
------------ ---
this Article XI, and Article XIV with respect to any reference therein to
---------- -----------
confidentiality obligations of the Purchaser, Chilmark and Cape Ann.
11.3 Purchaser's Escrow Fund. If the transactions contemplated hereby
-----------------------
fail to close because of Purchaser's failure to satisfy a condition to Closing,
the Purchaser's Escrow Fund shall be retained by the Sellers as liquidated
damages and any damage claim against Purchaser shall be limited to the
Purchaser's Escrow Fund. Such Purchaser's Escrow Fund shall be refunded to the
Purchaser in the event Sellers are unable to obtain Bankruptcy Court approval of
the transactions contemplated hereby, or if such transactions fail to close for
any reason other than the Purchaser's failure to satisfy a condition to Closing.
ARTICLE XII
SURVIVAL AND REMEDY; INDEMNIFICATION
12.1 Survival. All of the terms and conditions of this Agreement and
--------
any Contract including the parties of this Agreement contemplated hereby,
together with the warranties, representations, agreements and covenants
contained herein or therein or in any instrument or document delivered or to be
delivered pursuant to this Agreement, and any Contract including the parties to
this Agreement contemplated hereby, shall survive the execution of this
Agreement and the Closing, notwithstanding any investigation heretofore or
hereafter made by or on behalf of any party hereto; provided, however, that (a)
the agreements and covenants (other than the indemnification provisions set
forth in this Article XII, which will survive as provided below) set forth in
-----------
this Agreement, the Sellers' Escrow Agreement, shall survive and continue until
the later of (i) when all obligations set forth therein shall have been
performed and satisfied and the applicable statute of limitations for breaches
or defaults of such agreements and covenants has expired and (ii) the third
anniversary of the Closing Date; and (b) all representations and warranties, and
the agreements of Sellers and Purchaser to indemnify each other set forth in
this Article XII, shall survive and continue for, and all indemnification claims
-----------
with respect thereto shall be made prior to the end of three years from the
Closing Date, except for (i) indemnification claims arising in connection with
timely indemnification claims made by Megas under the Megas Escrow Agreement and
the Megas
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Escrow Account relating thereto, and (ii) representations, warranties and
related indemnities for which an indemnification claim shall be pending as of
the end of the applicable period referred to above, in which event such
indemnities shall survive with respect to such indemnification claim until the
final disposition thereof.
12.2 Indemnification by Sellers. Each of the Sellers jointly and
--------------------------
severally agree to indemnify Purchaser and each of its affiliates, and their
respective officers, directors, employees, stockholders, representatives and
agents, against, and agrees to hold it and them harmless from, any and all
Losses incurred or suffered by Purchaser or any of its affiliates (or any
combination thereof) arising out of any of the following: (a) any material
breach of or any inaccuracy in (or any alleged breach made by a person other
than Purchaser of or inaccuracy in) any representations or warranty made by
Sellers pursuant to this Agreement, any Contract including the parties to this
Agreement contemplated hereby, any document relating hereto or thereto or
contained in any Schedule or Exhibit to this Agreement, and any breach of or
failure by Sellers to perform (or alleged breach of or failure by Sellers to
perform) any covenant or obligation of Sellers set out in this Agreement, any
Contract including the parties to this Agreement contemplated hereby, any
document relating hereto or thereto or contained in any Exhibit to this
Agreement; (b) any of the Excluded Assets; (c) any Unassumed Liabilities; (d)
the Bulk Sales Laws of any jurisdiction in connection with transactions
contemplated by this Agreement; (e) any Claims by or liabilities with respect to
any employee of Sellers with respect to his or her employment or termination of
employment by Sellers at or prior to the Closing Date, including, without
limitation, any and all worker's compensation claims or liabilities to the
extent arising out of any accidents, illness or other events which occurred on
or prior to the Closing Date; (f) to the extent not included in clauses (a)-(e)
---------------
above, irrespective of whether or not Sellers had knowledge of the matters
referred to in this clause (f), and irrespective of whether or not the
----------
representations and warranties set forth in this Agreement were breached,
including without limitation the items disclosed on Schedule 3.13, any and all
-------------
Environmental Liabilities and Costs (including, without limitation, (i) the
Release of any Contaminant on, upon or into any property and (ii) damage to real
or personal property or natural resources and/or harm or injury to persons or
entities alleged to have resulted from any such Release of Contaminants) arising
out of or in connection with the present or past operations and facilities of
Sellers as conducted prior to the Closing Date; (g) all demands, assessments,
judgments, costs and reasonable legal and other expenses arising from, or in
connection with, any investigation, action, suit, proceeding or other Claim
incident to any of the foregoing; (h) any litigation to which Seller is a party
relating to the foregoing; and (i) any use of the Acquired Assets by any person
while such Acquired Assets are located in AWC's facilities or otherwise are in
the possession of AWC.
12.3 Indemnification by Purchaser. Purchaser agrees to indemnify
----------------------------
Sellers and each of their affiliates, and their respective officers, directors,
employees, stockholders, representatives and agents, against, and agrees to hold
them harmless from, any and all Losses incurred or suffered by Sellers or any of
its affiliates (or any combination thereof) arising out of any of the following:
(a) any material breach of or any inaccuracy (or any alleged breach made by a
person other than Purchaser of or inaccuracy in) any representations or warranty
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made by Purchaser pursuant to this Agreement, any agreement, or instrument
contemplated hereby, any document relating hereto or thereto or contained in any
schedule or Exhibit to this Agreement, (b) breach of or failure by Purchaser to
perform (or alleged breach of or failure by Purchaser to perform) any covenant
or obligation of Purchaser set out in this Agreement, any Agreement, or
instrument contemplated hereby, any document relating hereto or thereto or
contained in any Schedule or Exhibit to this Agreement, including the failure to
pay, perform or discharge when due any Assumed Obligations, (c) any Losses
relating to the ownership of the Acquired Assets or the conduct of the Business
after the Closing Date, and (d) any Losses or liabilities incurred by Sellers
due to Purchaser's breach of the Assumed Obligations.
12.4 Indemnity Limits.
----------------
(a) Indemnification claims shall be reduced, by and to the
extent, that an indemnitee shall actually receive proceeds under insurance
policies, or similar arrangements specifically as a result of, and in
compensation for, the subject matter of an indemnification claim by such
indemnitee; provided, however, that such reduction shall only be to the extent
that such proceeds are paid without recourse to the indemnitee by way of
deductibles, re-insurance, retro-payments or other risk or loss sharing
agreement.
(b) Purchaser will not be entitled to indemnification pursuant
to Section 12.2 and Sellers will not be entitled to indemnification pursuant to
Section 12.3 with respect to any breach or misrepresentation of any
representation or warranty until such time as its respective aggregate right to
such indemnification exceeds $100,000 after which, Purchaser or Sellers will be
entitled to such indemnification for all Losses, and provided that with regard
to indemnification of Purchaser with respect to Environmental Liabilities and
Costs (including those under Section 5.20) or Taxes, Purchaser will be entitled
to indemnification without regard to the $100,000 threshold. The amount of
indemnification to which Purchaser shall be entitled pursuant to this Article
-------
XII shall be drawn solely from the amount then held in escrow under the Sellers'
- ---
Escrow Agreement which shall be Purchaser's sole and exclusive remedy therefor.
12.5 Third-Party Claims. Except as otherwise provided in this
------------------
Agreement, the following procedures shall be applicable with respect to
indemnification pursuant to this Article XII relating to or arising out of
-----------
Claims, actions or omissions by authorities, or other third parties. Promptly
after receipt by the party seeking indemnification hereunder (hereinafter the
"indemnitee") of notice of the commencement of any (a) tax audit or proceeding
----------
for the assessment of any Tax by any Taxing authority or any other proceeding
likely to result in the imposition of a liability or obligation for Taxes or (b)
any action or the assertion of any Claim, liability or obligation by an
authority or a third party (whether by legal process or otherwise), against
which Claim, liability or obligation of a party under Sections 11.2 and/or 11.3
(hereinafter the "indemnitor") is, or may be, required under this Agreement to
----------
indemnify such indemnitee, the indemnitee will, if a claim thereon is to be, or
may be, made against the indemnitor pursuant to this Article XII, notify the
-----------
indemnitor in writing of the commencement or assertion thereof and give the
indemnitor a copy of such
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claim, process and all legal pleadings and other written evidence thereof, but
the failure to so notify indemnitor shall not relieve indemnitor from its
obligations hereunder except to the extent that it is prejudiced by the failure
or delay in giving such notice. The indemnitor shall have, in all instances the
right to participate in the defense of such action unless such action (a) may
result in Orders, injunctions or other equitable remedies in respect of the
indemnitee or its business; or (b) may result in liabilities which, taken with
other then existing claims under this Article XII, would not be fully
-----------
indemnified hereunder. The indemnitor shall have 10 days, after receipt of
notice of such claim, process, legal proceeding and other written notice, to
assume defense thereof. If the indemnitor does assume such defense and so
notifies the indemnitee, or if the indemnitor is barred from assuming such
defense pursuant to this Section 12.5, then the indemnitee shall assume such
defense, subject to the participation of the indemnitor, as provided in this
Section 12.5, and the indemnitee's reasonable fees and expenses (including
reasonable fees and expenses of counsel) in connection with such defense will be
borne by the indemnitor. In any case, the indemnitor and indemnitee shall
cooperate and assist each other in such defense, and shall make available to the
other all records, documents and information (written or otherwise) relevant to
such defense. If the indemnitee shall be required by judgment or a settlement
Agreement to pay any amount in respect of any obligation or liability against
which the indemnitor has agreed to indemnify the indemnitee under this
Agreement, the indemnitor shall promptly reimburse the indemnitee in an amount
equal to the amount of such payment plus all reasonable expenses (including
reasonable legal fees and expenses) incurred by such indemnitee in connection
with such obligation or liability, subject to this Article XII. Prior to paying
-----------
any claim against which an indemnitor is, or may be, obligated under this
Agreement to indemnify an indemnitee, the indemnitee must first supply the
indemnitor with a copy of a final court judgment or decree, or evidence of
assessment of Taxes or a similar final action by a Taxing authority, holding the
indemnitee liable on such Claim or failing such judgment or decree, must first
receive the written approval of the terms and conditions of such settlement from
the indemnitor, which shall not be unreasonably withheld. An indemnitor or
indemnitee shall have the authority to settle or compromise any Claim for which
it has assumed or conducted the defense pursuant to this Section 12.5; provided
that an indemnitor shall not settle or compromise any such Claim if such
settlement or compromise would result in any Order, injunction or other
equitable remedy in respect of the indemnitee or its business, or would result
in liabilities which, taken together with other existing claims under this
Article XII, would not be fully indemnified hereunder, in each case, without the
- -----------
prior written consent of the indemnitee, which consent shall not be unreasonably
withheld. An indemnitee shall have the right to employ its own counsel in any
case, but the fees and expenses of such counsel shall be at the expense of the
indemnitee, unless (x) the employment of such counsel shall have been authorized
in writing by the indemnitor in connection with the defense of such action or
claim or (y) the indemnitor shall not have assumed the defense, or shall be
barred from assuming the defense, of such action or Claim pursuant to this
Section 12.5, or (z) such indemnitee shall have reasonably concluded based upon
the advice of counsel that there may be defenses available to it which are
contrary to, or inconsistent with, those available to the indemnitor, in any of
which events such fees and expenses of not more than one additional counsel for
the indemnified parties shall borne by the indemnitor.
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12.6 Determination of Indemnification Amount. In the event that any
---------------------------------------
indemnitee believes that it is entitled to claim indemnification from an
indemnitor under this Article XII, the indemnitee shall notify the indemnitor of
-----------
such claim, the amount or estimated amount thereof and the basis of such claim
(which will be described in reasonable detail). The indemnitor, on the one
hand, and Purchaser or Sellers, as the case may be, which is not the indemnitor,
on the other hand, will proceed, in good faith, and using reasonable efforts, to
agree on the amount of such indemnification claim. If they are unable to agree
on the amount of such indemnification claim within 30 days after notice, (a) if
such indemnification claim arises out of a claim by an authority or third party
of the type referred to in Section 12.5, then the amount of such indemnification
claim will be determined pursuant to a final judgment or settlement or
compromise pursuant to Section 12.5, or (b) if such indemnification claim does
not arise out of such a third party claim, then the indemnification claim will
be submitted to arbitration conducted pursuant to the rules and procedures of
the American Arbitration Association. The determination of the amount of any
indemnification claim pursuant to this Section 12.6 will be final, binding and
conclusive, and the indemnitee, upon final determination of the amount of the
indemnification claim, will be paid by the indemnitor, within 10 days of such
final determination, the full amount, in cash, of such indemnification claim, as
finally determined, and will be entitled to apply to any court or authority of
competent jurisdiction to enforce such payment (the reasonable fees and expenses
of such enforcement, if necessary, to be borne by the indemnitor). In addition,
if the indemnitor does not pay in full the indemnification claim, within 10
days, as aforesaid, the amount of the indemnification claim, as finally
determined, will be increased to include accrued interest thereon from the date
payment is due until the date full payment is received equal to the "prime" rate
announced from time to time by Citibank, N.A., plus 2%, until the date
indemnitee receives the full indemnification amount.
ARTICLE XIII
INSURANCE AND OTHER MATTERS
13.1 Certain Insurance Matters. Purchaser shall be entitled to make
-------------------------
claims against Sellers' insurance policies and coverage which are occurrence
policies from and after the Closing Date for all matters, injuries and claims
arising prior to the Closing Date relating in any way to the Acquired Assets or
Assumed Liabilities in the same manner and subject to the same terms, conditions
and limitations as Sellers prior to the Closing Date. Purchaser will have no
obligations or liabilities under such insurance policies for additional premiums
or similar payments after the Closing Date, either due to retroactive
adjustments, audits, roll-backs or otherwise. Sellers will cooperate after the
Closing Date with Purchasers and its insurance carriers and agents in connection
with the foregoing and with Purchaser in establishing new insurance policies and
coverage for Purchaser from and after the Closing Date. Notwithstanding the
foregoing, Purchaser shall be entitled to make claims against Sellers' insurance
policies and coverage only to the extent permitted by the carriers of such
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insurance and Sellers shall be entitled to make claims against Sellers'
insurance policies and coverage only to the extent permitted by such carriers,
and Purchaser and Seller shall cooperate with each other in connection with any
of the foregoing claims.
13.2 Weaver Environmental Matters.
----------------------------
(a) The Elmwood Park, New Jersey, facility (the "Premises") is
an industrial establishment regulated by the Industrial Site Recovery Act,
N.J.S.A., 13:1K-6 et seq., and the other statutes and regulations adopted
thereunder or applicable thereto (including the Hazardous Discharge Site
Remediation Site Act, N.J.S.A. 58:10B-1 et seq.) ("ISRA"). Sellers shall, at
their sole cost and expense, initiate and diligently pursue to completion
(whether before or after the Closing) compliance with all requirements of ISRA
until they obtain a No Further Act Letter, as defined by ISRA, or equivalent
approval, issued and approved by the New Jersey Department of Environmental
Protection ("NJDEP") for the Premises. Subject to Section 8.19, the Closing may
occur pursuant to the terms of a remediation agreement or other approval
permitted by ISRA.
(b) Purchaser shall cooperate and assist Sellers in obtaining
the approval of NJDEP (and/or other governmental bodies) sought by Sellers,
including to allow remediation to the cleanup levels applicable to the existing
use of the Premises, such assistance to include consenting to and/or executing
or recording engineering or institutional controls. Whenever Sellers make or
intend to make any proposal permitted under this Section 13.2 to utilize less
stringent cleanup standards or levels, or institutional and/or engineering
controls, with respect to each such proposal, Purchaser shall have the right to
reject such proposal if the implementation, operation and/or maintenance of the
proposed standard, level, or institutional and/or engineering control would have
an adverse impact on Purchaser's continuation of the exiting use of the
Premises, and in all other instances Purchaser shall accept and comply with the
terms of the proposal, standard, level and/or control.
(c) Upon reasonable notice to Purchaser, the Sellers and their
agents and representatives shall have the right to enter upon the Premises in
order to perform any activities necessary or advisable, in Sellers' reasonable
opinion, to comply diligently with ISRA obligations or other remedial
obligations. The right of access set forth in this Section 13.2 is irrevocable
for the duration of any and all remedial activities hereunder, including
investigative activities, for which Sellers are responsible.
(d) Sellers agree that, during the course of Sellers'
performance of any ISRA obligations hereunder or other remedial obligations,
Sellers shall take reasonable measures to avoid interference with the business
operations of Purchaser at the Premises and, at the completion of Sellers'
remedial activities, to restore the Premises, to the extent practicable, to
substantially its pre-closing condition, in each case, after accounting for the
nature and type of remediation approved by NJDEP.
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(e) The obligations, rights and liabilities of Sellers and
Purchasers as set forth in this Section 13.2 shall survive the Closing.
