FORM 8-K
[As last amended in Release No. 34-30968,
July 30, 1992, 57 F.R. 36442]
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): July 5,1994
SMITH CORONA CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-10281 51-0286862
- - -------- ------- ----------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
65 Locust Avenue, New Canaan, Connecticut 06840
(Address of principal executive offices) (zip code)
(203) 972-1471
(Registrant's telephone number, including area code)<PAGE>
Item 2. Acquisition or Disposition of Assets
DESCRIPTION OF TRANSACTION
On July 5, 1994 Smith Corona Corporation (the "Company")
sold substantially all the assets and liabilities of SCM Office
Supplies, Inc., a wholly-owned subsidiary, to Ampad Corporation
(the "Sale"). The selling price of approximately $13 million is
subject to the terms of the asset purchase agreement which
requires, among other things, approval by the Company and Ampad
Corporation of the assets and liabilities on the final closing
balance sheet. A copy of the asset purchase agreement is
attached hereto as Exhibit 1.
PRO FORMA FINANCIAL STATEMENTS
The following pro forma financial statements give effect for
the Sale and are presented for illustrative purposes only. These
pro forma financial statements are not necessarily indicative of
the operating results and financial position that might have been
achieved had the Sale occurred as of an earlier date, nor are
they necessarily indicative of operating results and financial
position which may occur in the future.
A pro forma balance sheet is provided as of March 31, 1994,
giving effect to the Sale as though it had been consummated on
that date. Pro forma income statements are provided for the
nine-month period ended March 31, 1994, and the year ended June
30, 1993, giving effect to the Sale as though it had occurred at
the beginning of each period presented.
The historical statement of income for the year ended June
30, 1993 is derived from the historical consolidated financial
statements of Smith Corona Corporation and should be read in
conjunction with the 1993 Annual Report on Form 10-K. The
historical financial statements as of and for the nine months
ended March 31, 1994 have been prepared in accordance with
generally accepted accounting principles applicable to interim
financial information and, in the opinion of management, include
all adjustments necessary for a fair presentation of financial
information for such interim periods.
<PAGE>
SMITH CORONA CORPORATION
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1994
($ in thousands)
<TABLE>
<CAPTION> Pro Forma
---------------------
Actual Adjustments Adjusted
<S> ------ ----------- --------
(unaudited)(unaudited)(unaudited)
ASSETS <C> <C> <C>
Current assets:
Cash and cash equivalents $ 4,773 - $ 4,773
Accounts receivable 58,373 $ (6,246) 52,127
Inventories 67,902 (7,081) 60,821
Prepaid expenses and other
current assets 3,466 (41) 3,425
Deferred income taxes 10,450 (188) 10,262
------- -------- --------
Total current assets 144,964 (13,556) 131,408
Property, plant and
equipment, net 42,200 (6,430) 35,770
Deferred income taxes 5,810 (493) 5,317
Other assets 3,267 (212) 3,055
-------- -------- --------
TOTAL $196,241 $(20,691) $175,550
======== ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Trade payables $ 34,079 $ (4,984) $ 29,095
Accrued liabilities 26,104 640 26,744
Income taxes payable 5,735 (997) 4,738
Dividends payable 1,513 - 1,513
------- -------- --------
Total current liabilities 67,431 (5,341) 62,090
Bank loans 13,000 (13,000) -
Postretirement benefits 13,033 (75) 12,958
Pension liability 21,089 (75) 21,014
Other long-term liabilities 2,623 - 2,623
------- -------- --------
Total liabilities 117,176 (18,491) 98,685
------- -------- --------
Stockholders' Equity:
Common stock-30,250,000 shares
issued and outstanding 303 - 303
Additional paid-in capital 44,697 - 44,697
Retained earnings 34,065 (2,200) 31,865
-------- -------- --------
Total stockholders' equity 79,065 (2,200) 76,865
-------- -------- --------
TOTAL $196,241 $(20,691) $175,550
======== ======== ========
</TABLE>
See accompanying notes to pro forma financial statements.<PAGE>
SMITH CORONA CORPORATION
PRO FORMA INCOME STATEMENT
FOR THE NINE MONTHS ENDED MARCH 31, 1994
($ in thousands, except per share amounts)
<TABLE>
<CAPTION> Pro Forma
---------------------
Actual Adjustments Adjusted
------ ----------- --------
(unaudited)(unaudited)(unaudited)
<S> <C> <C> <C>
Net sales $268,617 $(51,609) $217,008
Cost of goods sold 213,183 (45,955) 167,228
------- -------- --------
Gross margin 55,434 (5,654) 49,780
Selling, administrative
and research expenses 44,394 (3,705) 40,689
------- -------- --------
Operating income 11,040 (1,949) 9,091
Interest expense 497 (360) 137
------- -------- --------
Income from continuing
operations before income
taxes 10,543 (1,589) 8,954
Income taxes 3,585 (541) 3,044
------- -------- --------
Income from continuing
operations $ 6,958 $ (1,048) $ 5,910
======= ======== ========
Earnings per share-
Income from continuing
operations $.23 ($.03) $.20
==== ===== ====
</TABLE>
See accompanying notes to pro forma financial statements.<PAGE>
SMITH CORONA CORPORATION
PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED JUNE 30, 1993
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma
---------------------
Actual Adjustments Adjusted
------ ----------- --------
(audited) (unaudited)(unaudited)
<S> <C> <C> <C>
Net sales $309,068 $(59,791) $249,277
Cost of goods sold 239,477 (55,203) 184,274
------- -------- --------
Gross margin 69,591 (4,588) 65,003
Selling, administrative
and research expenses 66,560 (5,704) 60,856
Restructuring costs 16,500 - 16,500
------- -------- --------
Operating loss (13,469) 1,116 (12,353)
Interest expense (income) 427 (539) (112)
------- -------- --------
Loss from continuing
operations before income
taxes (13,896) 1,655 (12,241)
Income taxes (benefit) (4,864) 580 (4,284)
------- -------- --------
Loss from continuing
operations $(9,032) $ 1,075 $ (7,957)
======= ======== ========
Earnings per share-
Loss from continuing
operations ($.30) $.04 ($.26)
===== ==== =====
</TABLE>
See accompanying notes to pro forma financial statements.<PAGE>
SMITH CORONA CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
Note 1. BASIS OF PRESENTATION
The pro forma financial statements are presented for
illustrative purposes only, giving effect for the sale of
substantially all the assets and liabilities of SCM Office
Supplies, Inc. (the "Sale"). In accordance with Commission
reporting rules, the pro forma income statements, and the
historical statements from which they are derived, present only
income from continuing operations and, therefore, do not include
discontinued operations, extraordinary items, and the cumulative
effects of accounting changes. Accordingly, the loss on the Sale
of approximately $2.2 million net of tax is not reflected in the
pro forma income statements.
The pro forma balance sheet as of March 31, 1994 includes,
in accordance with Commission reporting rules, the impact of all
transactions, whether of a recurring or nonrecurring nature, that
can be reasonably estimated and should be reflected as of that
date.
Note 2. PRO FORMA ADJUSTMENTS
Pro forma adjustments include amounts for the following:
- Substantially all historical assets and liabilities and all
historical results of operations relating to SCM Office
Supplies, Inc.
- Paydown of bank loans from proceeds of the Sale estimated at
approximately $13.0 million with applicable reductions of
interest expense
- Income taxes (benefit) using the historical effective tax
rate
- Accrual of transaction related costs in accrued liabilities<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date: July 19, 1994 SMITH CORONA CORPORATION
By: \s\ Thomas C. DeFazio
--------------------------
Thomas C. DeFazio
Executive Vice President &
Chief Financial Officer<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- - ----------- -----------
1 Asset Purchase Agreement by and
among Ampad Corporation (the
"Purchaser"), SCM Office Supplies,
Inc. (the "Seller") and Smith Corona
Corporation (the "Stockholder").
EXHIBIT 1
ASSET PURCHASE AGREEMENT
BY AND AMONG
AMPAD CORPORATION
(the "Purchaser"),
SCM OFFICE SUPPLIES, INC.
(the "Seller")
AND
SMITH CORONA CORPORATION
(the "Stockholder")
Dated as of June 8, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions. . . . . . . . . . . . . . . . . 5
1.3 Cross Reference of Other Definitions . . . . . . . . . . . . . 6
ARTICLE 2 PURCHASE AND SALE; ASSUMPTION OF CERTAIN
LIABILITIES; CLOSING. . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Asset Purchase . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Purchase Price Adjustment. . . . . . . . . . . . . . . . . . . 11
2.4 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 3 CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Confidentiality Obligations of the Seller. . . . . . . . . . . 13
3.2 Confidentiality Obligations of the Purchaser . . . . . . . . . 14
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. . . . . . . . 14
4.1 Organization of the Purchaser. . . . . . . . . . . . . . . . . 14
4.2 Authorization; Binding Effect; No Breach . . . . . . . . . . . 14
4.3 Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 Accuracy on Closing Date . . . . . . . . . . . . . . . . . . . 15
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE
STOCKHOLDER. . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Organization and Corporate Power . . . . . . . . . . . . . . . 15
5.2 Capital Stock and Related Matters. . . . . . . . . . . . . . . 15
5.3 Authorization; Binding Effect; No Breach . . . . . . . . . . . 16
5.4 Subsidiaries; Investments. . . . . . . . . . . . . . . . . . . 16
5.5 Financial Statements and Related Matters . . . . . . . . . . . 17
5.6 Acquired Assets. . . . . . . . . . . . . . . . . . . . . . . . 17
5.7 Absence of Certain Developments. . . . . . . . . . . . . . . . 18
5.8 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.9 Contracts and Commitments. . . . . . . . . . . . . . . . . . . 20
5.10 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . 22
5.11 Certain Litigation . . . . . . . . . . . . . . . . . . . . . . 23
5.12 Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.13 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.14 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.15 Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 26
5.17 Product Warranty . . . . . . . . . . . . . . . . . . . . . . . 28
5.18 Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.19 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.20 Accuracy on Closing Date . . . . . . . . . . . . . . . . . . . 28
ARTICLE 6 ACCESS TO AND PRESERVATION OF RECORDS. . . . . . . . . . . . . 28
ARTICLE 7 SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . . . . 29
7.1 Survival of Representations and Warranties . . . . . . . . . . 29
7.2 Indemnification Obligations of the Seller and
Stockholder. . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.3 Indemnification Obligations of the Purchaser . . . . . . . . . 31
7.4 Indemnification Procedures . . . . . . . . . . . . . . . . . . 32
7.5 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.6 Arbitration Procedure. . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 8 CONDITIONS TO THE CLOSING. . . . . . . . . . . . . . . . . . . 36
8.1 Conditions of the Purchaser's Obligation . . . . . . . . . . . 36
8.2 Conditions of the Seller's Obligation. . . . . . . . . . . . . 38
ARTICLE 9 OTHER COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 40
9.1 Interim Agreements of the Seller and the Stockholder . . . . . 40
9.2 Exclusivity. . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.3 Notice by the Purchaser. . . . . . . . . . . . . . . . . . . . 43
9.4 Additional Interim Agreements. . . . . . . . . . . . . . . . . 43
9.5 Benefits Matters . . . . . . . . . . . . . . . . . . . . . . . 43
9.6 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . 46
9.7 Non-Compete. . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.8 Transaction Expenses . . . . . . . . . . . . . . . . . . . . . 47
9.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 47
9.10 Announcements. . . . . . . . . . . . . . . . . . . . . . . . . 47
9.11 Property Taxes and FICA. . . . . . . . . . . . . . . . . . . . 48
9.12 Public Offering. . . . . . . . . . . . . . . . . . . . . . . . 48
9.13 Obsolete Inventory. . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 10 OTHER AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . 48
10.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.3 Consent to Amendments. . . . . . . . . . . . . . . . . . . . . 49
10.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 49
10.5 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 50
10.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.7 Severability of Provisions . . . . . . . . . . . . . . . . . . 51
10.8 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . 51
10.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.10 No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . 52
10.11 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.12 Merger and Integration. . . . . . . . . . . . . . . . . . . . 52
10.13 Allocation of Purchase Price. . . . . . . . . . . . . . . . . 52
10.14 Bulk Sales Law. . . . . . . . . . . . . . . . . . . . . . . . 52
<PAGE>
EXHIBITS
Exhibit A - Form of License Agreement
Exhibit B - Form of Guaranty
PURCHASER DISCLOSURE SCHEDULES
Purchaser Brokerage Schedule
SELLER DISCLOSURE SCHEDULES
Affiliated Transactions Schedule
Assets Schedule
Brokerage Schedule
Capitalization Schedule
Compliance Schedule
Consents Schedule
Contracts Schedule
Developments Schedule
Employees Schedule
Employee Benefits Schedule
Environmental Indemnity Schedule
Environmental Matters Schedule
Financial Statements Schedule
Inventory Valuation Schedule
Litigation Schedule
Organization Schedule
Permits Schedule
Proprietary Rights Schedule
Real Estate Schedule
Receivables Schedule
Taxes Schedule
Warranties Schedule<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of June 8, 1994, by and among
AMPAD CORPORATION, a Massachusetts corporation (the "Purchaser"),
SCM OFFICE SUPPLIES, INC., a Delaware corporation (the "Seller"),
and SMITH CORONA CORPORATION, a Delaware corporation and the sole
stockholder of the Seller (the "Stockholder"). The Purchaser, the
Seller and the Stockholder are collectively referred to herein as
the "Parties."
WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement, the Purchaser desires to acquire from the
Seller, and the Seller desires to sell to the Purchaser,
substantially all of the Seller's assets (subject to certain of the
Seller's liabilities as specifically provided herein).
NOW, THEREFORE, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. For purposes hereof, the following
terms, when used herein with initial capital letters, shall have
the respective meanings set forth herein:
"Affiliate" of any Person means any other Person
controlling, controlled by or under common control with such first
Person.
"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.
"Books and Records" means all lists, records and other
information pertaining to accounts, personnel and referral sources
of the Seller, all lists and records pertaining to suppliers and
customers of the Seller, and all other books, ledgers, files and
business records of every kind relating or pertaining to the
Business, in each case whether evidenced in writing, electronically
(including by computer) or otherwise.
"Business" means the business of the Seller as currently
conducted.
"Code" means the United States Internal Revenue Code of
1986, as amended.
"Environmental Affiliates" means, with respect to any
particular matter, all other Persons whose liabilities or
obligations with respect to that particular matter have been
assumed by, or are otherwise deemed by law to be those of, the
Seller.
"Environmental and Safety Requirements" means all
federal, state, local and foreign statutes, regulations, ordinances
and governmental requirements having the force or effect of law,
all judicial and administrative orders and determinations, all
contractual obligations and all common law concerning public health
and safety, worker health and safety and pollution or protection of
the environment, including without limitation all those relating to
the presence, use, production, generation, handling, transport,
treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or
cleanup of any hazardous materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or by-products, asbestos,
polychlorinated biphenyls (or PCBs), noise or radiation.
"Environmental Lien" means any Lien, whether recorded or
unrecorded, in favor of any Government Entity relating to any
liability of the Seller or any Environmental Affiliate arising
under any Environmental and Safety Requirement.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"GAAP" means, at a given time, United States generally
accepted accounting principles, consistently applied.
"Government Entity" means the United States of America or
any other nation, any state or other political subdivision thereof,
or any entity exercising executive, legislative, judicial,
regulatory or administrative functions of government.