ARTICLE XIV
NONCOMPETITION AND CONFIDENTIALITY
Each of the Article XIV Parties severally and only for itself acknowledges
that it or he has a special knowledge of the Business and the proprietary and
confidential information included in the Acquired Assets, and that Purchaser is
making a considerable investment in the Acquired Assets from which investment
the Article XIV Parties have benefited. In consideration of this Agreement and
such investment and benefit, and as an inducement to Purchaser to enter into
this Agreement and consummate the transactions contemplated herein, each of the
Article XIV Parties severally and only for itself agrees that, for a period of
five years after the Closing Date, (i) it or he will not, directly or
indirectly, own, manage, operate, control or participate in the ownership,
management, operation or control of, or be connected as an officer, employee,
partner, director or that otherwise engages in the Business; or have any
financial interest in, or aid or assist anyone else in the conduct of, any
business that competes with the Business as conducted on the date hereof (a
"Competitive Business"); provided, however, that a Article XIV Party may own
- --------------------- -------- -------
less than 1% of any outstanding class of publicly traded securities of an issuer
that is a Competitive Business, and (ii) it or he will not, directly or
indirectly in one or a series of transactions, disclose to any person, or use or
otherwise exploit for its own benefit or for the benefit of anyone other than
Purchaser, Confidential Information (as defined below) and Sellers shall use
their reasonable best efforts to cause all persons or entities to whom any
Confidential Information has been disclosed without violation hereunder to
observe the terms and conditions set forth herein as though each such person or
entity was bound hereby. In consideration of this Agreement and the
transactions contemplated hereby, and as an inducement to Sellers to enter into
this Agreement, each of Purchaser, Chilmark and Cape Ann severally and only for
itself agrees that, if but only if this Agreement is terminated and the Closing
Date does not occur, for a period of five years after the Outside Date it will
not, directly or indirectly in one or a series of transactions, disclose to any
person, or use or otherwise exploit for its own benefit or for the benefit of
anyone other than Sellers, Confidential Information and it shall use its
reasonable best efforts to cause all persons or entities to whom any
Confidential Information has been disclosed without violation hereunder to
observe the terms and conditions set forth herein as though each such person or
entity was bound hereby. "Confidential Information" means any trade secret,
------------------------
confidential study, data, calculations, software storage media or other
compilation of information, patent, patent application, copyright, trademark,
trade name, service mark, service name, "know-how", trade secrets, customer
lists, details of client or consultant contracts, pricing policies, sales
techniques, confidential information relating to suppliers, marketing plans or
strategies, products and formulae, product development techniques or plans,
business acquisition plans or any portion or phrase of any scientific or
technical information, ideas, discoveries, designs, computer programs (including
source of object codes), processes, procedures, research or technical data,
improvements or other proprietary
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or intellectual property of Sellers specifically relating to the Business,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
------------------------
obligation hereunder with respect to, information that is or becomes generally
available to the public other than as a result of a disclosure by any of the
Article XIV Parties. The Article XIV Parties (or Purchaser, Chilmark or Cape
Ann, if applicable), shall have no obligation hereunder to keep confidential any
Confidential Information if and to the extent disclosure of any therefor is
specifically required by law; provided, however, that in the event disclosure is
-------- -------
required by applicable law, the Article XIV Parties shall provide Purchaser (or
Purchaser, Chilmark or Cape Ann, as the case may be, shall provide the Article
XIV Parties, if applicable) with prompt notice of such requirement, prior to
making any disclosure, so that Purchaser (or the Article XIV Parties, if
applicable) may seek an appropriate protective order, and shall cooperate with
Purchaser in connection therewith.
For a period of five years following the Closing Date, each of the Article
XIV Parties severally and only for itself agrees that it or he will not without
the express prior written approval of the Board of Directors of Purchaser (A)
directly or indirectly recruit, solicit or otherwise induce or influence any
employee, sales agent, joint venturer, lessor, supplier, agent, representative
or any other person that has or had during the one year period initially
preceding the Closing Date a business relationship with Sellers relating to the
Business, to discontinue, reduce or adversely modify such employment, agency or
business relationship with Purchaser as it relates solely to the Business, or
(B) only to the extent competitive with the Business as conducted on the Closing
Date, employ or seek to employ or cause any Competitive Business to employ or
seek to employ any person or agent who is employed or retained by Purchaser.
Notwithstanding the foregoing, nothing herein shall prevent an officer of
Sellers from providing a letter of recommendation to an employee with respect to
a future employment opportunity.
For a period of five years following the Closing Date, each of the Article
XIV Parties severally and only for itself agrees that it or he will not without
the express prior written approval of the Board of Directors of Purchaser,
directly or indirectly, recruit, solicit or otherwise induce or influence any
customer of Purchaser to discontinue, reduce or modify such business
relationship with Purchaser to the extent such business relationship pertains to
the Business.
Each of the Article XIV Parties severally and only for itself agrees, and
each of Purchaser, Chilmark and Cape Ann severally and only for itself agrees,
that the violation or threatened violation of any of the provisions of this
Article XIV by it or him shall cause immediate and irreparable harm to Purchaser
(or an Article XIV Party, if applicable) and that the damage to Purchaser (or an
Article XIV Party, if applicable) will be difficult or impossible to calculate
with precision. Therefore, in the event that any of the Article XIV Parties (or
Purchaser, Chilmark or Cape Ann, if applicable) violate this Article XIV, an
injunction restraining such Article XIV Parties (or Purchaser, Chilmark or Cape
Ann, if applicable) from such violation may be entered against the relevant
Article XIV Party (or Purchaser, Chilmark
57
<PAGE>
or Cape Ann, if applicable) in addition to any other relief available to
Purchaser (or an Article XIV Party, if applicable).
If, at the time of enforcement of any provision of this Article XIV, a
court shall hold that the duration, scope or other restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or other restrictions reasonable under such
circumstances shall be substituted for the stated duration, scope or other
restrictions and that the court shall be allowed to revise the restrictions
contained herein to cover the maximum period, scope and other restrictions
permitted by law.
ARTICLE XV
MISCELLANEOUS
15.1 Expenses. Subject to Section 11.2, each party hereto shall bear
--------
its own expenses with respect to this transaction. Sellers agree to pay and be
responsible for all sales, use, stamp, transfer, service, recording, real estate
and like taxes or fees, if any, imposed by any authority, required to be paid by
any party in connection with the transfer of the Acquired Assets.
15.2 Amendment; Supplemental Disclosure. This Agreement may be
----------------------------------
amended, modified or supplemented but only in writing signed by all of the
parties hereto. Sellers shall have the right from time to time prior to August
1, 1997 to update or supplement the Disclosure Schedules with respect to any
matter which, if existing or known as of the date of this Agreement, would have
been required to be set forth or described in such Disclosure Schedule.
Notwithstanding the foregoing, Sellers shall have the right from time to time
after the date of this Agreement to update or supplement the Disclosure
Schedules with respect to any matter hereafter arising which was not in
existence as of the date of this Agreement; provided, however, that (i) such
updated or supplemental disclosure will not modify or otherwise affect the
Assumed Obligations, except in accordance with this Agreement, and (ii) any such
updated or supplemental disclosure will not be deemed to have been disclosed as
of the date of this Agreement for any purposes of this Agreement (other than to
provide such updated and supplemental disclosure to Purchaser), including
without limitation, for purposes of determining whether or not the conditions
set forth in Articles VIII and IX hereunder have been satisfied. Every
disclosure and statement made in any Disclosure Schedule shall be deemed a
disclosure and statement in all other applicable Disclosure Schedules.
15.3 Notices. Any notice, request, instruction or other document to
-------
be given hereunder by a party hereto shall be in writing and shall be deemed to
have been given, (i) when received if given in person, or (ii) on the date of
transmission if sent by nationally recognized overnight courier, certified or
registered mail, return receipt requested, or (iii) three days after being
deposited in the U.S. mail, postage prepaid:
58
<PAGE>
(A) If to Sellers, addressed as follows:
American White Cross, Inc.
15200 I-45 North
Houston, Texas 77090
Attention: President
with copies to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Roger Andrus, Esq.
and
Creditors' Committee
c/o Klehr, Harrison, Harvey et. al.
222 Delaware Avenue, Suite 1101
Wilmington, DE 19801-1621
Attention: Joanne Wills, Esq.
(B) If to Purchaser, addressed as follows:
NutraMax Products, Inc.
9 Blackburn Drive
Gloucester, MA 01930
Attention: Robert F. Burns, Vice President and
Chief Financial Officer
with copies to:
Eugene M. Schloss, Jr., Esq.
1700 Cary Road
Huntingdon Valley, PA 19006-5002
and
Goodwin, Procter & Hoar LLP
Exchange Place
53 State Street
Boston, MA 02109
Attention: Michael J. Pappone, P.C.
and
59
<PAGE>
Cape Ann Investors, L.L.C.
c/o Chilmark Fund II, L.P.
875 N. Michigan Avenue
Suite 2100
Chicago, IL 60611
Attention: David M. Schulte
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Attention: James E. Millstein, Esq.
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
15.4 Waivers. The failure of a party hereto at any time or times to
-------
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver by a party of any condition or
of any breach of any term, covenant, representation or warranty contained in
this Agreement shall be effective unless in writing, and no waiver in any one or
more instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
15.5 Counterparts. This Agreement may be executed simultaneously in
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.6 Headings. The headings preceding the text of Articles and
--------
Sections of this Agreement and the Schedules thereto are for convenience only
and shall not be deemed part of this Agreement.
15.7 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH
JURISDICTION.
15.8 Binding Nature; Assignment. This Agreement shall be binding
--------------------------
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interest or obligations hereunder shall be assigned by any of the
parties hereto without prior written consent of the other parties; except, that
(i) Purchaser may assign any of its rights and obligations hereunder to any
affiliate or wholly-owned subsidiary of Purchaser which shall assume, all
obligations and liabilities hereunder, but such assignment shall not relieve
Purchaser from any such obligations or liabilities, (ii) Purchaser may grant a
security interest in its rights and interests hereunder to its lenders, and
60
<PAGE>
(iii) as otherwise provided in this Agreement. Other than the provisions of
Article XII, nothing contained herein, express or implied, is intended to confer
on any Person other than the parties hereto or their successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
15.9 No Third Party Beneficiaries. This Agreement is solely for the
----------------------------
benefit of the parties hereto and their respective affiliates and, except for
the provisions of Article XII, no provision of this Agreement shall be deemed to
confer upon third parties any remedy, claim, liability, reimbursement, claim of
action or other right in excess of those existing without reference to this
Agreement.
15.10 Tax Matters.
-----------
(a) Purchaser and Sellers shall treat and report the transaction
contemplated by this Agreement in all respects consistently for purposes of any
federal, state or local tax, including, without limitation, the Purchase Price
allocation made pursuant to Section 2.3 hereof.
(b) Purchaser shall make available to Sellers, and Sellers shall
make available to Purchaser, (i) such records as any such party may require for
the preparation of any Tax Returns required to be filed by Sellers or Purchaser
and (ii) such records as Sellers or Purchaser may require for the defense of any
audit, examination, administrative appeal, or litigation of any Tax Return in
which Sellers or Purchaser was included.
15.11 Other Instruments. Upon the reasonable request of Purchaser,
-----------------
Sellers will on and after the Closing Date execute and deliver to Purchaser such
other documents, releases, assignments and other instruments as may be required
to effectuate completely the transfer and assignment to Purchaser of, and to
vest fully in Purchaser title to, each of the Acquired Assets and Assumed
Obligations.
15.12 Construction. The language used in this Agreement will be
------------
deemed to be the language chosen by the parties to this Agreement to express
their mutual intent, and no rule of strict construction shall be applied against
any party. Any reference to any federal, state, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Nothing in the Disclosure
Schedule will be deemed adequate to disclose an exception to a representation or
warranty made herein unless the Disclosure Schedule identifies the exception
with particularity and describes the relevant facts in detail of the exception.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
items itself). The parties hereto intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any party
hereto has breached any representation, warranty, or covenant contained herein
in any respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of
61
<PAGE>
the relative levels of specificity) which such party has not breached shall not
detract from or mitigate the fact that the party is in breach of the first
representation, warranty, or covenant.
15.13 Entire Understanding. This Agreement sets forth the entire
--------------------
agreement and understanding of the parties hereto in respect to the transactions
contemplated hereby and supersede all prior agreements, arrangements and
understandings relating to the subject matter hereof and is not intended to
confer upon any other person any rights or remedies hereunder. There have been
no representations or statements, oral or written, that have been relied on by
any party hereto, except those expressly set forth in this Agreement.
62
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the date first above written.
PURCHASER:
NUTRAMAX PRODUCTS, INC.
/s/ Donald E. Lepone
By:_______________________________________
Name: Donald E. Lepone
Title: President and Chief Executive Officer
SELLERS:
AMERICAN WHITE CROSS, INC.
/s/ Howard Koenig
By:_______________________________________
Name: Howard Koenig
Title: President
WEAVER MANUFACTURING CORPORATION
/s/ Howard Koenig
By:_______________________________________
Name: Howard Koenig
Title: President
ONLY WITH RESPECT TO
ARTICLE XIV HEREOF:
/s/ Howard Koenig
___________________________
Name: Howard Koenig
/s/ Scott Vertrees
___________________________
Name: Scott Vertrees
63
<PAGE>
ONLY WITH RESPECT TO
SECTION 5.16 HEREOF:
ELECTRA FLEMING, INC.
/s/ Diane M. Smith
By:____________________________________
Name: Diane M. Smith
Title: Principal
THE UNOFFICIAL COMMITTEE
OF UNSECURED CREDITORS
/s/ Victor P. Zosda
By:____________________________________
Name: Victor P. Zosda
Title: Chairman
64
<PAGE>
ONLY WITH RESPECT TO
ARTICLE XIV HEREOF:
CHILMARK FUND II, L.P.
By: Chilmark II, L.L.C.,
its General Partner
/s/ Joel S. Friedland
By:____________________________________
Name: Joel S. Friedland
Title: Vice President
CAPE ANN INVESTORS, L.L.C.
By: Chilmark Fund II, L.P.,
its Managing Member
By: Chilmark II, L.L.C.,
its General Partner
/s/ Joel S. Friedland
By:____________________________________
Name: Joel S. Friedland
Title: Vice President
65
<PAGE>
ONLY WITH RESPECT TO
SECTION 1.1(c), SECTION 1.1(o)
AND SECTION 1.2 HEREOF:
ACME/CHASTON PUERTO RICO, INC.
/s/ Howard Koenig
By:____________________________________
Name: Howard Koenig
Title: President
66
<PAGE>
Exhibit 2.2
-----------
AMENDMENT NO.1
--------------
TO
--
ASSET PURCHASE AGREEMENT
------------------------
This Amendment No.1 to the Asset Purchase Agreement dated as of July 21,
1997 (the "Asset Purchase Agreement") by and among American White Cross, Inc.,
a corporation organized under the laws of the State of Delaware, and Weaver
Manufacturing Corporation, a corporation organized under the laws of the State
of New Jersey (collectively, the "Sellers"), and NutraMax Products, Inc., a
corporation organized under the laws of the State of Delaware (the "Purchaser"),
is entered into as of August 15, 1997 by and among the Sellers and the
Purchaser. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to those terms in the Asset Purchase Agreement.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, pursuant to the Asset Purchase Agreement, the Purchaser has agreed
to purchase and the Sellers have agreed to sell substantially all of the assets
of the first aid business to the Purchaser and the Purchaser has agreed to
assume certain liabilities of the Sellers; and
WHEREAS, the parties hereto wish to amend the Asset Purchase Agreement as
set forth below.
NOW, THEREFORE, in consideration of the premises and the representations
and agreements herein contained, the parties mutually agree as follows:
1. Sections 2.1 and 2.2 of the Asset Purchase Agreement are hereby amended
by replacing the references therein to $40,000,000 with $38,040,000.
2. Section 7.1 is amended by replacing the reference therein to $41,800,000
with $39,840,000.
3. All terms, provisions, covenants, representations, warranties,
agreements and conditions contained in the Asset Purchase Agreement shall
remain in full force and effect except as expressly contemplated herein and
shall not otherwise be deemed waived, modified or amended hereby.
<PAGE>
-2-
4. This Amendment No.1 may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5. This Amendment No.1 shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed wholly within such jurisdiction.
IN WITNESS WHEREOF, each of the parties has caused this Amendment No.1
to duly executed all as of the date first written above.
PURCHASER:
NUTRAMAX PRODUCTS, INC.
By: /s/ Donald E. Lepone
--------------------------
Name: Donald E. Lepone
Title: President / CEO
SELLERS:
AMERICAN WHITE CROSS, INC.
By: /s/ Howard Koenig
----------------------------
Name: Howard Koenig
Title: President
WEAVER MANUFACTURING CORPORATION
By: /s/ Howard Koenig
----------------------------
Name: Howard Koenig
Title: President
<PAGE>
Exhibit 2.3
-----------
[Conformed Copy]
STOCK PURCHASE AGREEMENT
by and between
NUTRAMAX PRODUCTS, INC.,
and
CAPE ANN INVESTORS, L.L.C.
Dated as of August 12, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
I. PURCHASE AND SALE.............................................2
1.1. Purchase and Sale...............................2
1.2. Purchase Price..................................2
1.3. Closing.........................................2
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................7
2.1. Due Organization, etc...........................7
2.2. Compliance with Law.............................8
2.3. Authorization; Execution and Delivery
of Agreement....................................8
2.4. No Conflict; No Consent.........................9
2.5. Capital Stock..................................10
2.6. SEC Reports....................................11
2.7. Financial Statements...........................12
2.8. No Brokers.....................................13
2.9. Litigation and Claims..........................13
2.10. Use of Proceeds................................13
2.11. Hart-Scott-Rodino Matters......................13
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER............14
3.1. Due Organization, etc..........................14
3.2. Authorization; Execution and Delivery
of Agreement...................................14
3.3. No Conflict; No Consent........................14
3.4. No Brokers.....................................15
3.5. Litigation and Claims..........................15
3.6. Investment Purposes............................15
3.7. Hart-Scott-Rodino Matters......................16
IV. COVENANTS OF THE COMPANY....................................17
4.1. Conduct of Business............................17
4.2. Exchange of Stock Certificates.................18
4.3. Lost, Stolen, Destroyed or Mutilated
Stock Certificates.............................18
4.4. Course of Dealings with AWC....................18
4.5. Board Representation...........................18
4.6. Additional Financing Commitment................19
V. COVENANTS OF THE PURCHASER AND THE COMPANY...................19
5.1. Access; Confidentiality........................19
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.2. Hart-Scott-Rodino Act Filings................ 20
5.3. Public Disclosure and Confidentiality........ 21
5.4. Certain Notifications........................ 21
5.5. Efforts to Consummate; Further Actions....... 21
5.6. Standstill Obligations of the Purchaser...... 22
VI. REGISTRATION RIGHTS....................................... 28
6.1. "Piggyback" Registration..................... 28
6.2. Demand Registration.......................... 29
6.3. General Provisions........................... 31
6.4. Information, Documents, Etc.................. 33
6.5. Expenses..................................... 33
6.6. Cooperation.................................. 34
6.7. Action to Suspend Effectiveness; Supplement
to Registration Statement.................... 35
6.8. Indemnification.............................. 37
VII. INDEMNIFICATION.......................................... 43
7.1. Indemnification by the Company............... 43
7.2. Indemnification by the Purchaser............. 44
VIII. TERMINATION............................................ 44
8.1 Termination.................................... 44
IX. GENERAL PROVISIONS........................................ 46
9.1. Survival of Representations, Warranties
and Agreements............................... 46
9.2. Notices...................................... 46
9.3. General...................................... 47
9.4. Governing Law................................ 48
9.5. Severability of Provisions................... 48
9.6. Captions..................................... 49
9.7. Expenses..................................... 49
9.8. Equitable Relief............................. 50
9.9. Definitions.................................. 50
</TABLE>
SCHEDULE 2.5(b)
SCHEDULE 5.6
ii
<PAGE>
STOCK PURCHASE AGREEMENT (this "Agreement") dated as of August 12,
1997 by and between NUTRAMAX PRODUCTS, INC., a Delaware corporation (the
"Company"), and CAPE ANN INVESTORS, L.L.C., a Delaware limited liability company
(the "Purchaser").