"Indebtedness" of any Person means, without duplication:
(a) indebtedness for borrowed money or for the deferred purchase
price of property or services in respect of which such Person is
liable, contingently or otherwise, as obligor or otherwise (other
than trade payables and other current liabilities incurred in the
ordinary course of business) and any commitment by which such
Person assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit; (b)
indebtedness guaranteed in any manner by such Person, including a
guarantee in the form of an agreement to repurchase or reimburse;
(c) obligations under capitalized leases in respect of which such
Person is liable, contingently or otherwise, as obligor, guarantor
or otherwise, or in respect of which obligations such Person
assures a creditor against loss; and (d) any unsatisfied obligation
of such Person for "withdrawal liability" to a "multiemployer
plan," as such terms are defined under ERISA.
"Inventory" means, as of a given date, the Seller's
inventory, determined in accordance with accounting principles
applied on a basis consistent with the Financial Statements, except
that cost will be based on a first-in, first-out ("FIFO") cost
basis rather than last-in, first-out ("LIFO") cost basis and on the
basis set forth in the Inventory Valuation Schedule attached
hereto.
"Investment" means, with respect to any Person, any
direct or indirect purchase or other acquisition by such Person of
any notes, obligations, instruments, stock, securities or other
ownership or beneficial interest (including partnership interests
and joint venture interests) of any other Person, and any capital
contribution by such Person to any other Person.
"Knowledge" means, when used with respect to the
Seller, the actual knowledge of the following Persons, after making
reasonable inquiry with respect to the particular matter in
question: Thomas C. DeFazio, John Noblitt, and Mr. Noblitt's direct
management reports.
"Legal Requirement" means any requirement arising under
any action, law, treaty, rule or regulation, determination or
direction of an arbitrator or Government Entity, including any
Environmental and Safety Requirement.
"Lien" means any mortgage, pledge, security interest,
encumbrance, easement, restriction, charge, or other lien, other
than Liens for Taxes not yet due and payable.
"Loss" means, with respect to any Person, any loss,
liability, damage or expense, whether or not arising out of a third
party claim, including all interest, penalties, reasonable
attorneys' fees and expenses and all amounts reasonably paid or
incurred to third parties in connection with any action, demand,
proceeding, investigation or claim by any third party (including
any Government Entity) against or affecting such Person or which,
if determined adversely to such Person, would give rise to,
evidence the existence of, or relate to, any other Loss and the
investigation, defense or settlement of any of the foregoing,
together with interest thereon from the date on which such Person
provides the written notice of the related claim as described in
Section 7.4 through and including the date on which the total
amount of the claim, including such interest, is recovered or
recouped pursuant to Article 7.
"Net Asset Value" means as of a given date, the net book
value of the Acquired Assets less the Assumed Liabilities,
determined in accordance with the accounting principles used in the
preparation of the Financial Statements (except as set forth on the
Inventory Valuation Schedule), applied on a basis consistent with
the Financial Statements, it being understood that (a) the lease
for Seller's Marion, Indiana facility will be accounted for as an
operating lease and will have zero book value on Seller's balance
sheet and (b) Seller's Inventory will be valued as set forth on the
Inventory Valuation Schedule attached hereto.
"Officer's Certificate" of any Person means a certificate
signed by such Person's president or chief financial officer (or an
individual having comparable responsibilities with respect to such
Person) stating that (a) the individual signing such certificate
has made or has caused to be made such investigations as are
necessary in order to permit such individual to verify the accuracy
of the information set forth in such certificate and (b) to such
individual's Knowledge, such certificate does not misstate any
material fact and does not omit to state any fact necessary to make
the fact stated therein not misleading.
"Person" means an individual, a partnership, a corpora-
tion, an association, a limited liability company, a joint stock
company, a trust, a joint venture, an unincorporated organization
and a governmental entity or any department, agency or political
subdivision thereof.
"Proprietary Rights" means all of the following owned by,
issued to, licensed to or used by the Seller: (a) all inventions
(whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, divisions,
extensions, and reexaminations thereof; (b) all trademarks, service
marks, trade dress, logos, trade names, and corporate names,
together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in
connection therewith; (c) all copyrightable works (including,
without limitation, all software developed by the Seller for use in
the Business), all copyrights, and all applications, registrations,
and renewals in connection therewith; (d) all mask works and all
applications, registrations, and renewals in connection therewith;
(e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals); (f) all computer
software (including data and related documentation); (g) all other
proprietary rights; and (h) all copies and tangible embodiments
thereof (in whatever form or medium).
"Release" shall have the meaning set forth in the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), as amended.
"Subsidiary" means, with respect to any Person, any
corporation a majority of the total voting power of shares of stock
of which is entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or any partnership,
association or other business entity a majority of the partnership
or other similar ownership interest of which is at the time owned
or controlled, directly or indirectly, by that Person or one or
more Subsidiaries of that Person or a combination thereof. For
purposes of this definition, a Person is deemed to have a majority
ownership interest in a partnership, association or other business
entity if such Person is allocated a majority of the gains or
losses of such partnership, association or other business entity or
is or controls the managing director or general partner of such
partnership, association or other business entity.
"Taxes" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental (including taxes imposed pursuant to Section 59A of
the Code), customs duties, capital stock, franchise, profits,
withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration,
value added, alternative or add-on minimum, or other tax, fee,
assessment or charge of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Transaction Documents" means this Agreement, and all
other agreements, instruments, certificates and other documents to
be entered into or delivered by any Party in connection with the
transactions contemplated to be consummated pursuant to any of the
foregoing.
"Treasury Regulations" means the United States Treasury
Regulations promulgated pursuant to the Code.
1.2 Other Definitional Provisions.
(a) Accounting Terms. Accounting terms which are not
otherwise defined in this Agreement have the meanings given to them
under generally accepted accounting principles. To the extent that
the definition of an accounting term that is defined in this
Agreement is inconsistent with the meaning of such term under
generally accepted accounting principles, the definition set forth
in this Agreement will control. With respect to the calculation of
Net Asset Value, all known errors, omissions and adjustments shall
be taken into account, regardless of their materiality. In
addition, no change in accounting principles shall be made from
those utilized in preparing the Financial Statements (without
regard to materiality) including, without limitation, with respect
to the nature of accounts, level of reserves or level of accruals.
For purposes of the preceding sentence, "changes in accounting
principles" includes all changes in accounting principles,
policies, practices, procedures or methodologies with respect to
financial statements, their classification or their display, as
well as all changes in practices, methods, conventions or
assumptions (unless required by objective changes in underlying
events and factual circumstances) utilized in making accounting
estimates.
(b) "Hereof," etc. The terms "hereof," "herein" and
"hereunder" and terms of similar import are references to this
Agreement as a whole and not to any particular provision of this
Agreement. Section, clause, Schedule and Exhibit references
contained in this Agreement are references to Sections, clauses,
Schedules and Exhibits in or to this Agreement, unless otherwise
specified.
(c) Successor Laws. Any reference to any particular
Code section or any other law or regulation will be interpreted to
include any revision of or successor to that section regardless of
how it is numbered or classified.
1.3 Cross Reference of Other Definitions. Each
capitalized term listed below is defined in the corresponding
Section of this Agreement:
Term Section
Acquired Assets 2.1(a)
Actual NAV 2.3(a)
Assumed Liabilities 2.1(c)
Assumption 2.4(b)
Bank Prime Loan 7.6(g)
Closing 2.4
Closing Date 2.4
Closing Review 2.3(a)
Confidential Information 7.1(a)
Consents 8.1(e)
Contracts 5.9(b)
Controlled Group 5.14(c)
Disputes 7.6(a)
Disputing Person 7.6(b)
Draft Balance Sheet 2.3(a)
Employee Plans 5.14(a)
Estimated Purchase Price 2.2
Excluded Assets 2.1(b)
Final Determination 7.6(e)
Financial Statements 5.5(a)
Firm 2.3(a)
Indemnification Claim Notice 7.4(a)
Indemnified Party 7.4(a)
Indemnifying Party 7.4(a)
Latest Balance Sheet 5.5(a)
Leased Real Property 5.15(b)
Leases 5.15(b)
License Agreement 8.1(g)
Notice of Arbitration 7.6(b)
Objection Notice 2.3(a)
Owned Real Property 5.15(a)
Parties Preface
PBGC 5.14(c)
Permitted Lien 5.15(a)
Proceeding 7.4(a)
Purchase Price 2.2
Purchaser Preface
Purchaser Indemnities 7.2
Purchaser's Arbitrator 7.6(c)
Real Estate 2.1(a)(v)
Retention Agreements 9.5(c)
Retention Employees 9.5(c)
Sale 2.4(a)
Seller Preface
Seller Indemnities 7.3
Seller's Arbitrator 7.6(c)
Stockholder Preface
Tax Benefit 7.2(b)(v)
Title Company 8.1(h)
Title Policies 8.1(h)
Transferred Employees 9.5(a)
Union 9.5(a)<PAGE>
ARTICLE 2
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES; CLOSING
2.1 Asset Purchase.
(a) Acquired Assets. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing the Seller
shall sell, assign, transfer and deliver to the Purchaser, and the
Purchaser shall purchase, all properties, assets, rights and
interests of every kind and nature, whether tangible or intangible,
and wherever located and by whomever possessed, owned by the Seller
as of the Closing Date, except as set forth in Section 2.1(b) below
(collectively, the "Acquired Assets"), including, without
limitation:
(i) all accounts and notes receivables (whether
current or noncurrent);
(ii) all securities and other Investments;
(iii) all Proprietary Rights, along with all
income, royalties and payments due or payable as of the
Closing or thereafter, including, without limitation, any and
all corresponding rights that, now or hereafter, may be
secured throughout the world, but excluding the right to
damages and payments for past infringements or
misappropriations thereof;
(iv) all of the Seller's rights existing under
leases, contracts, licenses, permits, distribution
arrangements, sales and purchase agreements, accounts
receivable, other agreements and business arrangements,
including, without limitation, all contracts and agreements
described on the Contracts Schedule attached hereto;
(v) all real property owned or leased by the
Seller, and all plants, buildings and other improvements
located on such owned or leased property, and all easements,
licenses, rights of way, permits and all appurtenances to such
owned or leased property, including, without limitation, all
appurtenant rights in and to public streets, whether or not
vacated (collectively, the "Real Estate");
(vi) all leasehold improvements and all
machinery, equipment (including all transportation and office
equipment), fixtures, trade fixtures, tools, dyes and
furniture owned by the Seller wherever located, including,
without limitation, all such items which are located in any
building, warehouse, office or other space leased, owned or
occupied by the Seller or used in connection with the Real
Estate;
(vii) all inventories of raw materials, work in
process, semi-finished and finished goods, stores, replacement
and spare parts, packaging materials, operating supplies, and
fuels, owned by the Seller wherever located;
(viii) all office supplies, production supplies,
spare parts, other miscellaneous supplies, and other tangible
property of any kind wherever located, including, without
limitation, all property of any kind located in any building,
office or other space leased, owned or occupied by the Seller
or in any warehouse where any of the Seller's properties and
assets may be situated;
(ix) all prepayments and prepaid expenses, the
rights and benefits of which inure to Purchaser;
(x) all of the Seller's claims, causes of
action, choses in action, rights of recovery and rights of
set-off of any kind;
(xi) the right to receive and retain mail,
accounts receivable payments and other communications relating
to the Business;
(xii) the right to bill and receive payment for
products shipped or delivered and services performed but
unbilled or unpaid as of the Closing;
(xiii) all lists, records and other information
pertaining to accounts, personnel and referral sources, all
lists and records pertaining to suppliers and customers; and
all books, ledgers, files and business records of every kind;
whether evidenced in writing, electronically (including,
without limitation, by computer) or otherwise;
(xiv) all advertising, marketing and promotional
materials and all other printed or written materials;
(xv) all permits, licenses, certifications and
approvals from all permitting, licensing, accrediting and
certifying agencies, and the rights to all data and records
held by such permitting, licensing and certifying agencies;
(xvi) all goodwill as a going concern and all
other intangible properties;
(xvii) all telephone numbers (e.g. "800" numbers)
used by the Seller; and
(xviii) except as specified in Section 2.1(b) below,
all other property owned by the Seller, or in which it has an
interest on the Closing Date, including, without limitation,
all fixed assets included on the Latest Balance Sheet and any
and all subsequent improvements or additions thereon through
the Closing Date.
(b) Excluded Assets. Notwithstanding Section 2.1(a)
above, the following assets of the Seller are expressly excluded
from the purchase and sale contemplated hereby and, as such, are
not Acquired Assets (collectively, the "Excluded Assets"):
(i) all cash and cash equivalents (including,
without limitation, all money market accounts, mutual fund
accounts and repurchase agreements);
(ii) the name "SCM", all variations thereof and
the associated SCM tri-bar logo;
(iii) all monies to be received by the Seller from
the Purchaser;
(iv) all rights of the Seller under this
Agreement;
(v) all qualifications to do business as a
foreign corporation;
(vi) all arrangements with registered agents
relating to foreign qualifications;
(vii) all taxpayer and other identification
numbers;
(viii) all seals, minute books, stock transfer
books, blank stock certificates, and other documents relating
to the organization, maintenance, and existence of the Seller
as a corporation;
(ix) all inventory of the Seller which has been
assigned a zero value in calculating Actual NAV pursuant to
Section 2.3 and which Seller takes possession of within the
time period set forth in Section 9.13; and
(x) the account receivable owed to Seller by
Phar-mor, Inc. in the amount of $498,240.09.
(c) Assumed Liabilities. Subject to Section 2.1(d)
below, as additional consideration for the Acquired Assets, at the
Closing the Purchaser will assume the following liabilities and
obligations of the Seller (the "Assumed Liabilities"):
(i) all liabilities of the Seller which are set
forth on the face of the Latest Balance Sheet (rather than in
any notes thereto) or which are of the type set forth on the
face of the Latest Balance sheet and incurred by the Seller in
the ordinary course of the Business since the date of the
Latest Balance Sheet (other than liabilities for Taxes
measured by income, gross receipts, profits or similar
measures for the period prior to the Closing Date and employee
benefits liabilities specifically not assumed by Purchaser in
Section 9.5 below);
(ii) all liabilities and obligations of the
Seller pursuant to executory leases, contracts and agreements
which are described on the attached Contracts Schedule (other
than the severance agreement with John Noblitt and the
contract with the union representing Seller's employees) and
all other executory leases, contracts and agreements entered
into in the ordinary course of the Business; and
(iii) all liabilities set forth on the Assumed
Liabilities Schedule attached hereto.
(d) Excluded Liabilities. Except as set forth in
Section 2.1(c) above, the Purchaser shall not assume or become
liable for, and shall not be deemed to have assumed or have become
liable for, any of the Seller's liabilities and obligations not
expressly assumed by the Purchaser pursuant to Section 2.1(c)
above, whether accrued, absolute or contingent, whether known or
unknown, whether disclosed or undisclosed, whether due or to become
due and whether related to the Acquired Assets or otherwise, and
regardless of when asserted.
2.2 Purchase Price. The purchase price for the Acquired
Assets (the "Purchase Price") will be equal to the Net Asset Value
as of the Closing Date. At the Closing, the Purchaser will pay to
Seller an amount equal to $13.0 million by wire transfer of
immediately available funds (the "Estimated Purchase Price").
2.3 Purchase Price Adjustment.
(a) Post-Closing Determination. Within 60 days after
the Closing Date, the Purchaser and its auditors will conduct a
review (the "Closing Review") as of the open of business on the
Closing Date and will prepare and deliver to the Seller a
computation of the actual amounts of the Net Asset Value as of the
open of business on the Closing Date (the "Draft Balance Sheet").