WHEREAS, the Purchaser wishes to purchase from the Company, and the
Company wishes to sell to the Purchaser, a number of shares (the "Shares") of
the Company's Common Stock, par value $0.001 per share (the "Common Stock"),
determined in accordance with the provisions hereof;
WHEREAS, the Purchaser and the Company are entering into this
Agreement to provide for such purchase and sale and to establish various rights
and obligations in connection therewith;
WHEREAS, the purchase of the Shares hereunder is being made in
connection with, and as part of, the acquisition (the "Asset Acquisition") by
the Company of certain of the assets of American White Cross, Inc., a Delaware
corporation ("White Cross"), and its wholly-owned subsidiary Weaver
Manufacturing Corporation, a New Jersey corporation ("Weaver" and, collectively
with White Cross, "AWC"), debtors and debtors in possession in chapter 11
proceedings pending before the United States Bankruptcy Court for the District
of Delaware, on terms and conditions set forth in that certain Asset Purchase
Agreement (the "Asset Purchase Agreement"), dated as of July 21, 1997, among the
Company, White Cross and Weaver and previously approved by the Purchaser; and
WHEREAS, the proceeds from the sale of the Shares, together with such
additional debt financing as the Company shall obtain, shall be used to fund the
consideration paid for the Asset Acquisition by the Company;
<PAGE>
NOW THEREFORE, in consideration of these premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
I.PURCHASE AND SALE
1.1. Purchase and Sale. Upon the terms and subject to the conditions
set forth in this Agreement, the Company agrees to issue, sell and deliver to
the Purchaser, and the Purchaser agrees to purchase from the Company, 1,405,000
Shares; provided, however, that, at the Company's option on notice to the
Purchaser given no less than ten days before the Closing (as hereinafter
defined), the number of Shares purchased and sold hereunder may be reduced, but
not below 846,154 Shares. The Shares purchased and sold hereunder shall be free
and clear of any liens, security interests, pledges, voting agreements, claims,
options and encumbrances of every kind, character and description whatsoever
("Encumbrances"), except as contemplated by this Agreement.
1.2. Purchase Price. As consideration for the sale of the Shares, at
the Closing the Purchaser shall pay the Company, in immediately available funds,
a purchase price of $13.00 per share.
1.3. Closing. (a) The closing of the transactions provided for in
this Agreement (the "Closing") shall take place simultaneously with the closing
of the Asset Acquisition pursuant to the terms of the Asset Purchase Agreement
at the offices of Goodwin, Procter & Hoar, LLP, Exchange Place, Boston,
Massachusetts.
(b) Conditions Precedent to the Purchaser's Obligations. The
obligation of the Purchaser to consummate the transactions described in this
Agreement shall be subject to the satisfaction of the following conditions on or
prior to the Closing: (i) the representations and warranties of the Company
contained in this Agreement shall have been true and correct when
2
<PAGE>
made and shall be true and correct in all material respects on the date of
Closing with the same effect as if they were made on such date; (ii) the Company
shall have performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or complied with by
the Company on or prior to the Closing; (iii) the Company shall have delivered
to the Purchaser a certificate, dated the date of Closing and signed by a duly
authorized officer of the Company, certifying as to the matters described in the
foregoing clauses (i) and (ii); (iv) no action, suit, investigation or
proceeding shall have been instituted before any court, administrative body or
governmental agency (a "Governmental Entity") which seeks to restrain the
consummation of, prohibit or declare illegal, or obtain a material amount of
damages arising from the Asset Acquisition or the transactions contemplated by
this Agreement and which is likely, in the Purchaser's reasonable judgment, to
be successful on the merits, and no temporary restraining order or injunction
shall have been issued by any Governmental Entity restraining or prohibiting,
and no other Legal Requirement (as hereinafter defined) shall have come into
effect making illegal, the performance of this Agreement or the consummation of
any of the transactions contemplated hereby; (v) all consents, approvals,
permits and authorizations required to be obtained from, and all filings
required to be made with, any Authority (as hereinafter defined) in connection
with the consummation of the transactions contemplated hereby shall have been
obtained or made, and all waiting periods specified under applicable Legal
Requirements (including any such waiting period applicable to the transactions
contemplated hereby under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "Hart-Scott-Rodino Act")), and all extensions thereof, the
passing of which is required for such consummation, shall have passed, except as
to such consents, approvals,
3
<PAGE>
permits, authorizations or filings that, individually or in the aggregate, would
not have a material adverse effect on the condition (financial or otherwise),
business, operations, properties, assets or liabilities of the Company and its
Subsidiaries (as hereinafter defined) taken as a whole (a "Material Adverse
Effect"); (vi) from and after the date of this Agreement, there shall not have
occurred any changes concerning the Company that, when combined, without
duplication, with all other changes concerning the Company from and after the
date of this Agreement, have had or would reasonably be expected to have a
Material Adverse Effect; (vii) there shall not have occurred a material adverse
change in the material terms of the final agreements entered into between the
Company and its lenders relating to the debt financing to be raised by the
Company in connection with the Asset Acquisition when compared to the material
terms of such debt financing set forth in the letter dated August 6, 1997 from
BankBoston, N.A. to the Company (the "August 6th Commitment Letter"), as such
terms may be amended by the Additional Commitment Letter (as hereinafter
defined) to be delivered to the Purchaser in accordance with Section 4.6 hereof;
and (viii) all conditions precedent to consummation of the Asset Acquisition
shall have been satisfied or waived by the appropriate party, and no amendment
to the Asset Purchase Agreement shall have been executed or agreed to that
increases the purchase price thereunder to more than $50,000,000.00 without the
Purchaser's prior written consent. In the event any of the foregoing conditions
to the Purchaser's obligation to close hereunder is not satisfied on or before
the Closing, the Purchaser may waive such condition and proceed to Closing. As
used herein, "Legal Requirements" shall include laws, regulations, ordinances,
orders, decrees, permits, licenses, consents, approvals, registrations,
authorizations and
4
<PAGE>
qualifications required by or from any federal, state, local or foreign
governmental or regulatory authority (each, an "Authority").
(c) Conditions Precedent to the Company's Obligations. The
obligation of the Company to consummate the transactions described in this
Agreement shall be subject to the satisfaction of the following conditions on or
prior to the Closing: (i) the representations and warranties of the Purchaser
contained in this Agreement shall have been true and correct when made and shall
be true and correct in all material respects on the date of Closing with the
same effect as if they were made on such date; (ii) the Purchaser shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by the
Purchaser on or prior to the Closing; (iii) the Purchaser shall have delivered
to the Company a certificate, dated the date of Closing and signed by a duly
authorized signatory of the Purchaser, certifying as to the matters described in
the foregoing clauses (i) and (ii); (iv) no action, suit, investigation or
proceeding shall have been instituted before any Governmental Entity which seeks
to restrain the consummation of, prohibit or declare illegal, or obtain a
material amount of damages arising from the Asset Acquisition or the
transactions contemplated by this Agreement and which is likely, in the
Company's reasonable judgment, to be successful on the merits and no temporary
restraining order or injunction shall have been issued by any Governmental
Entity restraining or prohibiting, and no other Legal Requirement shall have
come into effect making illegal, the performance of this Agreement or the
consummation of any of the transactions contemplated hereby; (v) all consents,
approvals, permits and authorizations required to be obtained from, and all
filings required to be made with, any Authority in connection with the
consummation of the transactions contemplated hereby shall have been obtained or
made, and all waiting periods specified under applicable Legal
5
<PAGE>
Requirements (including any such waiting period applicable to the transactions
contemplated hereby under the Hart-Scott-Rodino Act), and all extensions
thereof, the passing of which is required for such consummation, shall have
passed, except as to such consents, approvals, permits, authorizations or
filings that, individually or in the aggregate would not have a Material Adverse
Effect; (vi) from and after the date of this Agreement, there shall not have
occurred any changes concerning the Purchaser that, when combined, without
duplication, with all other changes concerning the Purchaser from and after the
date of this Agreement, have had or would reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), business,
operations, properties, assets or liabilities of the Purchaser (a "Purchaser
Material Adverse Effect"); and (vii) all conditions precedent to consummation of
the Asset Acquisition shall have been satisfied or waived by the appropriate
party. In the event any of the foregoing conditions to the Company's obligation
to close hereunder is not satisfied on or before the Closing, the Company may
waive such condition and proceed to Closing.
(d) Company Closing Deliveries. At the Closing, the Company will
deliver to the Purchaser the following:
(i) a stock certificate or certificates representing the
Shares; and
(ii) a certificate of the Secretary of the Company certifying as
to the adoption and effect of resolutions of the Board of
Directors of the Company (the "Board") authorizing the
execution, delivery and performance of this Agreement.
(e) Purchaser Closing Deliveries. At the Closing, the Purchaser will
deliver to the Company the following:
6
<PAGE>
(i) a certificate of the Managing Member of the Purchaser
certifying as to the adoption and effect of resolutions of
the Purchaser authorizing the execution, delivery and
performance of this Agreement; and
(ii) payment of the purchase price provided by Section 1.2.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Due Organization, etc. The Company and each of its Subsidiaries
(as hereinafter defined) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, and
each has all requisite corporate power and authority to own, operate and lease
its respective properties and assets and to conduct its respective businesses as
now conducted and is qualified to do business in each state or other
jurisdiction where the nature of its properties, assets or businesses requires
such qualification other than where the failure to be so qualified would not,
individually or in the aggregate have a Material Adverse Effect. All of the
outstanding shares of capital stock of each Subsidiary of the Company are
validly issued, fully paid and non-assessable, other than the shares of capital
stock of foreign Subsidiaries which are not fully paid and which failure to be
fully paid, individually or in the aggregate, does not have a Material Adverse
Effect, and all of such outstanding shares are owned, directly or indirectly, by
the Company free and clear of all Encumbrances, except for liens or security
interests or pledge arrangements involving the capital stock of the Subsidiaries
in favor of the Company's lenders. "Subsidiary" means a corporation or other
business arrangement a majority of the outstanding voting securities or
ownership interests of which is owned, directly or indirectly, by the Company,
by one or more other Subsidiaries or by the Company and one or more other
Subsidiaries.
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2.2. Compliance with Law. The Company and each Subsidiary has
obtained and maintains in full force and effect all permits, licenses, consents,
approvals, registrations, memberships, authorizations and qualifications under
all federal, state, local and foreign laws and regulations, and with all
Authorities, required for the conduct by it of its businesses and the ownership
or possession by it of its properties and assets other than where the failure to
obtain or maintain such permits, licenses, consents, approvals, registrations,
memberships, authorizations or qualifications would not, individually or in the
aggregate, have a Material Adverse Effect. The Company and each Subsidiary are
in compliance with all laws, regulations, ordinances, orders and decrees
(including, without limitation, all environmental and occupational, health and
safety laws) of any Authority applicable to the conduct by the Company and each
Subsidiary of their respective businesses and to their ownership and possession
of their respective properties and assets, other than where the failure so to
comply would not, individually or in the aggregate, have a Material Adverse
Effect.
2.3. Authorization; Execution and Delivery of Agreement. (a) Except
to the extent that the By-laws of, or other rules or regulations promulgated by,
the National Association of Securities Dealers ("NASD") applicable to Nasdaq
SmallCap listed companies may require approval of the issuance of shares
hereunder, the execution and delivery of this Agreement, the issuance and sale
of the Shares to the Purchaser and the consummation of the transactions
contemplated hereby (i) do not require the approval or consent of any
stockholders of the Company and (ii) have been duly authorized by all necessary
corporate action on the part of the Company for all purposes, including Section
203 of the Delaware General Corporation Law. Except to the extent that the By-
laws of, or other rules or regulations promulgated by, the NASD applicable to
Nasdaq SmallCap listed companies may require approval of the issuance of shares
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hereunder, this Agreement has been duly executed and delivered by the Company
and this Agreement constitutes the legal, valid, binding and enforceable
obligation of the Company, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity. The Company has full corporate power and authority to
enter into this Agreement and to perform its obligations hereunder.
(b) Except to the extent that the By-laws of, or other rules or
regulations promulgated by, the NASD applicable to Nasdaq SmallCap listed
companies may require approval of the issuance of shares hereunder, (i) the
Shares have been duly authorized by all necessary corporate action on the part
of the Company, and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration therefor set forth herein, the
Shares will be validly issued, fully paid and non-assessable and (ii) the
Purchaser will acquire valid and marketable title to the Shares, free and clear
of any Encumbrances except as contemplated by this Agreement.
2.4. No Conflict; No Consent. Except to the extent that the By-laws
of, or other rules or regulations promulgated by, the NASD applicable to Nasdaq
SmallCap listed companies may require approval of the issuance of shares
hereunder, the execution and delivery of this Agreement, the issuance and sale
of the Shares to the Purchaser and the consummation of the transactions
contemplated hereby do not, and will not, conflict with, or result in any
violation of or default under, or permit the acceleration of any obligation
under, or the creation or imposition of any Encumbrance on any of the properties
or assets of the Company or any Subsidiary under, (i) any provision of the
certificate of incorporation or by-laws or similar constituent documents of the
Company or any Subsidiary, (ii) any indenture, lease, mortgage, deed of trust,
loan agreement or other agreement or instrument, or any permit, license,
9
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registration, membership, authorization or qualification from any Authority, of
the Company or any Subsidiary or (iii) any judgment, order, decree, statute,
law, ordinance, rule or regulation of any Authority to which the Company or any
of its Subsidiaries is a party or by which any of them is bound, other than, in
the case of clause (ii) above, where such conflict, violation, default,
acceleration or Encumbrance would not, individually or in the aggregate, have a
Material Adverse Effect. No consent, approval, order or authorization of, or
registration, declaration, filing with or notice to, any Authority or third
party is required to be made or obtained by the Company or any Subsidiary
(including, without limitation, under any environmental or occupational, health
and safety laws) in order to execute or deliver this Agreement, issue and sell
the Shares or to consummate the transactions contemplated hereby, other than (A)
as may be required by the Hart-Scott-Rodino Act, (B) as a result of the periodic
reporting requirements under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and (C) the listing requirements of the NASDAQ SmallCap
Market, or except where the failure to make or obtain any such consent,
approval, order, authorization, registration, declaration, filing or notice
would not have a Material Adverse Effect.
2.5. Capital Stock. (a) The authorized capital stock of the Company
consists of 20,000,000 shares of common stock, par value $0.001 per share (the
"Common Stock"), of which, as of June 28, 1997, 4,763,014 shares were
outstanding and 4,037,258 shares were held in treasury and 1,705,839 shares are
reserved for future issuance pursuant to any option, warrant or other rights
agreement, arrangement or other commitment. All of the issued and outstanding
shares of Common Stock have been validly issued and are fully paid and non-
assessable.
(b) (i) Other than this Agreement and the Asset Purchase Agreement
or as set forth on Schedule 2.5(b) hereto, there are not authorized or
outstanding any subscriptions,
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options, conversion rights, warrants or other agreements, securities or
commitments of any nature whatsoever (whether oral or written and whether firm
or conditional) obligating the Company or any Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, to any person any shares of
Common Stock or any other shares of the capital stock of the Company or any
shares of the capital stock of any Subsidiary, or any securities convertible
into or exchangeable for any such shares, or obligating any such person to
grant, extend or enter into any such agreement or commitment; and (ii) except as
set forth on Schedule 2.5(b) hereto, there is no obligation, contingent or
otherwise, of the Company to repurchase, redeem or otherwise acquire any share
of capital stock or other equity interests of the Company or any Subsidiary. No
class of capital stock of the Company is entitled to preemptive rights.
2.6. SEC Reports. The Company has filed with the Securities and
Exchange Commission (the "Commission") all proxy statements, reports, forms and
other documents required to be filed by it after January 1, 1995 under the
Exchange Act (collectively, the "SEC Reports"). As of their respective dates,
the SEC Reports (i) complied as to form in all material respects with the
applicable requirements of the Exchange Act and the rules and regulations of the
Commission thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
2.7. Financial Statements. (a) The financial statements (including
any related notes) included in the SEC Reports (the "Financial Statements") have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as may be noted
therein) and fairly present the consolidated financial condition, results of
operations and cash flows of the Company and its consolidated Subsidiaries
11
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as of the dates thereof and for the periods ended on such dates (in each case
subject, as to interim statements, to changes resulting from year-end
adjustments (none of which were or, except as otherwise disclosed to the
Purchaser in writing, will be material in amount or effect) and except as
permitted by Form 10-Q pursuant to Section 13 or 15(d) of the Exchange Act).
(b) On the date hereof, except as disclosed in the SEC Reports,
neither the Company nor any Subsidiary has any liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
to become due and whether or not required to be disclosed in the SEC Reports,
other than liabilities that have been disclosed to the Purchaser in writing,
have been incurred in the ordinary course of business or are not in the
aggregate material to the Company and its Subsidiaries taken as a whole. Since
September 28, 1996, the Company has not declared or paid any dividends to any of
its stockholders.