The Purchaser and its auditors shall give the Seller and its
auditors an opportunity to observe the Closing Review and shall
make available to such Persons all records and work papers used in
preparing the Draft Balance Sheet. If the Seller disagrees with the
computation of the Net Asset Value reflected on the Draft Balance
Sheet, the Seller may, within 30 days after receipt of the Draft
Balance Sheet, deliver a notice (an "Objection Notice") to the
Purchaser setting forth the Seller's calculation of the actual
amount of the Net Asset Value in dispute as of the open of business
on the Closing Date. The Purchaser and the Seller will use rea-
sonable efforts to resolve any disagreements as to the computation
of the Net Asset Value. If they do not obtain a final resolution
within 30 days after the Purchaser has received the Objection
Notice, the Purchaser and the Seller will jointly retain an
independent accounting firm of recognized national standing (the
"Firm") to resolve any remaining disagreements. If the Purchaser
and the Seller are unable to agree on the choice of the Firm, the
Firm shall be a "big-six" accounting firm selected by lot (after
excluding one firm designated by each of the Purchaser and the
Seller). The Purchaser and the Seller shall direct the Firm to
render a determination within 15 days of its retention and the
Purchaser and its employees shall cooperate with the Firm during
its engagement. The Firm shall consider only those items and
amounts in the Draft Balance Sheet set forth in the Objection
Notice which the Purchaser and the Seller are unable to resolve.
The Firm's determination shall be based on the definitions of the
Net Asset Value included herein. The determination of the Firm will
be conclusive and binding upon the Seller and the Purchaser. The
Purchaser and the Seller will each pay one half of the fees and
expenses of the Firm. The amount of the Net Asset Value, as finally
determined pursuant to this Section 2.3(a), is referred to herein
as the "Actual NAV".
(b) Post-Closing Adjustment.
(i) Payments by the Purchaser. If the Estimated
Purchase Price is less than the Actual NAV, the Purchaser
shall, within two (2) business days after the determination
thereof, pay to the Seller an amount equal to such difference
by wire transfer or delivery of immediately available funds.
(ii) Payments by the Seller. If the Actual NAV is
less than the Estimated Purchase Price, the Seller shall,
within two (2) business days after the determination thereof,
pay to the Purchaser an amount equal to such difference by
wire transfer or delivery of other immediately available
funds.
2.4 The Closing. The closing of the purchase and sale
of the Acquired Assets, the assumption of the Assumed Liabilities,
and the transactions relating thereto (the "Closing") will take
place on July 6, 1994 at the offices of Kirkland & Ellis, 153 East
53rd Street, New York, NY 10022 or at such other place time and
place as is mutually agreeable to the Parties, commencing at
10:00 a.m. local time on such day. The date and time of the
Closing are herein referred to as the "Closing Date." At the
Closing, subject to the satisfaction or waiver of each of the
conditions specified in Sections 8.1 and 8.2 below:
(a) the Seller will convey to the Purchaser all of the
Acquired Assets, free and clear of all liens, charges, security
interests and other encumbrances, and deliver to the Purchaser
warranty deeds, bills of sale, assignments of leases and contracts
and all other instruments of conveyance which are necessary to
effect transfer of the Acquired Assets (the "Sale");
(b) the Purchaser will deliver to the Seller such
instruments of assumption as are required in order for the
Purchaser to assume the Assumed Liabilities (the "Assumption");
(c) the Purchaser will deliver to the Seller (or, at the
Seller's direction, to lenders or other third parties), the
Estimated Purchase Price; and
(d) there shall be delivered to the Purchaser and the
Seller the opinions, certificates and other documents and
instruments provided to be delivered under Article 8 hereof.
ARTICLE 3
CONFIDENTIALITY
3.1 Confidentiality Obligations of the Seller.
(a) Confidential Treatment. The Seller will (and will
use its best efforts to cause each of its Affiliates to) treat and
hold as confidential all information concerning the conduct or
affairs of the Business (the "Confidential Information"), refrain
from using any Confidential Information, and, at the Purchaser's
request, deliver to the Purchaser or destroy all tangible
embodiments (and all copies) of any Confidential Information which
are in the Seller's or any such Affiliate's possession. This
Section 3.1(a) will not apply to any Confidential Information which
is generally available to the public (other than by reason of any
disclosure by the Seller or an Affiliate of the Seller which
constitutes or is the result of breach of this Section 3.1(a) or
any disclosure by any such Affiliate which would constitute a
breach of this Section 3.1(a) if such Affiliate were the Seller)
immediately prior to the time of disclosure.
(b) Forced Disclosure. If the Seller or any Affiliate
of the Seller is requested or required (by oral question or request
for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, the Seller will
notify the Purchaser promptly of such request or requirement so
that the Purchaser may seek an appropriate protective order or
waive compliance with the provisions of this Section 3.1. If, in
the absence of such a protective order or waiver, the Seller or any
Affiliate of the Seller, on the advice of counsel, is compelled to
disclose any Confidential Information to any Government Entity, the
Seller will use its best efforts to (i) ensure that such disclosure
is limited to Confidential Information which is so required to be
disclosed and (ii) obtain an order or other assurance that
confidential treatment will be accorded to any Confidential
Information disclosed.
3.2 Confidentiality Obligations of the Purchaser. From
the date of this Agreement until the Closing, the Purchaser will
(and will use its best efforts to cause each of its Affiliates to)
comply with the terms of that certain letter agreement dated as of
January 27, 1994, as amended as of March 18, 1994, by and among
Seller, Stockholder and Ampad Holding Corporation, the terms of
which are incorporated herein by reference.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As a material inducement to the Seller to enter into this
Agreement, the Purchaser hereby represents and warrants that:
4.1 Organization of the Purchaser. The Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts. The Purchaser
has the requisite corporate power and authority and all licenses,
permits and authorizations necessary to enter into, deliver and
carry out its obligations pursuant to the Transaction Documents to
which it is a party.
4.2 Authorization; Binding Effect; No Breach. The
Purchaser's execution, delivery and performance of each Transaction
Document to which the Purchaser is a party has been duly authorized
by the Purchaser. Each Transaction Document to which the Purchaser
is a party constitutes a valid and binding obligation of the
Purchaser which is enforceable in accordance with its terms. The
execution, delivery and performance by the Purchaser of the
Transaction Documents to which the Purchaser is a party do not and
will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii)
result in a violation of, or (iv) require any authorization,
consent, approval, exemption or other action by or declaration or
notice to any Governmental Entity pursuant to, the charter or
bylaws of the Purchaser or any agreement, instrument, or other
document, or any Legal Requirement, to which the Purchaser or any
of its assets is subject.
4.3 Brokerage. Except as set forth on the Purchaser
Brokerage Schedule, there is no claim for brokerage commissions,
finders' fees or similar compensation in connection with the
transactions contemplated by the Transaction Documents based on any
arrangement or agreement which is binding upon the Purchaser.
4.4 Disclosure. Neither this Article 4 nor any
certificate or other item delivered to the Seller by or on behalf
of the Purchaser with respect to the transactions contemplated by
the Transaction Documents contains any untrue statement of a
material fact or omits a material fact which is necessary to make
any statement contained herein or therein not misleading.