(c) Since September 28, 1996, the Company and each of its
Subsidiaries have conducted their respective businesses only in the ordinary
course in substantially the same manner as theretofore conducted and the Company
and its Subsidiaries, taken as a whole, have not undergone or suffered any
Material Adverse Effect, except as otherwise disclosed to the Purchaser in
writing.
2.8. No Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Company.
2.9. Litigation and Claims. There is no claim, prosecution, suit,
action, arbitration, proceeding, investigation or review pending or, to the
knowledge of the Company, threatened against or affecting the Company, any of
its Subsidiaries or any of their respective properties or assets (nor, to the
knowledge of the Company, are there any facts or circumstances
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<PAGE>
providing a basis for any such claim, prosecution, suit, action, arbitration,
proceeding, investigation or review) which, if adversely determined, would be
reasonably likely to have a Material Adverse Effect or would prohibit or impose
any limitations on the Purchaser's ownership of the Shares or would prohibit or
make illegal the acceptance for payment, purchase of or payment for the Shares.
Neither the Company nor any of its Subsidiaries is in default with respect to
any judgment, decree, injunction, rule or order of any court, arbitrator or
Authority outstanding against or binding upon the Company or any of its
Subsidiaries, other than where any such defaults would not, individually or in
the aggregate, have a Material Adverse Effect.
2.10. Use of Proceeds. The Company intends to use the proceeds from
the sale of Shares solely for the Asset Acquisition.
2.11. Hart-Scott-Rodino Matters. The Company, taken together with the
"ultimate parent entity" of the Company, if any, and all entities which the
Company and such ultimate parent entity control directly or indirectly, is not a
person which has total assets or annual net sales (as such terms are defined
under the Hart-Scott-Rodino Act) of $100,000,000 or more for purposes of 15
U.S.C. ss.18a(a) of the Hart-Scott-Rodino Act.
III. REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER
The Purchaser represents and warrants to the Company that:
3.1. Due Organization, etc. The Purchaser is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware. The Purchaser has no direct or indirect subsidiaries.
3.2. Authorization; Execution and Delivery of Agreement. The
Purchaser has all requisite power and authority to execute this Agreement, to
perform its obligations hereunder
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<PAGE>
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Purchaser. This Agreement has been duly executed and delivered by the Purchaser
and this Agreement constitutes the legal, valid, binding and enforceable
obligation of the Purchaser, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
3.3. No Conflict; No Consent. The execution and delivery of this
Agreement, the issuance and sale of the Shares to the Purchaser and the
consummation of the transactions contemplated hereby do not, and will not,
conflict with, or result in any violation of or default under, or permit the
acceleration of any obligation under, or the creation or imposition of any
Encumbrance on any of the properties or assets of the Purchaser under, (i) any
provision of the certificate of organization and limited liability company
agreement or similar constituent documents of the Purchaser, (ii) any indenture,
lease, mortgage, deed of trust, loan agreement or other agreement or instrument,
or any permit, license, registration, membership, authorization or qualification
from any Authority, of the Purchaser or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation of any Authority to which the
Purchaser is a party or by which it is bound, other than, in the case of clause
(ii) above, where such conflict, violation, default, acceleration or Encumbrance
would not, individually or in the aggregate, have a Purchaser Material Adverse
Effect. Other than as required by the Hart-Scott-Rodino Act or as a result of
the reporting requirements of the Exchange Act, no consent, approval, order or
authorization of, or registration, declaration, filing with or notice to, any
Authority is required to be made or obtained by the Purchaser in order to
execute or deliver this Agreement or to consummate the transactions contemplated
hereby.
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3.4. No Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Purchaser.
3.5. Litigation and Claims. There is no claim, prosecution, suit,
action, arbitration, proceeding, investigation or review pending or, to the
knowledge of the Purchaser, threatened against or affecting the Purchaser, or
any of its properties or assets which, if adversely determined, would prohibit
or make illegal the purchase of or payment for the Shares.
3.6. Investment Purposes. (a) The Purchaser, by reason of its
business and financial experience, has such knowledge, sophistication and
experience in business and financial matters as to be capable of evaluating the
merits and risks of its investment in the Shares, and is purchasing the Shares
hereunder for its own account, for investment only and not with a view to, or
any present intention of, effecting a distribution of such securities or any
part thereof. The Purchaser acknowledges that the Shares to be purchased
hereunder have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), or the securities laws of any state or other
jurisdiction and cannot be disposed of unless they are subsequently registered
under the Securities Act and any applicable state laws or exemption from such
registration is available.
(b) The Purchaser is an "accredited investor" as that term is
defined in Rule 501 promulgated under the Securities Act.
(c) The Purchaser has had the opportunity to ask questions and to
receive answers concerning the financial condition, operations and prospects of
the Company and the terms and conditions of the Purchaser's investment, as well
as the opportunity to obtain any additional information necessary to verify the
accuracy of information furnished in connection therewith that the Company
possesses or can acquire without unreasonable effort or expense.
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<PAGE>
3.7. Hart-Scott-Rodino Matters. The Purchaser, taken together with
the "ultimate parent entity" of the Purchaser, if any, and all entities which
the Purchaser and such ultimate parent entity control directly or indirectly, is
not a person which has total assets or annual net sales (as such terms are
defined under the Hart-Scott-Rodino Act) of $100,000,000 or more for purposes of
15 U.S.C. ss.18a(a) of the Hart-Scott-Rodino Act.
IV.COVENANTS OF THE COMPANY
The Company covenants and agrees that:
4.1. Conduct of Business. Except as specifically consented to in
writing by the Purchaser or expressly contemplated by this Agreement or by the
Asset Purchase Agreement, with no amendment being made to the Asset Purchase
Agreement that provides for a purchase price in excess of $50,000,000.00 or that
provides for the issuance of any stock of any class other than pursuant to this
Agreement, during the period from the date of this Agreement up to and including
the date of the Closing, the Company shall, and shall cause each of its
Subsidiaries to, (i) conduct its business in the usual and ordinary course
consistent with past practice and use its reasonable best efforts to preserve
its business organization intact, to keep available the services of its key
employees, material independent contractors and material consultants currently
employed, to preserve the present relationships with customers, suppliers and
other Persons (as hereinafter defined) with whom it has significant business
relations, to maintain books and records in the usual and ordinary manner, and
to preserve the goodwill and ongoing business; and (ii) except pursuant to
agreements or commitments entered into by the Company or its Subsidiaries prior
to the date of this Agreement and listed on Schedule 2.5(b) hereto, not issue or
sell (or agree to issue or sell) any stock of any class or any other securities,
or any options, warrants, conversion or other rights to purchase any such
securities, or grant, or agree to grant,
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any such options or modify or alter the terms of any of the above. As used
herein, "Person" means any individual, partnership, joint venture, firm,
corporation, association, trust or other entity or any government or political
subdivision or agency, department or instrumentality thereof.
4.2. Exchange of Stock Certificates. Promptly upon surrender of any
certificates representing Shares at the office of the Company, the Company will,
at its expense, execute and deliver to the Purchaser a new certificate or
certificates in denominations specified by the Purchaser for an aggregate number
of Shares equal to the number of Shares represented by the certificates
surrendered.
4.3. Lost, Stolen, Destroyed or Mutilated Stock Certificates. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any certificate for Shares and, in the case of loss, theft or
destruction, upon delivery of an indemnity satisfactory to the Company (which,
in the case of the Purchaser may be an undertaking by the Purchaser to so
indemnify the Company), or, in the case of mutilation, upon surrender and
cancellation thereof, the Company will issue a new certificate of like tenor for
a number of Shares equal to the number of Shares represented by the certificate
lost, stolen, destroyed or mutilated.
4.4. Course of Dealings with AWC. The Company shall keep the
Purchaser apprised of all material developments in connection with the Asset
Acquisition, including any amendment of the Asset Purchase Agreement or waiver
of any terms or conditions thereof.
4.5. Board Representation. As promptly as practicable after the
Closing, the Company shall take or cause to be taken all necessary actions to
appoint or elect David M. Schulte to the Board, which is currently composed of
four members. At each annual meeting of
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the stockholders of the Company thereafter, so long as the Purchaser shall own
Shares representing 5% or more of the total issued and outstanding shares of
Common Stock as of the date which is thirty (30) days immediately preceding the
record date of such meeting, the Company shall include in the slate of nominees
for election as the Board at such meeting, one officer or individual member of
the Purchaser designated by the Purchaser (which designee shall not include any
individual whose membership on the Board would be a violation of law), provided
that the Company has consented to such designee, which consent shall not be
unreasonably withheld.
4.6. Additional Financing Commitment. The Company shall provide to
the Purchaser, promptly after receipt thereof by the Company, a copy of the
commitment letter (the "Additional Commitment Letter") relating to an increase
in the aggregate principal amount of the debt financing commitment set forth in
the August 6th Commitment Letter. On or prior to the third calendar day
immediately following the Purchaser's receipt of such copy of the Additional
Commitment Letter, the Purchaser shall notify the Company in writing if the
terms of such Additional Commitment Letter are materially and adversely
different from those contained in the August 6th Commitment Letter (other than
with respect to the aggregate principal amount of the debt financing) and shall
include in such notice whether it elects, as a consequence thereof, to terminate
this Agreement pursuant to Section 8.1(v).
V.COVENANTS OF THE PURCHASER AND THE COMPANY
5.1. Access; Confidentiality. (a) At the reasonable request of the
Purchaser, the Company shall give the officers, attorneys, accountants and other
authorized representatives of the Purchaser access, during normal business hours
and upon reasonable notice, to all of the Company's, and the Subsidiaries'
offices, facilities, properties and personnel. The Company will
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furnish the representatives of the Purchaser with all such information
concerning the Company and its Subsidiaries as such representatives may
reasonably request and cause the employees, accountants, independent accountants
and attorneys of the Company and its Subsidiaries to cooperate fully with such
representatives in connection with such review and examination and to make full
disclosure to the Purchaser of all material facts concerning the Company and its
Subsidiaries; provided, however, that the Purchaser will hold in strict
confidence and not use for its own benefit (other than in connection with the
transactions contemplated by this Agreement), prior to the Closing, the
documents and information (including all evaluation material relating to
employees) furnished to the Purchaser concerning the Company and its
Subsidiaries; and, if the transactions contemplated by this Agreement shall not
be consummated, such confidence shall be maintained and all such documents and
all copies thereof shall promptly thereafter be returned to the Company. The
Purchaser further agrees that it shall be responsible for any breach of this
Section 5.1 by any of its officers, attorneys, accountants and other authorized
representatives. No investigation by the Purchaser or any of its representatives
pursuant to this Section 5.1 shall affect any representation, warranty or
closing condition of any party hereto.
(b) Chilmark Fund II, L.P. ("Chilmark") agrees that it shall be
bound by the obligations of the Purchaser set forth in Section 5.1(a) as if it
were the Purchaser for purposes of said section.
5.2. Hart-Scott-Rodino Act Filings. Each party covenants and agrees
to file, if required, on a date no later than ten days from the date hereof a
notification and report form pursuant to the Hart-Scott-Rodino Act with respect
to the purchase by the Purchaser of the Shares pursuant to this Agreement and
will provide promptly any supplemental information that may be requested in
connection therewith. Each party will comply with all reasonable requests of
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the other party for information necessary in connection with the preparation by
such other party of its notification and report form.
5.3. Public Disclosure and Confidentiality. Each party hereby agrees
that, prior to the Closing, except as required by applicable law (or under the
rules and regulations of the Nasdaq Stock Market (or any national securities
exchange on which the Common Stock is listed)), no press release or public
announcement or communication will be made or caused to be made concerning the
execution or performance of this Agreement, the terms hereof or the transactions
contemplated hereby unless specifically approved in advance by both parties. In
the event that a party views disclosure as required by applicable law (or the
rules and regulations of the Nasdaq Stock Market or any such national stock
exchange) as contemplated by the previous sentence, such disclosing party shall
provide a copy of such disclosure to the other party within a reasonable period
of time prior to such disclosure.
5.4. Certain Notifications. At all times prior to the Closing, each
party hereto shall promptly notify the other party in writing of the occurrence
of any event which will or could reasonably result in the failure of any of the
conditions contained in Article I hereof to be satisfied. Such notice shall be
in additional to and not in lieu of the other notices and communications
provided for herein.
5.5. Efforts to Consummate; Further Actions. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate the
Asset Acquisition and the transactions contemplated by this Agreement.
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5.6. Standstill Obligations of the Purchaser. (a) As of the date of
this Agreement, none of the Purchaser, Chilmark or any Affiliate (as hereinafter
defined) thereof beneficially owns any shares of Common Stock, except as set
forth on Schedule 5.6. From and after the date of this Agreement until the
Closing, none of the Purchaser or Chilmark (collectively, the "Stockholders") or
any of their Affiliates will acquire any securities issued by the Company or
convertible into or exchangeable for any equity securities of the Company
(collectively referred to as "Stock"), except pursuant to the terms of this
Agreement. For purposes of this Agreement, an "Affiliate" of any person, entity
or corporation shall mean and include (i) any person, entity or corporation, now
or hereafter, directly or indirectly through one or more intermediaries,
controlling, controlled by or under common control with (through the ownership
of voting securities or interests, by contract or otherwise) such person, entity
or corporation, or (ii) any other person, entity or corporation acting in
concert with such person, entity or corporation in connection with the Company
with respect to any matter referred to in Section 5.6(d) of this Agreement or
clauses (a)-(j) of Item 4 of Schedule 13D under the Exchange Act, or with
respect to acquiring, holding, voting or disposing of any Stock. Each of the
Stockholders acknowledges and agrees that a breach of any provision of this
Agreement by any Stockholder or any Affiliate thereof shall constitute a breach
by each Stockholder and that each Stockholder shall be fully liable for any
breach of this Agreement by any other Stockholder or by any Affiliate of any
Stockholder, it being understood that notwithstanding any other provision of
this Agreement, any of the Stockholders and their Affiliates shall be entitled
to act in concert with one another with respect to any action which a
Stockholder or an Affiliate of a Stockholder would be permitted to take
individually hereunder. For the purposes of this Agreement,
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beneficial ownership shall be determined pursuant to Rule 13d-3 ("Rule 13d-3")
promulgated by the Commission pursuant to the Exchange Act.
(b) Each of the Stockholders hereby jointly and severally covenants
and agrees that from and after the date hereof none of the Stockholders or their
Affiliates will, without the prior written consent of the Company specifically
expressed in a vote adopted after the Closing by the Board, directly or
indirectly, purchase or cause to be purchased or otherwise acquire (other than
pursuant to a stock split, stock dividend or similar transaction) or agree to
acquire, or become or agree to become the beneficial owner of, any additional
Stock, except that the Stockholders and their Affiliates may purchase from time
to time, in the open market or in privately negotiated transactions, up to an
aggregate number of shares of Common Stock which, when added to the shares of
Common Stock then owned by the Stockholders and their Affiliates, would result
in the Stockholders and their Affiliates owning no more than the percentage of
voting securities of the Company held by the Stockholders and their Affiliates
immediately following the Closing. Each of the Stockholders agrees that none of
the Stockholders or their Affiliates will, without the prior written consent of
the Board specifically expressed in a vote adopted by the Board, directly or
indirectly, transfer any shares of Stock now owned or hereafter acquired by
them, except for transfers made: (i) pursuant to the provisions of Section
5.6(c) below, (ii) pursuant to a publicly announced tender offer for any shares
of Stock by any corporation, entity, person or group (other than any of the
Stockholders or their Affiliates) which the Board has voted to recommend to
holders of any shares of Stock, (iii) pursuant to the exercise of the
registration rights provided in Article VI hereof, (iv) pursuant to open market
sales made in accordance with Rule 144 under the Securities Act, including, if
applicable, paragraph (k) thereof or (v) to the members or investors of the
Purchaser, and to their members or investors, by
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distribution, dissolution or otherwise; provided, however, that in no event
shall any such member or investor who is an Affiliate of either of the
Stockholders be permitted to, directly or indirectly, transfer any shares of
Stock now owned or hereafter acquired, except in accordance with this Section
5.6(b). For purposes of this Agreement, "transfer" shall mean and include any
sale, assignment, gift, pledge, the imposition of any other encumbrance or any
other disposition or any agreement or obligation to do any of the foregoing.
(c) If any Stockholder or any Affiliate thereof desires to sell any
shares of Stock (a "Selling Stockholder") (other than pursuant to clause (ii),
(iii), (iv) or (v) of Section 5.6(b) hereof), the following requirements shall
be satisfied:
(i) The Selling Stockholder shall notify the Company in
writing of the proposed sale (the "Notice of Proposed Transfer"). The Notice of
Proposed Transfer shall identify and provide reasonable information concerning
the background, business experience and business affiliations of the proposed
transferee (the "Transferee"), the purchase price or other consideration, if
any, the number of shares and type of Stock to be transferred and the complete
terms of the proposed transaction.
(ii) For a period of ten (10) business days following the
receipt of the Notice of Proposed Transfer, the Company and/or any substitute
purchaser(s) as designated by the Company (the Company and/or such substituted
purchaser is hereinafter sometimes called the "Buyer") shall have the option to
purchase all, but not less than all, the Stock specified in the Notice of
Proposed Transfer at the price and upon the terms set forthin the Notice of
Proposed Transfer; provided, however, that if the type of consideration that was
to be paid was non-cash consideration, then the amount payable by the Buyer for
such Stock shall be determined in good faith by the Board, after consultation
with the Company's investment banker. In the event that
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Buyer elects to purchase all, but not less than all, of the Stock specified in
the Notice of Proposed Transfer, it shall give written notice to the Selling
Stockholder of its election, in which case settlement for said Stock shall be
made and the Buyer shall purchase such Stock for such price, in cash within ten
(10) business days after the date the Company receives the Notice of Proposed
Transfer. In the event that Buyer elects not to purchase all of the Stock
specified in the Notice of Proposed Transfer, the Selling Stockholder may
consummate the proposed transfer of said Stock with the Transferee, provided,
however, that such transfer shall not be consummated unless and until such
Transferee agrees in writing to be bound by all of the terms of and to perform
all of the obligations of the Stockholders contained in Section 5.6(b), this
Section 5.6(c) and in Section 5.6(d) of this Agreement in the same manner as if
such Transferee were a party to this Agreement.
(d) Each of the Stockholders hereby agrees that, prior to the date
on which the Stockholders beneficially own collectively less than 0.5% of the
total issued and outstanding shares of Common Stock, none of the Stockholders or
their Affiliates will, directly or indirectly, or will solicit, request, advise,
assist or encourage others, directly or indirectly, to:
(i) form, join in or in any other way participate in a
"partnership, limited partnership, syndicate or other group" within the meaning
of Section 13(d)(3) of the Exchange Act with respect to shares of Stock or
deposit any Stock in a voting trust or similar arrangement or subject any Stock
to any voting agreement or pooling arrangement, other than solely with one or
more other Stockholders or Affiliates with respect to shares of Common Stock
permitted to be owned hereunder;
(ii) solicit proxies or written consents of shareholders with
respect to Stock under any circumstances, or make, or in any way participate in,
any "solicitation" of any
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"proxy" to vote any shares of Stock, or become a "participant" in any election
contest with respect to the Company (as such terms are defined or used in Rules
14a-1 and 14a-11 under the Exchange Act);
(iii) seek to call, or to request the call of, a special meeting
of the shareholders of the Company or seek to make, or make, a shareholder
proposal, or seek to make or make, any nomination of any candidate as a director
of the Company other than a designee of the Purchaser pursuant to Section 4.5
hereof or any candidate nominated by the Board, at any meeting of the
shareholders of the Company;
(iv) commence or announce any intention to commence any tender
offer for any shares of Stock;
(v) make a proposal or bid with respect to, announce any
intention or desire to make, or discuss with any person, or publicly make or
disclose, cause to be made or disclosed publicly, facilitate the making public
or public disclosure of, any proposal or bid with respect to, the acquisition of
any substantial portion of the assets of the Company or of the assets or stock
of any of its Subsidiaries or of all or any portion of the outstanding Stock, or
any merger, consolidation, other business combination, restructuring,
recapitalization, liquidation or other extraordinary transaction involving the
Company or any of its Subsidiaries;
(vi) otherwise act alone or in concert with others to seek to
control or influence in any manner the management or the Board (including the
composition thereof) or the business, operations or affairs of the Company;
provided, however, that this provision shall not prevent the Purchaser's
designee on the Board from participating in, or otherwise seeking to affect the
outcome of, discussions and votes of the Board with respect to matters coming
before it;
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(vii) arrange, or in any way participate in, any financing for
any transaction referred to in clauses (i) through (vi) above inclusive;
(viii) make public, or cause or facilitate the making public
(including by disclosure to any journalist or other representative of the media)
of, any request, or otherwise seek, to obtain any waiver or amendment of any
provision of this Agreement, or to take any action restricted hereby.
Notwithstanding the foregoing, (i) the Stockholders may make such
filings with the Commission pursuant to Sections 13(d) and 16(a) of the Exchange
Act to reflect changes in the beneficial ownership of any shares of Stock of any
Stockholder (to the extent such changes reflect action taken by such Stockholder
which is permitted by this Agreement) and (ii) the Purchaser may exercise its
rights with respect to the election of a director to the Board pursuant to
Section 4.5 of this Agreement.
(e) So long as the Stockholders beneficially own collectively 5.0% or
more of the total issued and outstanding shares of Common Stock or an individual
designated by the Purchaser pursuant to Section 4.5 is a member of the Board,
whenever there shall be submitted to the stockholders of the Company nominees
for election to the Board, each of the Stockholders and any Affiliate of such
Stockholder controlled directly or indirectly by such Stockholder hereby agrees
to vote, or to cause to be voted, all Stock then held by such Stockholder,
whether beneficially or of record, and entitled to vote on such matter, in favor
of such nominees designated or nominated by the Board, and, unless otherwise
requested by the Company, not in favor of any other nominee or nominees other
than a designee of the Purchaser pursuant to Section 4.5.
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(f) Each of the Stockholders hereby covenants and agrees that each
Stockholder will promptly notify the Company when and if such Stockholder
receives or learns of (A) any oral or written request to any of the Stockholders
or any of their Affiliates to participate in any of the transactions or actions
referred to in paragraphs (i) through (viii) of subsection (d) above inclusive
or (B) any oral or written communication from or by any person or entity (other
than the Company) with respect to any of the transactions or actions referred to
in paragraphs (i) through (viii) of subsection (d) above inclusive, if such
person or entity could reasonably be deemed to be capable of effecting,
participating in or materially assisting in such an action or transaction
(through one or more Affiliates or otherwise) and such oral or written
communication was of a nature that could reasonably be deemed to indicate a
serious interest in effecting, participating in or materially assisting in such
an action or transaction.
VI. REGISTRATION RIGHTS
The Company covenants and agrees to provide the following
registration rights:
6.1. "Piggyback" Registration. If, at any time while the Purchaser
shall hold Shares, the Company proposes to file a registration statement
relating to the offering of any of its capital stock under the Securities Act
(other than (i) a registration statement required to be filed in respect of
employee benefit plans of the Company on Form S-8 or any similar form from time
to time in effect, (ii) any registration statement on Form S-4 or similar
successor form, or (iii) a registration statement relating to a transaction
pursuant to Rule 145 of the Securities Act), whether or not for sale for its own
account, the Company shall, at least twenty-one days (or if such twenty-one day
period is not practicable, then a reasonable shorter period which shall not be
less than seven days) prior to such filing, give written notice of such proposed
filing to the Purchaser. Upon receipt by the Company not more than seven days
(unless the notice given to
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the Purchaser pursuant to the previous sentence is less than ten days, in which
case such seven-day period shall be shortened to five days) after such notice of
a written request from the Purchaser for registration of Purchaser's Stock (as
hereinafter defined), (i) the Company shall, subject to Section 6.3, include
such Purchaser's Stock in such registration statement, and shall use all
reasonable efforts to cause such registration statement to become effective with
respect to such Purchaser's Stock, unless the managing underwriter therefor
concludes in its reasonable judgment that the number of securities requested to
be included in such registration exceeds the number which can reasonably be sold
in (or during the time of) such offering, in which case the Company may (i)
include all securities initially proposed by the Company to be sold for its own
account and (ii) decrease the number of shares of Purchaser's Stock and any
other securities (other than securities included by virtue of clause (i) above)
proposed to be sold to the extent necessary to reduce the number of securities
to be included in the registration to the level recommended by the managing
underwriter; provided, however, that there shall be no such decrease in the
number of shares of Purchaser's Stock unless the number of shares of Purchaser's
Stock and such other securities (other than the securities included by virtue of
clause (i) above) proposed to be sold has been decreased on a pro rata basis,
calculated according to the number of shares of Purchaser's Stock and other
securities requested to be included by the respective holders of each.
"Purchaser's Stock" means any Shares for which the Purchaser requests
registration pursuant to Section 6.1 or 6.2.
6.2. Demand Registration. If the Company shall receive at any time or
from time to time a written request from the Purchaser requesting the Company to
register any shares of Purchaser's Stock under the Securities Act on Form S-3
(or if the Company is not eligible to use Form S-3, then on Form S-1 or S-2), or
any other similar form then in effect, the Company
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agrees that it will use all reasonable efforts to cause the prompt registration
of all shares of Purchaser's Stock as to which such request is made (or will
amend or supplement an effective registration statement to include Purchaser's
Stock). The Company may postpone for a limited time, which in no event shall be
longer than 90 days, compliance with a request for registration pursuant to this
Section 6.2 if (i) the Company shall have given notice to the Purchaser of the
occurrence of a Suspension Event (as hereinafter defined) or (ii) the Company is
conducting a public offering of capital stock and the managing underwriter
concludes in its reasonable judgment that such compliance would materially
adversely affect such offering. Notwithstanding anything in this Section 6.2 to
the contrary, the Company shall not be required to: (a) comply with more than
two (2) requests of the Purchaser pursuant to this Section 6.2 or (b) prepare or
cause to be prepared audited financial statements of the Company other than
those prepared in the normal course of the Company's business at its fiscal year
end. Any underwriter selected by the Purchaser to act as such in connection with
a registration pursuant to this Section 6.2 shall be reasonably acceptable to
the Company. The Company shall not be required to file and effect a new
registration pursuant to this Section 6.2(b) until a period of nine (9) months
has elapsed from the termination of the registration statement with respect to
Purchaser's Stock covered by a prior registration request. The Company agrees
that in the event the Purchaser makes a request under this Section 6.2 to cause
the Company to effect a demand registration and the Company is precluded from
effecting such registration with respect to 25% or more of the shares of
Purchaser's Stock subject to such request as a consequence of the terms of
registration rights previously granted by the Company to any of the Other
Holders, then, under such
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circumstances, such request shall not be counted against the number of demand
requests granted to Purchaser under this Section 6.2.
6.3. General Provisions. (a) The Company will use all reasonable
efforts to cause any registration statement referred to in Sections 6.1 and 6.2
to become effective and to remain effective (with a prospectus at all times
meeting the requirement of the 1933 Act) until the earlier of 180 days from the
effective date of the registration statement and the date the Purchaser
completes its distribution of Purchaser's Stock, subject, however, to the
Company's suspension rights set forth in Section 6.7(b). The Company will use
all reasonable efforts to effect such qualifications under applicable Blue Sky
or other state securities laws as may be reasonably requested by the Purchaser
(provided that the Company shall not be obligated to file a general consent to
service of process or qualify to do business as a foreign corporation or
otherwise subject itself to taxation in any jurisdiction solely for the purpose
of any such qualification) to permit or facilitate such sale or other
distribution. The Company will cause the Purchaser's Stock to be listed on the
principal stock exchange on which the shares of Common Stock are listed.
(b) The Purchaser acknowledges that the Company has previously
granted registration rights to other holders of Common Stock and/or other
securities issued by the Company that are convertible into or exercisable for
shares of Common Stock (collectively, the "Other Holders"). The Purchaser
further acknowledges that, notwithstanding anything to the contrary provided in
this Agreement, the registration rights granted to the Purchaser under this
Agreement shall, in every case, be subject to the rights of the Other Holders
and, to the extent, if any, that any of the provisions of this Article VI
conflict or are inconsistent with any of such
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rights of the Other Holders, such rights of the Other Holders shall govern with
respect to the subject matter of such conflict or inconsistency.
(c) The Purchaser agrees, if requested by the managing underwriter or
underwriters in an underwritten offering (an "Offering"), not to effect any
public sale or distribution of any of the securities of the Company of any class
included in such Offering, including a sale pursuant to Rule 144 or Rule 144A
under the Securities Act (except as part of such Offering), during the 15-day
period prior to, and during the 90-day period beginning on, the date of pricing
of each Offering, to the extent timely notified in writing by the Company or the
managing underwriters. Furthermore, notwithstanding anything to the contrary set
forth in the Agreement, the Company's obligation under this Agreement to cause a
registration statement and any filings with any state securities commission to
be made or to become effective or to amend or supplement such registration
statement shall be suspended in the event and during such period as the Company
is proceeding with an Offering if the Company is advised by the underwriters
that the sale of shares of Purchaser's Stock under such registration statement
would have a material adverse effect on the Offering.
(d) Following the effectiveness of a registration statement and the
filings with any state securities commissions, the Purchaser agrees that it will
not effect any sales of the Purchaser's Stock pursuant to such registration
statement or any such filings at any time after it has received notice from the
Company to suspend sales (i) as a result of the occurrence or existence of any
Suspension Event, or (ii) so that the Company may amend or supplement such
registration statement or such filing. The Purchaser may recommence effecting
sales of the Purchaser's Stock pursuant to the registration statement or such
filings following further notice to such effect from the Company, which notice
shall be given by the Company not later than
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three (3) business days after the conclusion of any such Suspension Event or
amendment or supplement.
6.4. Information, Documents, Etc. Upon making a request for
registration pursuant to Sections 6.1 or 6.2, the Purchaser shall furnish to the
Company such information regarding its holdings and the proposed manner of
distribution thereof as the Company may reasonably request and as shall be
required in connection with any registration, qualification or compliance
referred to in this Article VI. The Company agrees that it will furnish to the
Purchaser the number of prospectuses, offering circulars or other documents, or
any amendments or supplements thereto, incident to any registration,
qualification or compliance referred to in this Article VI as the Purchaser from
time to time may reasonably request.
6.5. Expenses. The Company will bear all expenses of registrations
pursuant to Section 6.1 and one-half of all expenses of the first registration
(and amendments and supplements related thereto) pursuant to Section 6.2 (in
each case, other than underwriting discounts and commissions and brokerage
commissions and fees, if any, payable with respect to shares of Purchaser's
Stock sold by the Purchaser, and fees and expenses of any accountants, counsel
or other parties retained or employed by holders of Purchaser's Stock)
including, without limitation, registration fees, printing expenses, expenses of
compliance with Blue Sky or other state securities laws, and legal and audit
fees incurred by the Company in connection with such registration and amendments
or supplements in connection therewith. The Purchaser will bear one-half of all
expenses of the first registration (and amendments and supplements related
thereto) and all expenses of the second registration (and amendments and
supplements related thereto) pursuant to Section 6.2, including, without
limitation, registration fees, printing expenses, expenses of compliance with
Blue Sky or other state securities laws, and legal and
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audit fees incurred by the Company and the Purchaser and the holders of
Purchaser's Stock. Notwithstanding the foregoing, the Company agrees that in the
event that subsequent to the date hereof the Company shall grant demand
registration rights to a third party and shall agree in connection therewith to
bear all or a greater portion of the expenses of such demand registrations than
as set out above, then this Section 6.5 shall be deemed to have been amended to
provide for the Company to bear, and the Company shall bear, the same portion of
the expenses of any subsequent registration pursuant to Section 6.2 of this
Agreement as the Company shall have agreed to bear for such third party.
6.6. Cooperation. In connection with any registration of Purchaser's
Stock pursuant to this Article VI, the Company agrees to :
(a) enter into such customary agreement (including an underwriting
agreement containing such representations and warranties by the Company and such
other terms and provisions, including indemnification provisions, as are
customarily contained in underwriting agreements for comparable offerings and,
if no underwriting agreement is entered into, an indemnification agreement on
such terms as is customary in transactions of such nature) and take all such
other actions as the Purchaser or the underwriters, if any, participating in
such offering and sale may reasonably request in order to expedite or facilitate
such offering and sale;
(b) furnish, at the request of the Purchaser or any underwriters
participating in such offering and sale, (i) a comfort letter or letters, dated
the date of the final prospectus with respect to the Purchaser's Stock and/or
the date of the closing for the sale of the Purchaser's Stock from the
independent certified public accountants of the Company and addressed to the
Purchaser and any underwriters participating in such offering and sale, which
letter or letters shall state that such accountants are independent with respect
to the Company within the
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meaning of Rule 1.01 of the Code of Professional Ethics of the American
Institute of Certified Public Accountants and shall be in form reasonably
satisfactory to the managing underwriter (or, if none, to the Purchaser) and
shall cover matters of the type customarily covered in "cold comfort" letters in
connection with transactions of a similar nature for similar entities and (ii)
an opinion, dated the date of the closing for the sale of the Purchaser's Stock,
of the counsel representing the Company with respect to such offering and sale
(which counsel may be the General Counsel of the Company or other counsel
reasonably satisfactory to the Purchaser), addressed to the Purchaser and any
such underwriters, which opinion shall be in form reasonably satisfactory to the
managing underwriter (or, if none, to the Purchaser) and shall address such
matters as are customary in transactions of a similar nature for similar
entities;
(c) make available for inspection by the Purchaser, the underwriters,
if any, participating in such offering and sale (which inspecting underwriters
shall, if reasonably possible, be limited to any manager or managers for such
participating underwriters), the counsel for the Purchaser, one accountant or
accounting firm retained by the Purchaser and any such underwriters, or any
other agent retained by the Purchaser or such underwriters, all financial and
other records, corporate documents and properties of the Company, and supply
such additional information, as they shall reasonably request; provided that any
such party shall keep the contents thereof confidential in the manner prescribed
by Section 5.1.
6.7. Action to Suspend Effectiveness; Supplement to Registration
Statement. (a) The Company will notify the Purchaser and its counsel promptly of
(i) any action by the Commission to suspend the effectiveness of the
registration statement covering the Purchaser's Stock or the institution or
threatening of any proceeding for such purpose (a "stop order") or (ii) the
receipt by the Company of any notification with respect to the suspension of the
qualification
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of the Purchaser's Stock for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. Immediately upon receipt of any
such notice, the Purchaser shall cease to offer or sell any Purchaser's Stock
pursuant to the registration statement in the jurisdiction to which such stop
order or suspension relates. The Company will use all reasonable efforts to
prevent the issuance of any such stop order or the suspension of any such
qualification and, if any such stop order is issued or any such qualification is
suspended, to obtain as soon as possible the withdrawal or revocation thereof,
and will notify the Purchaser and its counsel at the earliest practicable date
of the date on which the Purchaser may offer and sell Purchaser's Stock pursuant
to the registration statement.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to cause the
registration of Purchaser's Stock and any filings with any state securities
commission to be made or to become effective or to amend or supplement a
registration statement shall be suspended in the event and during such period
that there are pending negotiations relating to, or consummation of, a
transaction or the occurrence of an event that would require additional
disclosure of material information by the Company in such registration statement
or such filing (such circumstances being hereinafter referred to as a
"Suspension Event") that would make it impractical or inadvisable to cause such
registration statement or such filings to be made or to become effective or to
amend or supplement such registration statement, but such suspension shall
continue only for so long as such event or its effect is continuing but in no
event will that suspension exceed ninety (90) days. Immediately upon receipt by
the Purchaser of notice of a Suspension Event, the Purchaser shall cease to
offer or sell any Purchaser's Stock pursuant to such registration statement,
cease to deliver or use such registration statement and, if so requested by the
Company, return to the
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Company, at its expense, all copies (other than permanent file copies) of such
registration statement.