4.5 Accuracy on Closing Date. Each representation and
warranty set forth in this Article 4 and all information contained
in any certificate delivered by or on behalf of the Purchaser
pursuant to this Agreement will be true and correct as of the time
of the Closing as though then made, except to the extent that the
Purchaser has advised the Seller otherwise in writing prior to the
Closing.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE STOCKHOLDER
As a material inducement to the Purchaser to enter into this
Agreement, purchase the Acquired Assets and assume the Assumed
Liabilities, the Seller and the Stockholder hereby jointly and
severally represent and warrant that:
5.1 Organization and Corporate Power. The Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and is duly qualified to do
business in each jurisdiction in which its ownership of property or
conduct of business requires it to so qualify, except to the extent
that the failure of the Seller to be so qualified could not
reasonably be expected to have a material adverse effect on the
Acquired Assets, the Assumed Liabilities or the financial
condition, operating results or assets of the Business. The
Organization Schedule attached hereto lists every jurisdiction
where the Seller is duly qualified to do business. The Seller has
the requisite corporate power necessary to own and operate its
properties, carry on the Business and enter into, deliver and carry
out the transactions contemplated by the Transaction Documents.
The Stockholder is a corporation duly organized, duly validly
existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power necessary to enter
into, deliver and carry out its obligations pursuant to the
Transaction Documents to which it is a party.
5.2 Capital Stock and Related Matters. The authorized
capital stock of the Seller consists of 1,000 shares of Common
Stock, no par value, of which 1,000 shares are issued and
outstanding. All of the issued and outstanding shares of the
Seller are held of record and beneficially by the Stockholder, free
and clear of any lien, encumbrance, claim, option or other right of
any nature. Except as set forth on the attached Capitalization
Schedule:
(a) there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could
require the Seller to issue, sell, or otherwise cause to become
outstanding any of its capital stock;
(b) there are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar
rights with respect to the Seller; and
(c) there are no voting trusts, proxies, or other agree-
ments or understandings with respect to the voting of the capital
stock of the Seller.
5.3 Authorization; Binding Effect; No Breach. The
Seller's and Stockholder's execution, delivery and performance of
each Transaction Document to which the Seller and/or Stockholder is
a party have been duly authorized by the Seller and Stockholder, as
applicable. Each Transaction Document to which the Seller or the
Stockholder is a party constitutes a valid and binding obligation
of such Person which is enforceable in accordance with its terms,
except as such enforceability may be limited by (a) applicable
insolvency, bankruptcy, reorganization, moratorium or other similar
laws affecting creditors' rights generally and (b) applicable
principles of equity (whether considered in a proceeding at law or
in equity). Except as set forth on the attached Consents Schedule,
the execution, delivery and performance of the Transaction
Documents to which the Seller or the Stockholder is a party do not
and will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii)
result in the creation of any Lien upon any of the Acquired Assets
under, (iv) give any third party the right to modify, terminate or
accelerate any Assumed Liability or other liability or obligation
of the Seller or the Stockholder under, (v) result in a violation
of, or (vi) require any authorization, consent, approval, exemption
or other action by or declaration or notice to any Governmental
Entity pursuant to, the charter or bylaws of the Seller or any
agreement, instrument or other document, or any Legal Requirement,
to which the Seller, the Stockholder or any of the Seller's assets
is subject. Without limiting the generality of the foregoing,
except as set forth on the attached Consents Schedule, neither the
Seller, the Stockholder nor any Affiliate of either of them has
entered into any agreement, or is bound by any obligation of any
kind whatsoever, directly or indirectly to transfer or dispose of
(whether by sale of stock or assets, assignment, merger,
consolidation or otherwise) the Business or the Acquired Assets (or
any substantial portion thereof) to any Person other than the
Purchaser.
5.4 Subsidiaries; Investments. The Seller does not own
or hold any rights to acquire any capital stock or any other
security, interest or Investment in any other Person other than
investments which constitute cash or cash equivalents. The Seller
does not have, and has never had, a Subsidiary.
5.5 Financial Statements and Related Matters.
(a) Financial Statements. Each of (i) the unaudited
balance sheets of the Seller as of June 30, 1992 and June 30, 1993
and the unaudited related statements of income and cash flows for
the respective 12-month periods then ended, and (ii) the unaudited
balance sheet of the Seller as of February 28, 1994 (the "Latest
Balance Sheet") and the related unaudited statements of income and
cash flows for the 8-month period then ended (collectively, the
"Financial Statements") (including in all cases the notes thereto,
if any) fairly presents the financial position and the results of
operations and changes in financial position of the Seller at the
respective dates or for the respective periods specified therein,
is accurate and complete in all material respects, is consistent
with the books and records of the Company and, except as set forth
on the attached Financial Statements Schedule, has been prepared in
accordance with accounting principles, consistently applied. Since
June 30, 1991, there have been no material changes in accounting
principles, policies, practices, procedures or methodologies used
in the preparation of the Financial Statements, their
classification or their display, or any material changes in
practices, methods, conventions or assumptions (unless required by
objective changes in underlying events and factual circumstances)
utilized in making accounting estimates.
(b) Receivables. To Seller's Knowledge, the notes and
accounts receivable which are part of the Acquired Assets will be
valid receivables stated at the aggregate amount recorded on the
Seller's books and records as of the Closing, and, except as set
forth on the Receivables Schedule, will be subject to no valid
counterclaims or setoffs, net of an amount of allowances for
doubtful accounts which relate to those receivables computed in a
manner consistent with the accounting practices used in the
preparation of the Latest Balance Sheet.
(c) Inventory. To Seller's Knowledge, no events have
occurred since April 29, 1994 which would cause any of the
inventory which is part of the Acquired Assets to be classified as
obsolete or slow-moving on the Inventory Valuation Schedule
attached hereto.
5.6 Acquired Assets. Except as set forth on the
attached Assets Schedule:
(a) the Acquired Assets constitute all of the assets and
rights (other than the Excluded Assets) which are necessary for the
conduct of the Business currently conducted by the Seller;
(b) the Seller owns, has the right to use or has a valid
leasehold interest in, all properties and assets used by it,
located on its premises, or shown on the Latest Balance Sheet or
acquired by it since the date of the Latest Balance Sheet, in each
case free and clear of all Liens, other than (i) properties and
assets disposed of in the ordinary course of the Seller's Business
and consistent with its past practice since the date of the Latest
Balance Sheet and (ii) Liens disclosed on the Latest Balance Sheet
(including any notes thereto); and
(c) (i) the equipment and other tangible assets used in
the production of file folders and filing supplies which is
included in the Acquired Assets is in normal operating condition,
reasonable wear and tear excepted, has been maintained in the
ordinary course of business of Seller consistent with its past
practice and custom and is free from any defects, (ii) to the
Seller's Knowledge, the equipment used in the production of
products other than file folders and filing supplies which is
included in the Acquired Assets is in normal operating condition,
reasonable wear and tear excepted, has been maintained in the
ordinary course of business consistent with past practice and
custom and is free from any defects, (iii) to the Seller's
Knowledge, all buildings, structures and other improvements located
on the Owned Real Property, is in normal operating condition with
respect to buildings, structures and other improvements of like
age, reasonable wear and tear excepted, has been maintained in the
ordinary course of business consistent with past practice and
custom and is free from any defects and (iv) to the Seller's
Knowledge, all buildings, structures and other improvements located
on the Leased Real Property, is in normal operating condition with
respect to buildings, structures and other improvements of like
age, reasonable wear and tear excepted, has been maintained in the
ordinary course of business consistent with past practice and
custom and is free from any defects.
5.7 Absence of Certain Developments. Except as set
forth on the attached Developments Schedule, since the date of the
Latest Balance Sheet, there has been no material adverse change in
the Acquired Assets, the Assumed Liabilities or the financial
condition, operating results, assets, customer or supplier
relations, or employee relations of the Business. Without limiting
the generality of the preceding sentence, except as expressly
contemplated by this Agreement or as set forth on the attached
Developments Schedule, since the date of the Latest Balance Sheet,
the Seller has not:
(a) engaged in any activity which has resulted in the
acceleration or delay of the collection of its accounts or notes
receivable or any delay in the payment of its accounts payable, in
each case as compared with its custom and practice in the conduct
of the Business immediately prior to the date of the Latest Balance
Sheet;
(b) discharged or satisfied any Lien or paid any
obligation or liability which would not constitute an Assumed
Liability if it were unpaid on the Closing Date, other than current
liabilities paid in the ordinary course of the Business and
consistent with the Seller's past practice;
(c) mortgaged or pledged any Acquired Asset or subjected
any Acquired Asset to any Lien;
(d) sold, assigned, conveyed, transferred, canceled or
waived any property, tangible asset, Proprietary Right or other
intangible asset or right which, if it were held by the Seller on
the Closing Date, would constitute a Acquired Asset, other than in
the ordinary course of the Business and consistent with the
Seller's past practice;
(e) disclosed any Confidential Information to any Person
other than the Purchaser and the Purchaser's representatives,
agents, attorneys, accountants and present and proposed financing
sources;
(f) waived any right other than in the ordinary course
of the Business or consistent with the Seller's past practice;
(g) made commitments for capital expenditures which, in
the aggregate, would exceed $150,000;
(h) made any loan or advance to, or guarantee for the
benefit of, or any Investment (other than Investments which
constitute Excluded Assets) in, any other Person;
(i) granted any bonus or any increase in wages, salary
or other compensation to any employee (other than any increase in
wages or salaries granted in the ordinary course of the Business
and consistent with the Seller's past practice granted to any
employee who is not affiliated with the Seller other than by reason
of such Person's employment by the Seller);
(j) suffered damages, destruction or casualty losses
which, in the aggregate, exceed $25,000 (whether or not covered by
insurance) to any Acquired Asset or any other property or asset
which, if it existed and was held by the Seller on the Closing
Date, would constitute a Acquired Asset;
(k) received any indication from any material supplier
of the Seller to the effect that such supplier will stop, or
materially decrease the rate of, supplying materials, products or
services to the Seller (or to the Purchaser, if the Sale is
consummated), or received any indication from any material customer
of the Seller to the effect that such customer will stop, or
materially decrease the rate of, buying materials, products or
services from the Seller (or from the Purchaser, if the Sale is
consummated);
(l) entered into any transaction other than in the ordi-
nary course of the Business and consistent with the Seller's past
practice, or entered into any other material transaction, whether
or not in the ordinary course of the Business, which may adversely
affect the Business, the Acquired Assets or the Assumed
Liabilities; or
(m) agreed to do any act described in any of clauses
5.8(a) through (l) above.
5.8 Tax Matters.
(a) The Seller has withheld and paid over or has
properly accrued as a liability on the books of the Seller all
Taxes which it is obligated to withhold from amounts paid or owing
to any employee, independent contractor, stockholder, creditor or
other third party. There are no Liens on any of the Acquired
Assets that arose in connection with any failure (or alleged
failure) to pay any Tax. To the Knowledge of the Seller, no claim
has ever been made by any jurisdiction in which the Seller does not
file Tax returns to the effect that the Seller is or may be subject
to any Tax imposed by that jurisdiction.
(b) Except as set forth in the attached Taxes Schedule,
with respect to Taxes other than income or franchise Taxes:
(i) the Seller has filed or will prepare and timely file
all Tax returns and other reports relating to taxable periods (or
portions thereof) ending on or prior to the Closing Date which it
was required to file and each such return or other report is or
will be correct and complete in all material respects, and the
Seller has paid or adequately accrued all Taxes due and owing by it
(whether or not shown on any Tax Return or other report) for all
periods (or portions thereof) ending on or prior to the Closing
Date; and
(ii) the Seller has not waived any statute of limitations
in respect of Taxes or agreed to an extension of time with respect
to any Tax assessment or deficiency which waiver or extension is
still in effect with respect to any taxable year.
5.9 Contracts and Commitments.
(a) Contracts Schedule. Other than this Agreement or as
described on the attached Contracts Schedule, the Seller is not a
party to any written or oral:
(i) contract with any labor union, or any severance
agreement;
(ii) contract for the employment or engagement as an
independent contractor of any Person on a full-time, part-
time, consulting or other basis;
(iii) contract pursuant to which the Seller has
advanced or loaned funds, or agreed to advance or loan funds,
to any other Person;
(iv) contract or indenture relating to any
Indebtedness or the mortgaging, pledging or otherwise placing
a Lien on any of the Acquired Assets;
(v) contract pursuant to which the Seller is the
lessee of, or holds or operates, any real or personal property
owned by any other Person;
(vi) contract pursuant to which the Seller is the
lessor of, or permits any third party to hold or operate, any
real or personal property owned by the Seller or of which the
Seller is a lessee;
(vii) assignment, license, indemnification or other
contract with respect to any intangible property (including
any Proprietary Right) which is not described on the attached
Proprietary Rights Schedule;
(viii) contract or agreement with respect to
services rendered or goods sold or leased to or from others,
other than any customer purchase order accepted in the
ordinary course of business and in accordance with the
Seller's past practice which both (1) does not require
delivery after the date which is six months after the Closing
Date and (2) does not involve a sale price of more than
$25,000;
(ix) contract prohibiting it from freely engaging in
any business anywhere in the world;
(x) independent sales representative or
distributorship agreement with respect to the Business; or
(xi) any other contract which is material to the
Business or involves a consideration in excess of $25,000.
(b) Enforceability. Each item described on the attached
Contracts Schedule (the "Contracts") is valid, binding and
enforceable in accordance with its terms against the parties
thereto, except as such enforceability may be limited by
(a) applicable insolvency, bankruptcy, reorganization, moratorium
or other similar laws affecting creditors' rights generally and
(b) applicable equitable principles (whether considered in a
proceeding at law or in equity).
(c) Compliance. The Seller has performed all obliga-
tions required to be performed by it under each Contract, and, to
Seller's Knowledge, the Seller is not in default under or in breach
in any material respect of (nor is it in receipt of any claim of
default or breach under) any such obligation. No event has
occurred which with the passage of time or the giving of notice (or
both) would result in a default, breach or event of noncompliance
in any material respect under any obligation of the Seller pursuant
to any Contract. The Seller has no Knowledge of any breach or
anticipated breach by any other party to any Contract.
(d) Affiliated Transactions. Except as set forth on the
attached Affiliated Transactions Schedule, no officer, director,
stockholder or Affiliate of the Seller (and no individual related
by blood or marriage to any such Person, and no entity in which any
such Person or individual owns any beneficial interest) is a party
to any agreement, contract, commitment or transaction with the
Seller (other than this Agreement) or has any material interest in
any material property used by the Seller.
(e) Copies. A true and correct copy of each written
Contract, each as currently in effect, has been made available to
the Purchaser.
5.10 Proprietary Rights.
(a) Schedule. The attached Proprietary Rights Schedule
contains a complete and accurate list of (a) all patented or
registered Proprietary Rights owned by the Seller or used in
connection with the Business, (b) all pending patent applications
and applications for registrations of other Proprietary Rights
filed by or on behalf of the Seller, (c) all trade names, corporate
names and unregistered trademarks and service marks owned by the
Seller or used in connection with the Business, and (d) all
unregistered copyrights and computer software which are material to
the Acquired Assets, the Assumed Liabilities or the financial
condition, operating results, assets, customer or supplier
relations, or employee relations of the Business. The attached
Proprietary Rights Schedule also contains a complete and accurate
list of all licenses and other rights granted by the Seller to any
third party, and all licenses and other rights granted by any third
party to the Seller, with respect to any Proprietary Rights. The
Proprietary Rights comprise all intellectual property rights which
are used in the operation of the Business.
(b) Ownership; Claims. Except as set forth on the
attached Proprietary Rights Schedule, the Seller owns and possesses
all right, title and interest in and to (or has the right to use
pursuant to a valid and enforceable license) all Proprietary Rights
used in the operation of the Seller's business as presently
conducted and the Seller has taken all necessary actions to
maintain and protect the Proprietary Rights which it owns and uses.