(c) In the event the Company shall determine that it is necessary to
amend or supplement any registration statement relating to Purchaser's Stock,
the Company will furnish copies of such proposed amendment or supplement to the
Purchaser and its counsel and will not file or distribute such amendment or
supplement without the prior consent of the Purchaser, which consent shall not
be unreasonably withheld.
6.8. Indemnification. In the event any Purchaser's Stock is included
in a registration statement under this Article VI:
(a) To the full extent permitted by law, the Company will indemnify
and hold harmless the Purchaser and each subsequent holder of Purchaser's Stock
as set forth in Section 9.3(d) hereof (each, a "Holder") and the affiliates of
such Holder, and their respective directors, officers, employees, general and
limited partners, members, agents and representatives (and the directors,
officers, affiliates and controlling persons thereof), and each other person, if
any, who controls such Holder within the meaning of the Securities Act or the
Exchange Act, from and against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities Act,
the Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus, any final prospectus contained therein or any amendments or
supplements thereto, (ii) any omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not
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misleading, or (iii) any violation or alleged violation by the Company in
connection with the registration of Purchaser's Stock under the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay to each such Holder, affiliate or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, that the indemnity agreement contained in this Section 6.8(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable hereunder in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
the Purchaser or controlling person; and provided, further, that the Company
shall not be liable hereunder in any such case to the extent it is determined
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made:
(A) in any such preliminary prospectus, if (I) it was the
responsibility of such Holder to provide the person asserting such loss,
claim, damage, liability or expense with a current copy of the prospectus
and such Holder failed to deliver or cause to be delivered a copy of the
prospectus to such person after the Company had furnished such Holder with
a sufficient number of copies of the same and (II) the prospectus
corrected such untrue statement or omission; or
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(B) in such prospectus, if such untrue statement or omission is
corrected in an amendment or supplement to such prospectus and the Holder
thereafter fails to deliver the prospectus as so amended or supplemented
prior to or concurrently with the sale of Purchaser's Stock to the person
asserting such loss, claim, damage, liability or expense after the Company
had furnished such Holder with a sufficient number copies of the same.
Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Holder or any such director,
officer, employee, general or limited partner, member, agent, representative or
controlling person and shall survive the transfer of such securities by such
Holder. Each Holder shall furnish such information regarding itself or the claim
in question as the Company may reasonably request in writing and as shall be
reasonably required in connection with defense of such claim and litigation
resulting therefrom.
(b) To the full extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon (i) any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for
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use in connection with such registration or (ii) an untrue statement or alleged
untrue statement or omission or alleged omission made in the circumstances
described in clauses (A) or (B) of Section 6.8(a); and each such Holder will
pay, as incurred, any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this Section 6.8(b), in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, that the indemnity agreement contained in this Section 6.8(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this Section 6.8(b) exceed the gross proceeds
from the offering received by such Holder; and provided, further, that the
obligation to provide indemnification pursuant to this Section 6.8(b) shall be
several, and not joint and several, among such indemnifying parties. Such
indemnity shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer,
representative or controlling person and shall survive the transfer of such
securities by such prospective Seller.
(c) Promptly after receipt by an indemnified party under this Section
6.8 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 6.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel selected by the
indemnifying party or parties. The failure to deliver written notice to the
indemnifying party within a reasonable time after the
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commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 6.8 to the extent of such prejudice,
but the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 6.8. The indemnified party shall have the right, but not
the obligation, to participate in the defense of any action referred to above
through counsel of its own choosing and shall have the right, but not the
obligation, to assert any and all separate defenses, cross claims or
counterclaims which it may have, and the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of such
counsel has been specifically authorized in advance by the indemnifying party,
(ii) there is a conflict of interest that prevents counsel for the indemnifying
party from adequately representing the interests of the indemnified party or
there are defenses available to the indemnified party that are different from,
or additional to, the defenses that are available to the indemnifying party, or
(iii) the indemnifying party fails to assume the defense or does not reasonably
contest such action in good faith, in which case, if the indemnified party
notifies the indemnifying party that it elects to employ separate counsel, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party and the reasonable fees and expenses of such
separate counsel shall be borne by the indemnifying party; provided, however,
that, the indemnifying party shall not, in connection with any proceeding or
related proceedings, be liable for the reasonable fees and expenses of more than
one separate firm (in addition to one firm acting as local counsel) for all
indemnified parties.
(d) Contribution. If for any reason (other than the reasons expressly
specified in this Section 6.8) the foregoing indemnity and payment obligation is
unavailable or is
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insufficient to hold harmless an indemnified party under paragraphs (a) or (b)
of this Section 6.8, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of any loss, claim, damage
or liability (or actions or proceedings in respect thereof), including, without
limitation, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding, in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and the indemnified
party on the other. The relative fault shall be determined by reference to,
among other things, whether the action in question, including any untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact has been taken or made by, or relates to information
supplied by, the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action, untrue statement or omission. If, however, the allocation
provided in the second preceding sentence is not permitted by applicable law, or
if the allocation provided in the second preceding sentence provides a lesser
sum to the indemnified party than the amount hereinafter calculated, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault but also the relative benefits to the indemnifying party and the
indemnified party as well as any other relevant equitable considerations. The
parties agree that it would not be just and equitable if contributions pursuant
to this Section 6.8(d) were to be determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the preceding sentences of this Section 6.8(d).
Notwithstanding anything in this Section 6.8(d) to the contrary, no indemnifying
party
41
<PAGE>
(other than the Company) shall be required pursuant to this Section 6.8(d) to
contribute any amount in excess of the gross proceeds received by such
indemnifying party from the sale of Purchaser's Stock in the offering to which
the losses, claims, damages or liabilities of the indemnified parties relate. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company and the Holders under this Section
6.8 shall survive the completion of any offering of Purchaser's Stock in a
registration statement under this Article VI.
(f) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement (if
any) entered into in connection with any underwritten public offering of the
Purchaser's Stock are in conflict with the foregoing provisions, the provisions
in such underwriting agreement shall control.
VII. INDEMNIFICATION
7.1. Indemnification by the Company. The Company shall indemnify and
hold the Purchaser and each of its members, employees, officers and agents
harmless from and against any and all losses, claims, damages or liabilities
whatsoever (including legal fees and expenses) incurred by any of them based
upon, resulting from or arising out of any material breach of any
representation, warranty, covenant or agreement of the Company contained in this
Agreement.
7.2. Indemnification by the Purchaser. The Purchaser (and with
respect to Sections 5.1, 5.2 and 5.6, Chilmark) shall indemnify and hold the
Company and each of its employees, directors, officers and agents harmless from
and against any and all losses, claims, damages or liabilities whatsoever
(including legal fees and expenses) incurred by any of them
42
<PAGE>
(i) in the case of the Purchaser, resulting from or arising out of any material
breach of any representation, warranty, covenant or agreement of the Purchaser
contained in this Agreement and (ii) in the case of Chilmark, resulting from or
arising out of any material breach of any covenant or agreement of Chilmark
contained in Sections 5.1, 5.2 or 5.6 of this Agreement.
VIII. TERMINATION
8.1 Termination. (a) This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time prior to the
Closing:
(i) by the Company or the Purchaser, if the Closing has not
occurred by December 31, 1997;
(ii) by mutual written consent of the Company and the Purchaser;
(iii) by the Company, if there has been a material misrepresentation
or breach of warranty on the part of the Purchaser in the representations and
warranties contained herein or a material breach of covenants on the part of the
Purchaser and the same has not been cured within 30 days after notice thereof;
(iv) by the Purchaser, if there has been a material
misrepresentation or breach of warranty on the part of the Company in the
representations and warranties contained herein or a material breach of
covenants on the part of the Company and the same has not been cured within 30
days after notice thereof;
(v) by the Purchaser, in accordance with Section 4.6, if the terms
of the Additional Commitment Letter are materially and adversely different from
those contained in the August 6th Commitment Letter; or
(vi) by either the Purchaser or the Company, if any Governmental
Entity shall have issued a final order, decree or ruling or taken any other
action permanently enjoining,
43
<PAGE>
restraining or otherwise prohibiting the Asset Acquisition or the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and nonappealable, provided that the party seeking to
terminate shall have used its best efforts to appeal such order, decree, ruling
or other action.
(b) Notwithstanding anything herein to the contrary, the right to
terminate this Agreement under this Section 8.1 shall not be available to any
party to the extent the failure of such party to fulfill any of its obligations
under this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date (as a result, for example, of an action
or failure to act causing a failure of a condition precedent).
(c) A party terminating this Agreement pursuant to this Section 8.1
shall give written notice thereof the other party hereto, whereupon this
Agreement shall terminate and be of no further force and effect, the
transactions contemplated hereby shall be abandoned without further action by
any party and there shall be no liability on the part of the Company or the
Purchaser, except as provided in Section 9.7 hereof and except for any liability
for any willful breach hereof; provided however that the provisions of Sections
5.1, 7.1 and 7.2 shall survive any such termination.
IX. GENERAL PROVISIONS
9.1. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation conducted or notice or knowledge obtained by
or on behalf of any party hereto, each representation and warranty in this
Agreement and each agreement or covenant in this Agreement which does not by its
own terms expire on or prior to the Closing shall survive the Closing without
limitation as to time, except as specifically referred to herein.
44
<PAGE>
9.2. Notices. Any notice, request, instruction or other document to
be given hereunder by a party hereto shall be in writing and shall be deemed to
have been given, (i) when received if given in person, or (ii) on the date of
transmission if sent by nationally recognized overnight courier, certified or
registered mail, return receipt requested or (iii) three days after being
deposited in the U.S. mail, postage prepaid:
(a) if to the Purchaser, addressed as follows:
Cape Ann Investors, L.L.C.
c/o Chilmark Fund II, L.P.
875 North Michigan Avenue
Suite 2100
Chicago, Illinois 60611
Attention: Mr. David M. Schulte
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: William A. Groll, Esq.
(b) if to the Company, addressed as follows:
NutraMax Products, Inc.
9 Blackburn Drive
Gloucester, Massachusetts 01930
Attention: Robert F. Burns, Vice President and
Chief Financial Officer
with a copy to:
Eugene M. Schloss, Jr., Esq.
1700 Cary Road
Huntingdon Valley, Pennsylvania 19006-5002
and
Goodwin, Procter & Hoar, LLP
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Joseph L. Johnson III, Esq.
45
<PAGE>
or to such other individual or address as a party hereto my designate for itself
by notice given as herein provided.
9.3. General. (a) This Agreement (including the documents and
instruments referred to or incorporated herein) constitutes the entire
agreement, and supersedes all of the prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
(b) This Agreement is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder other than as
contemplated in Article VI, Article VII and Section 9.3(d) and shall not be
assigned by any party by operation of law or otherwise.
(c) This Agreement may be executed in two or more counterparts which
together shall constitute a single agreement.
(d) This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors, heirs and permitted assigns. This
Agreement is not assignable except by consent of each of the parties hereto or
operation of law; provided that in the event Purchaser shall distribute the
Shares to its investors (whether as a result of dissolution or otherwise), (i)
the holders of such Shares shall succeed to the rights and obligations of the
Purchaser contained in Article VI hereof and (ii) Chilmark Fund II, L.P. shall
succeed to the rights and obligations of the Purchaser contained in Section 4.5
hereof so long as it shall hold any Shares. Any purported assignment of this
Agreement in violation of this Section 9.3 shall be null and void.
9.4. Governing Law. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES CREATED HEREBY SHALL BE GOVERNED BY THE
46
<PAGE>
INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW
RULES THEREOF.
(b) Each party agrees that any proceeding relating to this Agreement
shall be brought in a state court of Delaware. Each party hereby consents to
personal jurisdiction in any such action brought in any such Delaware court,
consents to service of process by mail made upon such party and such party's
agent and waives any objection to venue in any such Delaware court or to any
claim that any such Delaware court is an inconvenient forum.
9.5. Severability of Provisions. If any provision or any portion of
any provision of this Agreement or the application of any such provision or any
portion thereof to any person or circumstance, shall be held invalid or
unenforceable, to the extent permitted by law, the remaining portion of such
provision and the remaining provisions of this Agreement, or the application of
such provision or portion of such provision as is held invalid or unenforceable
to persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby.
9.6. Captions. All section titles or captions contained in this
Agreement are for convenience only, shall not be deemed a part of this Agreement
and shall not affect the meaning or interpretation of this Agreement. All
references herein to Sections shall be deemed references to such parts of this
Agreement, unless the context shall otherwise require.
9.7. Expenses. Except as otherwise expressly provided in this
Agreement, each party hereto shall pay its own expenses incidental to the
preparation of this Agreement, the carrying out of the provisions hereof and the
consummation of the transactions contemplated hereby. In the event that the
Company shall become entitled to a break-up fee or reimbursement of expenses
from AWC pursuant to the terms of the Asset Purchase Agreement, the Company
47
<PAGE>
agrees that the aggregate amount of the break-up fee and expense reimbursement
to which it is entitled shall be allocated, first, to reimburse the out-of-
pocket costs and expenses incurred by each of the Company and the Purchaser in
connection with the Asset Acquisition and the transactions contemplated by this
Agreement (including, without limitation, the bank financing sought by the
Company in connection with the Asset Acquisition) (provided that should the
amount of such break-up fee and expense reimbursement be insufficient to
reimburse the Company and the Purchaser in full, the Company and the Purchaser
shall share such amount pro-rata in accordance with their respective out-of-
pocket costs and expenses) and, second, the balance of such funds shall be
allocated two-thirds to the Company and one-third to the Purchaser. Any payments
to be made to the Purchaser under this Section 9.7 shall be made to the account
of the general partner of the managing member of the Purchaser.
9.8. Equitable Relief. Each party acknowledges that, in the event of
any breach of this Agreement by a party, the other party would be irreparably
and immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that such other party, in addition to any other remedy to
which it may be entitled, shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to compel specific
performance of this Agreement. Any requirements for the securing or posting of
any bond with respect to such remedy are hereby waived by each of the parties
hereto.
9.9. Definitions. The following terms shall have the respective
meanings specified in the indicated Sections of this Agreement:
<TABLE>
<CAPTION>
Term Agreement Section
- ---- -----------------
<S> <C>
Additional Commitment Letter 4.6
Affiliate 5.6(a)
Agreement Recitals
</TABLE>
48
<PAGE>
<TABLE>
<S> <C>
Asset Acquisition Recitals
Asset Purchase Agreement Recitals
August 6th Commitment Letter 1.3(b)
Authority 1.3(b)
Board 1.3(d)(ii)
Buyer 5.6(c)(ii)
Chilmark 5.1(b)
Closing 1.3(a)
Code 5.6
Commission 2.6
Common Stock 2.5(a)
Company Recitals
Encumbrances 1.1
Exchange Act 2.4
Financial Statements 2.7(a)
Governmental Entity 1.3(b)
Hart-Scott-Rodino Act 1.3(b)
Holder 6.8(a)
Legal Requirements 1.3(b)
Material Adverse Effect 1.3(b)
NASD 2.3(a)
Notice of Proposed Transfer 5.6(c)(i)
Offering 6.3(c)
Other Holders 6.3(b)
Person 4.1
Purchaser Recitals
Purchaser Material Adverse Effect 1.3(c)
Purchaser's Stock 6.1
Rule 13d-3 5.6(a)
SEC Reports 2.6
Securities Act 3.6
Selling Stockholder 5.6(c)
Shares Recitals
Stock 5.6(a)
Stockholders 5.6(a)
Subsidiary 2.1
Suspension Event 6.7(b)
Transferee 5.6(c)(i)
Weaver Recitals
White Cross Recitals
</TABLE>
49
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have duly executed and
delivered this Agreement as of the date first above written.
NUTRAMAX PRODUCTS, INC.
By: /s/ Donald E. Lepone
------------------------
Name: Donald E. Lepone
Title: President/CEO
CAPE ANN INVESTORS, L.L.C.
By: Chilmark Fund II, L.P.,
its Managing Member
By: Chilmark II, L.L.C.,
its General Partner
By: /s/ Joel S. Friedland
------------------------
Name: Joel S. Friedland
Title: Vice President
SOLELY FOR PURPOSES OF
SECTIONS 5.1, 5.2, 5.6 AND 7.2:
CHILMARK FUND II, L.P.
By: Chilmark II, L.L.C.,
its General Partner
By: /s/ Joel S. Friedland
-------------------------
Name: Joel S. Friedland
Title: Vice President
<PAGE>
Exhibit 2.4
-----------
AMENDMENT NO. 1 (this "Amendment"), dated September 9, 1997, to the
Stock Purchase Agreement (the "Agreement") dated as of August 12, 1997 by and
between NutraMax Products, Inc., a Delaware corporation (the "Company"), and
Cape Ann Investors, L.L.C., a Delaware limited liability company (the
"Purchaser"). All capitalized terms used in this Amendment and not otherwise
defined herein shall have the meanings set forth in the Agreement.
1. The first sentence of Section 1.1 of the Agreement is hereby
deleted in its entirety and replaced with the following sentence: "Upon the
terms and subject to the conditions set forth in this Agreement, the Company
agrees to issue, sell and deliver to the Purchaser, and the Purchaser agrees to
purchase from the Company, 846,154 Shares."
2. Section 5.6(b) of the Agreement is hereby amended by (a) inserting
a comma after the word "thereof" at the end of clause (iv), (b) deleting the
word "or" immediately preceding clause (v), (c) inserting after the word
"otherwise" at the end of clause (v) the following: "or (vi) to one or more
members of the Advisory Board of Chilmark in an aggregate amount of up to 40,000
Shares and subject to Section 9.3(d) hereof" and (d) inserting after the word
"investor" in the proviso the following: "referred to in clause (v) or (vi)
hereof."
3. Section 9.3(d) of the Agreement is hereby amended by inserting
after the word "Shares" at the end of the second sentence thereof the following:
"; and provided further that in the event the Purchaser shall transfer Shares to
one or more members of the Advisory Board of Chilmark in accordance with Section
5.6(b)(vi), such member or members shall succeed to the rights and obligations
of the Purchaser with respect to such Shares contained in Section 5.6 and
Article VI hereof, other than Section 6.2 hereof. No transfer of Shares to any
member of the Advisory Board of Chilmark pursuant to the second proviso of the
preceding sentence shall be effective unless and until such member (i) agrees in
writing to be bound by all of the terms of and to perform all of the obligations
of the Purchaser with respect to such Shares contained in Section 5.6 and
Article VI hereof, other than Section 6.2 hereof, and (ii) makes a
representation as to such member to the same effects set forth for the Purchaser
in Section 3.6 hereof or otherwise provides written evidence, reasonably
satisfactory to the Company, that such transfer may be effected in compliance
with the federal securities laws and applicable state securities laws."
4. Except as expressly provided herein, the Agreement shall remain in
full force and effect.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has duly executed and
delivered this Amendment as of the date first above written.
NUTRAMAX PRODUCTS, INC.
By: /s/ Donald E. Lepone
---------------------------
Name: Donald E. Lepone
Title: President/CEO
CAPE ANN INVESTORS, L.L.C.
By: Chilmark Fund II, L.P.,
its Managing Member
By: Chilmark II, L.L.C.,
its General Partner
By: /s/ Joel S. Friedland
---------------------------
Name: Joel S. Friedland
Title: Vice President
2
<PAGE>
Exhibit 2.5
-----------
NUTRAMAX PRODUCTS, INC.
9 Blackburn Drive
Gloucester, MA 01930
Dated as of: September 11, 1997
BankBoston, N.A.
Individually and as Agent
100 Federal Street
Boston, Massachusetts 02110
Fleet National Bank
One Federal Street
Boston, MA 02109
National Bank of Canada
One Federal Street, 27th Floor
Boston, MA 02110
The Sumitomo Bank, Limited
One Post Office Square
Suite 3820
Boston, MA 02109
Senior Debt Portfolio
c/o Eaton Vance Management
24 Federal Street
Boston, MA 02110
Re: First Amendment to Revolving Credit and Term Loan Agreement
-----------------------------------------------------------
Ladies and Gentlemen:
-1-
<PAGE>
We refer to the Revolving Credit and Term Loan Agreement, dated as of
December 30, 1996 (the "Loan Agreement"), among NutraMax Products, Inc. (the
"Borrower"), the banking institutions referred to therein as Banks (the "Banks")
and The First National Bank of Boston (now known as BankBoston, N.A.), as agent
(the "Agent"). Upon the terms and subject to the conditions contained in the
Loan Agreement, you agreed to make Revolving Loans and Term Loans to, and issue
Letters of Credit for the account of, the Borrower.
Terms used in this letter of agreement (the "First Amendment") which are
not defined herein, but which are defined in the Loan Agreement, shall have the
same respective meanings herein as therein.
We have advised you of the acquisition (the "Acquisition") out of
bankruptcy by the Borrower or its newly-established subsidiaries of
substantially all of the assets of American White Cross, Inc. ("AWCI") and its
affiliates (together with AWCI, the "Sellers") relating to the first aid
business of the Sellers. The Acquisition is being made substantially on the
terms set forth in the Asset Purchase Agreement dated as of July 21, 1997 among
the Borrower, AWCI and certain other parties and the related documents
(collectively, the "Acquisition Documents"). In connection with the
Acquisition, we have requested you to increase the aggregate principal amount of
the Loans and to make certain other modifications to the Loan Documents
(collectively, the "Modifications"), and you have advised us that you are
prepared and would be pleased to make the Modifications so requested by us on
the condition that we join with you in this First Amendment and the various
other instruments and documents (including the allonges to the Notes)
contemplated hereby (collectively with the First Amendment, the "First Amendment
Documents").
Accordingly, in consideration of these premises, the promises, mutual
covenants and agreements contained in this First Amendment, and fully intending
to be legally bound by this First Amendment and the other First Amendment
Documents to which the undersigned is a party, we hereby agree with you as
follows:
-2-
<PAGE>
ARTICLE I
---------
AMENDMENTS TO LOAN AGREEMENT
----------------------------
Effective as of September 11, 1997 (the "First Amendment Date"), the Loan
Agreement is amended in each of the following respects:
(a) The terms "Loan Documents" and "Security Documents" shall,
wherever used in any of the Loan Documents or Security Documents, be deemed to
also mean and include this First Amendment, the allonges to the Notes and each
of the other First Amendment Documents.
(b) Section 1.1, containing various definitions, is amended in each
of the following respects:
(i) the definition of "Ancillary Documents" is amended to read
in its entirety as follows:
Ancillary Documents. Collectively, (i) the Stock Purchase Documents, (ii)
-------------------
the Bond Documents, (iii) the Subordinated Debt Documents, (iv) the
Material Agreements and Contracts, (v) the Acquisition Documents, (vi) the
Chilmark Documents and (vii) all other agreements, instruments and
contracts which shall from time to time be identified by the Agent, the
Banks and the Borrower as "Ancillary Documents" for purposes of this
Agreement, as any of the foregoing may be amended from time to time in
accordance with Section 6.17.
(ii) the definition of "Base Inventory" is amended by adding in
the first line after the words "solely of finished goods" the
words "(provided that, as to the Acquiring Subsidiaries only,
Base Inventory shall also include raw materials and work-in-
process)".
(iii) the definition of "Borrowing Base" is amended to read in
its entirety as follows:
Borrowing Base. In relation to the Borrower as at any particular date, an
--------------
amount equal to the lesser of (i) the aggregate Revolving Credit
Commitments as in effect on
-3-
<PAGE>
such date, and (ii) the sum, as determined by the Agent in good faith as at
such date, of: (A) with respect to the Borrower and the Subsidiaries other
than the Acquiring Subsidiaries: (1) 50% of the Net Security Value of Base
Inventory as at such date, and (2) 85% of the Net Outstanding Amount of
Base Accounts as at such date; and (B) with respect to the Acquiring
Subsidiaries: (1) 50% of the Net Security Value of Base Inventory as at
such date other than items of Base Inventory described in item (2)
immediately following, and (2) 25% of the Net Security Value of Base
Inventory as at such date consisting of (a) finished goods that is adhesive
bandages and (b) raw materials (other than raw materials consisting of
adhesive bandages, adhesive substrates and medical supplies), and (3) 80%
of the Net Outstanding Amount of Base Accounts as at such date; provided
--------
that the Agent reserves the right, in its reasonable discretion, based upon
a good faith determination that a material change in the Collateral has
occurred, to decrease the foregoing percentages or to modify the
eligibility requirements.
Whenever the Borrowing Base is used as a measure of Revolving Loans, it
shall be computed as of, and the Revolving Loans referred to shall be those
reflected in the Loan Account at, the time in question.
(iv) the definition of "Environmental Indemnity Agreement" is
amended to read in its entirety as follows:
Environmental Indemnity Agreement. Collectively, the Environmental
---------------------------------
Indemnity Agreements executed and delivered by the Borrower and its
Subsidiaries to the Agent, each for the ratable benefit of the Banks and
the Agent, pursuant to which the Borrower and its Subsidiaries shall, among
other things, indemnify the Banks from environmental liability on or
affecting the Real Properties.
(v) the definition of "Patent and Trademark Security
Agreements" is amended to read in its entirety as follows:
Patent and Trademark Security Agreements. Collectively, (i) the Borrower
----------------------------------------
Patent and Trademark Security Agreement, (ii) the Holdings Patent and
Trademark Security Agreement, (iii) the Holdings II Patent and Trademark
Security Agreement, (iv) the Optopics Patent and Trademark Security
Agreement, (v) the Fairton Patent and Trademark Security Agreement, (vi)
the Oral Patent and Security Agreement, (vii) the
-4-
<PAGE>
Florence Patent and Security Agreement, (viii) the Powers Patent and
Trademark Security Agreement, (ix) the Certified Patent and Trademark
Security Agreement, (x) the Adhesive Patent and Trademark Security
Agreement and (xi) the First Aid Patent and Trademark Security Agreement.
(vi) the definition of "Real Property or Real Properties" is
amended to read in its entirety as follows:
Real Property or Real Properties. Collectively, the several parcels of
--------------------------------
land together with the improvements now or hereafter located thereon, at:
(i) 170 Oak Hill Way, Brockton, Massachusetts, 23 Spring Street, Florence,
Massachusetts, 355 East 54th Street, Elmwood Park, New Jersey, 35 Main
Street, Fairton, New Jersey, and 14 Blackburn Drive, Gloucester,
Massachusetts; and (ii) 9 Blackburn Drive, Gloucester, Massachusetts, 83
Blackburn Drive, Gloucester, Massachusetts, 51 Blackburn Drive, Gloucester,
Massachusetts, 15200 Interstate Highway, 45 North, Houston, Texas and
Baltimore Avenue, Bridgeton, New Jersey, each of which is leased to the
Borrower pursuant to a Lease, said Real Properties being described in
detail in the Mortgages.
(vii) the definition of "Revolving Credit Maturity Date" is
amended to read in its entirety as follows:
Revolving Credit Maturity Date. September 30, 2002.
------------------------------
(viii) the definition of "Revolving Loans" is amended to read in
its entirety as follows:
Revolving Loans. Collectively, the loans in the maximum aggregate
---------------
principal amount of $25,000,000 made or to be made to the Borrower by the
Banks pursuant to this Agreement (including Section 2.1(a) hereof) and
subject to the limitations contained herein.
(ix) the definition of "Security Agreements" is amended to
read in its entirety as follows:
-5-
<PAGE>
Security Agreements. Collectively, (i) the Borrower Security Agreement,
-------------------
(ii) the Holdings Security Agreement, (iii) the Holdings II Security
Agreement, (iv) the Optopics Security Agreement, (v) the Fairton Security
Agreement, (vi) the Oral Security Agreement, (vii) the Florence Security
Agreement, (viii) the Powers Security Agreement, (ix) the Certified
Security Agreement, (x) the Adhesive Security Agreement, (xi) the Elmwood
Security Agreement and (xii) the First Aid Security Agreement.
(x) the first sentence of the definition of "Subordinated
Debt Documents" is amended to read in its entirety as follows:
Subordinated Debt Documents. Collectively, (i) the ING Subordinated
------------------------------
Agreement, (ii) the ING Subordinated Note, (iii) the ING Warrant Agreement
and any and all Warrants issued hereunder (including, in any event, any so-
called "put" or "call" rights contained therein, (iv) the ING Amendments
and (v) each of any other agreements, contracts, and other instruments
executed and delivered in connection with the foregoing or relating
thereto, as the same may be amended or modified in accordance with Section
6.17 and Articles VIII and X of the ING Subordinated Agreement.
(xi) the definition of "Subsidiary Guaranties" is amended to
read in its entirety as follows:
Subsidiary Guaranties. Collectively, (i) the Holdings Guaranty, (ii) the
---------------------
Holdings II Guaranty, (iii) the Optopics Guaranty, (iv) the Fairton
Guaranty, (v) the Oral Guaranty, (vi) the Florence Guaranty, (vii) the
Powers Guaranty, (viii) the Certified Guaranty, (ix) the Adhesive Guaranty,
(x) the Elmwood Guaranty and (xi) the First Aid Guaranty.
(xii) the definition of "Term Loan A" is amended to read in its
entirety as follows:
Term Loan A. The term loan in the principal amount of up to $32,000,000
-----------
made or to be made to the Borrower between the Closing Date and the Stock
Purchase LC
-6-
<PAGE>
Expiry Date by the Banks having a Term Loan A Commitment pursuant to this
Agreement (including Section 2.1(b) hereof), and subject to the limitations
contained herein.
(xiii) the definition of "Term Loan B" is amended to read in its
entirety as follows:
Term Loan B. The term loan in the principal amount of up to $27,000,000
-----------
made or to be made to the Borrower between the Closing Date and the Stock
Purchase LC Expiry Date by the Banks having a Term Loan B Commitment
pursuant to Section 2.1(c), and subject to the limitations contained
herein.
(xiv) the definition of "Term Loan A Maturity Date" is amended
to read in its entirety as follows:
Term Loan A Maturity Date. September 30, 2002.
-------------------------
(xv) the definition of "Term Loan B Maturity Date " is amended
to read in its entirety as follows:
Term Loan B Maturity Date. September 30, 2004.
-------------------------
(xvi) the definition of "Total Commitment" is amended to read
in its entirety as follows:
Total Commitment. As of any date, the sum of the then-current Commitments
----------------
of the Banks, provided that the Total Commitment shall not at any time
--------
exceed $91,222,693.
(xvii) the following new definitions are added to Section 1.1:
Acquiring Subsidiaries. Adhesive and First Aid, being the Subsidiaries who
----------------------
are to hold title to the non-real estate assets being acquired from the
Sellers in the Acquisition.
-7-
<PAGE>
Acquisition. The acquisition out of bankruptcy by the Borrower and/or the
-----------
Acquiring Subsidiaries of substantially all of the assets of American White
Cross, Inc. ("AWCI") and its affiliates (together with AWCI, the "Sellers")
relating to the first aid business of the Sellers.
Acquisition Documents. Collectively, (i) the Asset Purchase Agreement
---------------------
dated as of July 21, 1997 among the Borrower, AWCI and certain other
parties, as amended by an Amendment No. 1 dated as of August 15, 1997, and
(ii) each of any other agreements, contracts and instruments executed and
delivered in connection with the foregoing or relating thereto, as the same
may be amended or modified in accordance with Section 6.17.
Adhesive. Adhesive Coatings, Inc., a New Jersey corporation.
--------
Adhesive Guaranty. The Unlimited Guaranty dated as of the First Amendment
-----------------
Date and executed and delivered by Adhesive to the Agent, for the ratable
benefit of the Banks and the Agent.
Adhesive Patent and Trademark Security Agreement. The Patent and Trademark
------------------------------------------------
Security Agreement dated as of the First Amendment Date and executed and
delivered by Adhesive to the Agent, for the ratable benefit of the Banks
and the Agent.
Adhesive Security Agreement. The Security Agreement dated as of the First
---------------------------
Amendment Date hereof and executed and delivered by Adhesive to the Agent,
for the ratable benefit of the Banks and the Agent.
Chilmark Documents. Collectively, (i) the Stock Purchase Agreement dated
-------------------
as of August 12, 1997, as amended by an amendment dated as of September 9,
1997, between the Borrower and Cape Ann Investors, L.L.C., a Delaware
limited liability company, and (ii) each of any other agreements, contracts
and instruments executed and delivered in connection with the foregoing or
relating thereto, as the same may be amended or modified in accordance with
Section 6.17.
Elmwood. Elmwood Park Realty, Inc., a New Jersey corporation.
-------
-8-
<PAGE>
Elmwood Guaranty. The Unlimited Guaranty dated as of the First Amendment
----------------
Date and executed and delivered by Elmwood to the Agent, for the ratable
benefit of the Banks and the Agent.
Elmwood Security Agreement. The Security Agreement dated as of the First
--------------------------
Amendment Date and executed and delivered by Elmwood to the Agent, for the
ratable benefit of the Banks and the Agent.
First Aid. First Aid Products, Inc., a Delaware corporation.
---------
First Aid Guaranty. The Unlimited Guaranty dated as of the First Amendment
------------------
Date and executed and delivered by First Aid to the Agent, for the ratable
benefit of the Banks and the Agent.
First Aid Patent and Trademark Security Agreement. The Patent and
-------------------------------------------------
Trademark Security Agreement dated as of the First Amendment Date and
executed and delivered by First Aid to the Agent, for the ratable benefit
of the Banks and the Agent.
First Aid Security Agreement. The Security Agreement dated as of the First
----------------------------
Amendment Date and executed and delivered by First Aid to the Agent, for
the ratable benefit of the Banks and the Agent.
First Amendment. The First Amendment to Revolving Credit and Term Loan
---------------
Agreement dated as of September 11, 1997, among the Borrower, the Banks and
the Agent.
First Amendment Date. September 11, 1997.
--------------------
First Amendment Documents. The First Amendment together with the allonges
-------------------------
to the Notes and all other agreements and other instruments contemplated
thereby (other than the Ancillary Documents) and all schedules, exhibits
and annexes thereto, as the same may from time to time be amended and in
effect.
ING Amendments. Collectively, (i) Amendment No. 1 to the ING Subordinated
--------------
Agreement and (ii) Amendment No. 1 to the ING Warrant Agreement.
-9-
<PAGE>
(c) The portion of Section 2.1(b) beginning in the seventh line with
the words "solely for" and ending in the tenth line with the words "Stock
Purchase Agreement" is amended to read in its entirety as follows:
"solely for the purposes permitted by Section 5.10(a);"
(d) The portion of Section 2.1(c) beginning in the fourth line with
the words "solely for" and ending in the seventh line with the words "Stock
Purchase Agreement" is amended to read in its entirety as follows:
"solely for the purposes permitted by Section 5.10(b);"
(e) Sections 2.13(b) and (c) are amended to read in their entirety as
follows:
(b) The entire principal of the Term Notes A shall be payable by the
Borrower to the Banks in 20 consecutive quarter-annual installments of
principal. Such quarter-annual installments of principal shall be payable on
the installment payment dates, and shall be in the amounts, set forth below:
-10-
<PAGE>
<TABLE>
<CAPTION>
Installment Aggregate Amount
Payment Date of Payment
------------ ----------------
<S> <C>
12/31/97 $ 725,000
03/31/98 $ 725,000
06/30/98 $ 725,000
09/30/98 $ 725,000
12/31/98 $1,475,000
03/31/99 $1,475,000
06/30/99 $1,475,000
09/30/99 $1,475,000
12/31/99 $1,787,500
03/31/00 $1,787,500
06/30/00 $1,787,500
09/30/00 $1,787,500
12/31/00 $1,975,000
03/31/01 $1,975,000
06/30/01 $1,975,000
09/30/01 $1,975,000
12/31/01 $2,037,500
03/31/02 $2,037,500
06/31/02 $2,037,500
09/30/02 $2,037,500
</TABLE>
Notwithstanding the foregoing, the last 4 quarter-annual installments set forth
in the table above shall be reduced in the inverse order of maturity by the
difference between (i) $32,000,000 and (ii) the aggregate amount borrowed under
Term Loan A as of the Stock Purchase LC Expiry Date. All of the indebtedness
evidenced by each Term Note A shall, if not sooner paid, be in any event
absolutely and unconditionally due and payable in full by the Borrower to the
Banks on the Term Loan A Maturity Date.
(c) The entire principal of the Term Notes B shall be payable by the
Borrower to the Banks having Term Loan B Commitments in 8 consecutive quarter-
annual installments of principal during the last two years prior to the Term
Loan B Maturity
-11-
<PAGE>
Date. Such quarter-annual installments of principal shall be payable on the
installment payment dates, and shall be in the amounts, set forth below:
<TABLE>
<CAPTION>
Installment Aggregate Amount
Payment Date of Payment
------------ ----------------
<S> <C>
12/31/2002 $3,375,000
03/31/2003 $3,375,000
06/30/2003 $3,375,000
09/30/2003 $3,375,000
12/31/2003 $3,375,000
03/31/2004 $3,375,000
06/30/2004 $3,375,000
09/30/2004 $3,375,000
</TABLE>
Notwithstanding the foregoing, each of the quarter-annual installments set forth
in the table above shall be proportionately reduced to the extent the actual
outstanding principal balance of Term Loan B is less than $27,000,000 on the
Stock Purchase LC Expiry Date. All of the indebtedness evidenced by each Term
Note B shall, if not sooner paid, be in any event absolutely and unconditionally
due and payable in full by the Borrower to such Banks on the Term Loan B
Maturity Date.
(f) Section 3.2(b) is amended by adding in the first line after the
words "Section IV" the words "hereof and Article II of the First Amendment".
(g) Section 5.8 is amended by adding at the end thereof the
following:
"On or prior to November 11, 1997, the Borrower shall obtain
additional interest rate protection on a minimum notational amount of
$8,000,000 for a three-year period at a rate reasonably satisfactory
to the Agent."
(h) Section 5.10 is amended to read in its entirety as follows:
5.10. Use of Proceeds.
---------------
-12-
<PAGE>
(a) Term Loan A shall only be advanced (i) to fund drawings under the Stock
Purchase Letter of Credit, (ii) to fund the Acquisition and (iii) to fund, on or
before the Stock Purchase LC Expiry Date, the acquisition of the Borrower's
common stock held by MEDIQ pursuant to the Stock Purchase Agreement.
(b) The proceeds of Term Loan B shall only be advanced (i) to fund drawings
under the Stock Purchase Letter of Credit, (ii) to fund the Acquisition and
(iii) to fund, on or before the Stock Purchase LC Expiry Date, the acquisition
of the Borrower's common stock held by MEDIQ pursuant to the Stock Purchase
Agreement.
(c) Each of the Revolving Loans shall be used (i) to fund the Acquisition,
(ii) to provide working capital for the Borrower and (iii) to pay costs and
expenses incurred or sustained by the Borrower in connection with the
consummation of the transactions referred to herein or contemplated hereby.
(d) No portion of any Loans shall be used for the purpose of purchasing or
carrying any "margin security" or "margin stock" as such terms are used in
Regulations G, U or X of the Board of Governors of the Federal Reserve System.
(i) Section 6.10 is amended by deleting the table set forth therein
in its entirety and by inserting the following table in place hereof:
-13-
<PAGE>
<TABLE>
<CAPTION>
Maximum
Fiscal Year Capital Expenditures
----------- --------------------
<S> <C>
1997 $2,500,000
1998 $8,000,000
1999 $7,000,000
2000, and each $6,750,000
fiscal year thereafter
</TABLE>
(j) Schedule 1 to the Loan Agreement is amended as set forth in Annex
-----
1 attached hereto.
- -
(k) Exhibits A-1, A-2 and A-3, respectively, to the Loan Agreement
are amended by the addition of the allonges set forth in Annex 2 attached
-------
hereto.
(l) Exhibit D to the Loan Agreement is amended as set forth in Annex
-----
4 attached hereto.
- -
ARTICLE II
----------
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
The Borrower hereby represents, warrants and covenants to you as follows:
(a) Representations in Loan Agreement. Each of the representations and
---------------------------------
warranties made by the Borrower to you in the Loan Agreement was true, correct
and complete when made and is true, correct and complete in all material
respects on and as of the date hereof with the same full force and effect as if
each of such representations and warranties had been made by the Borrower on the
date hereof and in this First Amendment.
(b) No Defaults or Events of Default. No Default or Event of Default
--------------------------------
exists on the date of this First Amendment (after giving effect to all of the
arrangements and transactions contemplated by this First Amendment).
-14-
<PAGE>
(c) Minimum Availability. The Borrower has a minimum availability under
--------------------
the Borrowing Base categories relating to the acquired assets, after the funding
of the Acquisition, of at least $1,500,000.
(d) Minimum Net Worth. The Borrower has a minimum net worth upon the
-----------------
closing of the Modifications of at least $25,000,000.
(e) Financial Information. The financial information previously delivered
---------------------
to the Banks and the Agent with respect to the Sellers and the Sellers' business
(including, without limitation, the pro forma financial statements of the
--- -----
Borrower prepared as if the Acquisition had been effected) fairly presents the
financial position of the Borrower and each Subsidiary, as applicable, and the
historic results and pro forma projections of operations for the periods covered
--- -----
by such information, and that there has been no material adverse change in the
business, operations, assets, financial condition of the respective businesses
and assets owned and operated by the Sellers, the Borrower or any Subsidiary or,
to its knowledge, the Sellers since the date of the most recent financial
information delivered to the Banks and the Agent the effect of which has,
individually or in the aggregate, to its knowledge been materially adverse to
the Borrower or its Subsidiaries.
(f) Regulatory Compliance. The Borrower, the Subsidiaries and, to its
---------------------
knowledge, each other party to the Acquisition and the Modifications shall have
received all necessary regulatory approvals, including, without limitation,
evidence of compliance in all material respects with all state and federal laws
applicable to any of the parties to such transactions.
(g) Post-Closing Items. Promptly following the closing of the
------------------
Modifications, the Borrower and the Subsidiaries shall promptly execute and
deliver such further documents and take such further actions, as the Agent may
reasonably require, and in any event shall deliver those items set forth in the
Post-Closing Section of the Closing Agenda attached hereto as Annex 3 (the
-------
"Annex 3 Items"). The failure to deliver any of the Annex 3 Items (other than
-------
Item No. 34) within the time period specified opposite each respective item
shall constitute an Event of Default under the Loan Agreement.
(h) Binding Effect of Documents. This First Amendment and each of the
---------------------------
First Amendment Documents has been duly executed and delivered to you by the
Borrower and the Subsidiaries (as the
-15-
<PAGE>
case may be) and is in full force and effect as of the date hereof, and the
agreements and obligations of the Borrower and the Subsidiaries (as the case may
be) contained herein and therein constitute legal, valid and binding obligations
of the Borrower and the Subsidiaries (as the case may be) enforceable against
them in accordance with their respective terms.
ARTICLE III
-----------
PROVISIONS OF GENERAL APPLICATION
---------------------------------
(a) No Other Changes. Except to the extent specifically amended and
----------------
supplemented hereby, all of the terms, conditions and the provisions of the Loan
Agreement, the Notes and each of the other Loan Documents shall remain
unmodified, and the Loan Agreement, the Notes and each of the other Loan
Documents, as amended and supplemented by this First Amendment, are confirmed as
being in full force and effect.
(b) Governing Law. This First Amendment is intended to take effect as a
-------------
sealed instrument and shall be deemed to be a contract under the laws of the
Commonwealth of Massachusetts. This First Amendment and the rights and
obligations of each of the parties hereto shall be governed by and interpreted
and determined in accordance with the laws of the Commonwealth of Massachusetts.
(c) Binding Effect; Assignment. This First Amendment shall be binding
--------------------------
upon and inure to the benefit of each of the parties hereto and their respective
successors in title and assigns.
(d) Counterparts. This First Amendment may be executed in any number of
------------
counterparts, each of which when executed and delivered shall be deemed an
original, but all of which together shall constitute one instrument. In making
proof of this First Amendment, it shall not be necessary to produce or account
for more than one counterpart hereof signed by each of the parties hereto.
(e) Conflict with Loan Agreement. If any of the terms of this First
----------------------------
Amendment shall conflict in any respect with any of the terms of the Loan
Agreement or any other Loan Document, the terms of this First Amendment shall be
controlling.
(f) Conditions Precedent. This First Amendment shall become and be
--------------------
effective as of the First Amendment Date, but only if:
-16-
<PAGE>
(i) the form of acceptance at the end of this First Amendment
shall be signed by the Borrower, each Subsidiary and the Banks;
(ii) the Agent shall have received:
1. originals of each of the First Amendment Documents,
together with any and all schedules, exhibits, annexes, agreements and
instruments required to be delivered in connection therewith, each
duly executed and delivered by the parties thereto, and each in form
and substance satisfactory to the Agent;
2. originals or copies of each of (i) the Acquisition
Documents, (ii) the Chilmark Documents and (iii) the ING Amendments,
each duly executed and delivered by the parties thereto, and each in
form and substance satisfactory to the Agent;
3. each of the items set forth on Annex 3, each in form
-------
and substance reasonably satisfactory to the Agent;
(iii) all steps necessary to enable the Agent to perfect a
legal, valid and enforceable security interest in the assets acquired
in connection with the Acquisition by the Borrower or any affiliate of
the Borrower in any new locations of Collateral shall have been taken
to the satisfaction of the Agent;
(iv) the Acquisition shall have been consummated on the terms
set forth in the Acquisition Documents, as delivered to the Agent on
or prior to the First Amendment Date, and each of the conditions
precedent specified in any thereof shall have been duly satisfied and
completed to the satisfaction of the Agent on or prior to the First
Amendment Date, notwithstanding any waiver or modification thereof;
(v) The Banks and the Agent shall be satisfied that the
financial information previously delivered to them with respect to the
Sellers and the Sellers' business (including, without limitation, the
pro forma financial statements of the Borrower prepared as if the
--- -----
Acquisition had been effected) fairly presents the business and
financial condition of
-17-
<PAGE>
the respective businesses and assets owned and operated by the Sellers
and the Borrower and each Subsidiary, as applicable, and the historic
results and pro forma projections of operations for the periods
--- -----
covered by such information, and that there has been no material
adverse change in the business, operations, assets, condition
(financial or otherwise) of the respective businesses and assets owned
and operated by the Sellers, the Borrower or any Subsidiary since the
date of the most recent financial information delivered to the Banks
and the Agent, and that in the judgment of the Banks and the Agent
there has been no material adverse change in the Sellers' business or
in the Borrower's or any Subsidiary's ability to perform its
obligations under the Loan Agreement (as amended by the First
Amendment);
(vi) the Sellers, the Borrower, the Subsidiaries and each other
party to the Acquisition and the Modifications shall have received all
necessary regulatory approvals, including, without limitation,
evidence of compliance in all material respects with all state and
federal laws applicable to any of the parties to such transactions;
(vii) the United States Bankruptcy Court for the District of
Delaware (the "Court") shall have entered a final order (the
"Confirmation Order") confirming the plan of reorganization of AWCI
(the "Plan") under 11 U.S.C. (S)1129 (the "1129 Order"), or,
alternatively, the Court shall enter orders under 11 U.S.C. (S)(S)363
and 365 (the "Sale Orders"). The Plan and the 1129 Order, or the Sale
Orders, shall provide for the Acquisition by the Borrower, and any
motion for rehearing or reconsideration of the 1129 Order or either or
both of the Sale Orders shall have been denied or withdrawn, and the
time allowed for appeals of the 1129 Order or either or both of the
Sale Orders shall have become final without any appeal having been
taken or, if an appeal or no appeal has been taken, no stay shall be
in effect. The 1129 Order or the Sale Orders shall be in form and
substance reasonably satisfactory to the Agent and its counsel and
each shall contain the following findings and provisions: (i) that the
Borrower is a good faith purchaser within the meaning of 11 U.S.C
(S)363(m), and (ii) that the Acquisition by the Borrower shall be free
and clear of any and all liens, claims and encumbrances;
-18-
<PAGE>
(viii) the Banks and the Agent shall have received satisfactory
evidence of appropriate corporate and, if necessary, shareholder
approval of the proposed transactions (including both the Acquisition
and the Modifications) as well as opinions of independent counsel to
the Sellers (to the extent the Seller delivers an opinion to
Borrower), the Borrower and the Subsidiaries, as applicable,
reasonably satisfactory to the Banks and the Agent in form and
substance as to, among other things, the due authorization, legality,
validity and binding effect of all documents relating to the
Acquisition and the Modifications, the perfection of the liens of the
security documents and the absence of any violation of any federal,
state or local law or regulation applicable to any of the parties to
such transactions as a result of the Acquisition or Modifications;
(ix) the Banks and the Agent shall have received satisfactory
evidence that (i) the Borrower has successfully completed (or, upon
funding up to (but not in excess of) $26,243,000 of the increases in
the Loans described herein, will successfully complete) the
Acquisition, such transaction to be in form and substance reasonably
satisfactory to the Banks and the Agent, (ii) Internationale
Nederlanden (U.S.) Capital Corporation ("ING") has provided any and
all required consents to the Acquisition and the Modifications and has
entered into modifications to the Subordinated Debt Documents
reasonably satisfactory to the Banks and the Agent in connection
therewith and (iii) the Borrower has received additional funding of at
least $11,000,000 through the issuance of equity to Chilmark (or other
satisfactory person) to pay the balance of the purchase price for the
assets to be sold in the Acquisition, and the Agent and the Banks are
satisfied in all respects (including prohibitions on dividends and the
amounts and terms of such equity) with such transactions;
(x) the Banks and the Agent shall be satisfied that, after
funding the Acquisition, there shall be additional availability under
Term Loan A and Term Loan B to fund all additional amounts to be
funded under the Stock Purchase Letter of Credit;
(xi) the Banks and the Agent shall be satisfied that no
litigation or proceedings shall be pending or threatened which would
adversely affect the financial condition or operations of the Borrower
or any
-19-
<PAGE>
Subsidiary, or which would otherwise materially adversely affect the
Acquisition or the assets to be acquired thereby;
(xii) the Acquisition Documents, the Chilmark Documents and the
ING Amendments shall be satisfactory to the Agent and the Banks in all
respects;
(xiii) the Banks and the Agent shall have received and be
satisfied in all respects with the Deloitte & Touche due diligence
report; and
(xiv) the Agent shall have received the amendment fee from the
Borrower in the amount of $97,750.
(g) Upon the fulfillment of the conditions set forth in clause (f) above,
the Banks shall be deemed to have consented, pursuant to Section 6.6 of the Loan
Agreement, to the Acquisition and to have waived any other provisions of the
Loan Agreement and the LC Reimbursement Agreements that would prohibit the
consummation of the Acquisition.
-20-
<PAGE>
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this First Amendment and return such
counterpart to the undersigned, whereupon this First Amendment, as so accepted
by you, shall become a binding agreement among you and the undersigned.
Very truly yours,
The Borrower:
-------------
NUTRAMAX PRODUCTS, INC.
/s/ Robert F. Burns
By:_______________________________
Title: Chief Financial Officer
(remainder of page intentionally left blank)
-21-
<PAGE>
The foregoing First Amendment is hereby accepted by the undersigned as of
September 11, 1997.
The Agent:
- ---------
BANKBOSTON, N.A. (f/k/a The First National Bank of Boston),
individually and as Agent
/s/ Timothy G. Clifford
By:_________________________________
Title: Vice President
FLEET NATIONAL BANK
/s/ Ann M. Dillion
By:_________________________________
Title: Vice President
NATIONAL BANK OF CANADA
/s/ Edward T. Paslawski
By:_________________________________
Title: Vice President
/s/ Leonard J. Pellechia
By:_________________________________
Title: Vice President
THE SUMITOMO BANK, LIMITED
/s/ Daniel G. Eastman
By:_________________________________
Title: Vice President and Manager
/s/ Alfred DeGemmis
By:_________________________________
Title: Vice President
-22-
<PAGE>
SENIOR DEBT PORTFOLIO
/s/ Payson F. Swaffield
By:_________________________________
Title: Vice President
By:_________________________________
Title:
-23-
<PAGE>
CONSENT OF GUARANTORS
---------------------
Each of the undersigned has guaranteed the Obligations under (and as
defined in) the Agreement by executing separate Guaranties, each dated as of
December 30, 1996. By executing this letter, each of the Subsidiaries hereby
absolutely and unconditionally reaffirms the Guaranty to which it is a party,
and acknowledges and agrees to the terms and conditions of this letter agreement
and the Loan Agreement and the other Loan Documents as amended hereby
(including, without limitation, the making of the representations and warranties
and the performance of the covenants applicable to it herein or therein).
NUTRAMAX HOLDINGS, Guarantor
/s/ Robert F. Burns
By:__________________________
Title: Vice President
NUTRAMAX HOLDINGS II, Guarantor
/s/ Robert F. Burns
By:__________________________
Title: Vice President
OPTOPICS LABORATORIES, INC., Guarantor
/s/ Robert F. Burns
By:__________________________
Title: Vice President
-24-
<PAGE>
FAIRTON REALTY, INC., Guarantor
/s/ Robert F. Burns
By:__________________________
Title: Vice President
(signatures continued on next page)
ORAL CARE, INC., Guarantor
/s/ Robert F. Burns
By:__________________________
Title: Vice President
FLORENCE REALTY, INC., Guarantor
/s/ Robert F. Burns
By:__________________________
Title: Vice President
POWERS PHARMACEUTICAL CORP.,
Guarantor
/s/ Robert F. Burns
By:__________________________
Title: Vice President
-25-
<PAGE>
CERTIFIED CORP., Guarantor
/s/ Robert F. Burns
By:__________________________
Title: Vice President
-26-