Except as indicated on the attached Proprietary Rights Schedule:
(i) there have been no written claims made against
the Seller asserting the invalidity, misuse or
unenforceability of any of such Proprietary Rights, and to the
Knowledge of the Seller, there are no grounds for any such
claim,
(ii) the Seller has not received any written notice
of (nor does Seller have Knowledge of any facts which indicate
a likelihood of) any infringement or misappropriation by, or
conflict with, any Person with respect to the Proprietary
Rights (including any demand or request that the Seller
license rights from any Person),
(iii) the conduct of the Business has not infringed
or misappropriated, and does not infringe or misappropriate,
any proprietary right of any other Person, nor would the
Purchaser's conduct of the Business as presently conducted
infringe or misappropriate any proprietary right of any other
Person,
(iv) to the Seller's Knowledge, the Proprietary
Rights used in connection with the Business have not been
infringed or misappropriated by any other Person, and
(v) the consummation of the transactions
contemplated by this Agreement will have no adverse effect on
any material Proprietary Right.
5.11 Certain Litigation. Except as set forth on the
attached Litigation Schedule, there is no action, suit, proceeding,
order, investigation or claim pending (or, to the Seller's
Knowledge, threatened) against or affecting the Seller or the
Business (or to the Seller's Knowledge, pending or threatened
against or affecting any officer, director or employee of the
Seller with respect to the Business), at law or in equity, or
before or by any Government Entity (a) with respect to the
transactions contemplated by the Transaction Documents, or (b)
concerning the design, manufacture, rendering or sale by the Seller
of product or service in the course of the Business or otherwise
concerning the conduct of the Business, and, to the Seller's
Knowledge, there is no basis for any of the foregoing.
5.12 Brokerage. Except as set forth on the attached
Brokerage Schedule, there is no claim for brokerage commissions,
finders' fees or similar compensation in connection with the
transactions contemplated by the Transaction Documents based on any
arrangement or agreement which may be binding upon the Seller or to
which the Seller or any of the Acquired Assets may be subject.
5.13 Employees. The Seller has complied in all material
respects with all laws relating to the employment of labor in
connection with the Business, including provisions of such laws
relating to wages, hours, equal opportunity, collective bargaining
and the payment of social security and other taxes, and, except as
set forth on the attached Employees Schedule, the Seller has no
material labor relations problem (including any actual or, to
Seller's Knowledge, threatened strikes or work stoppages or
material grievances). Except as set forth on the attached
Compliance Schedule, neither the Seller nor any of its employees is
subject to any noncompete, nondisclosure, confidentiality,
employment, consulting or similar agreement relating to, affecting,
or in conflict with, the Business activities.
5.14 ERISA. (a) The attached Employee Benefits Schedule
lists all employee plans currently maintained or contributed to on
behalf of the Seller's employees (the "Employee Plans"). For
purposes of this Agreement, the term "employee plans" includes all
pension, retirement, disability, medical, dental or other health
insurance plans, life insurance or other death benefit plans,
profit sharing, deferred compensation, stock option, bonus or other
incentive plans, vacation benefit plans, severance plans, or other
material employee benefit plans or arrangements including, without
limitation, any pension plan as defined in Section 3(2) of ERISA
and any welfare plan as defined in Section 3(1) of ERISA, whether
or not funded, and any plan which is a multiemployer plan as
defined in Section 3(37)(A) of ERISA. Except as disclosed on the
Employee Benefits Schedule, none of the Employee Plans provide
post-retirement life, accident, medical or disability insurance
benefits of any type, other than limited benefits required to be
provided under Code Section 4980B.
(b) Seller represents that accurate copies (or, where
such plan is not in writing, descriptions thereof) of each Employee
Plan have been made available to the Purchaser.
(c) To Seller's Knowledge, the Seller has not incurred
any liability to the Pension Benefit Guaranty Corporation (the
"PBGC"), the Internal Revenue Service, any multiemployer plan or
otherwise with respect to any Employee Plan or with respect to any
employee pension benefit plan currently or previously maintained by
members of the controlled group of companies (as defined in Section
414(b) and (c) of the Code) that includes the Seller (the
"Controlled Group") that has not been satisfied in full, and no
condition exists that presents a material risk to the Seller or any
member of the Controlled Group of incurring such a liability (other
than liability for premiums due the PBGC) which could reasonably be
expected to have any material adverse effect on the Purchaser or
any of the Acquired Assets after the Closing.
5.15 Real Estate.
(a) Owned Properties. The attached Real Estate Schedule
lists all real property that the Seller owns (the "Owned Real
Property"). Except as otherwise described on the Real Estate
Schedule, with respect to each such parcel of Owned Real Property:
(i) the Seller has good and marketable fee simple
title to each such parcel free and clear of any Lien, except
for (1) statutory liens for current taxes or other
governmental and/or municipal charges with respect to the
Owned Real Property not yet due and payable or the amount or
validity of which is being contested in good faith by
appropriate proceedings by the Seller; (2) unpaid installments
of any assessments affecting the Owned Real Property, provided
such assessments are not yet past due; (3) mechanics, carriers
workers, repairers and similar statutory liens arising or
incurred in the ordinary course of business for amounts which
are not delinquent and which are not, individually or in the
aggregate, material to the Business; (4) zoning, entitlement,
building and other land use regulations imposed by
governmental agencies having jurisdiction over the Owned Real
Property which are not violated by the current use and
operation of the Owned Real Property or if a violation shall
exist such violation shall have become legally non-conforming;
and (5) covenants, conditions, restrictions, easements and
other matters of record affecting title to the Owned Real
Property which do not materially impair the use or value of
the Owned Real Property for the purposes for which it is used
in connection with the Business (collectively, the "Permitted
Liens");
(ii) there are no pending (or, to the Seller's
Knowledge, threatened) condemnation proceedings, lawsuits, or
administrative actions relating to the Owned Real Property;
(iii) the Owned Real Property does not serve any
adjoining property for any purpose inconsistent with the use
of the Owned Real Property;
(iv) there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to
any Person the right of use or occupancy of any portion of the
Owned Real Property;
(v) there are no outstanding options or rights of
first refusal to purchase any of the Owned Real Property
(other than the right of the Purchaser pursuant to this
Agreement), or any portion thereof or interest therein;
(vi) no Person (other than the Seller) is in
possession of any of the Owned Real Property;
(vii) the current use of the Owned Real Property
and the operation of the Business does not violate any
instrument of record or agreement affecting the Owned Real
Property or any applicable Legal Requirements except for such
violations which have become legally non-conforming or which,
individually and in the aggregate, could not reasonably be
foreseen to have a material adverse affect on the Business;
and
(viii) to Seller's Knowledge, all certificates of
occupancy, permits, licenses, approvals and other
authorizations required to own and operate the Owned Real
Property have been lawfully issued and are, as of the date,
hereof, in full force and effect.
(b) Leased Property. The attached Real Estate Schedule
lists all real property leased or subleased to the Seller and all
other real property which is used in the Business and not owned by
the Seller (the "Leased Real Property"). The Seller has made
available to the Purchaser correct and complete copies of the
leases and subleases listed on the Real Estate Schedule
(collectively, the "Leases"). With respect to the Leased Real
Property and each of the Leases:
(i) except as set forth on the Real Estate Schedule,
such Lease is fully assignable to the Purchaser;
(ii) Seller is not in breach or default under such
Lease, and no event has occurred which, with notice or lapse
of time, would constitute a breach or default by Seller or
permit termination, modification, or acceleration of such
lease or sublease;
(iii) there are no disputes, oral agreements, or
forbearance programs in effect as to such Lease;
(iv) the Seller has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold created pursuant to
such Lease; and
(v) none of the Leases has been modified in any
respect, except to the extent that such modifications are in
writing and have been delivered or made available to
Purchaser.
5.16 Compliance with Laws.
(a) Generally. Except as set forth on the attached
Compliance Schedule, the Seller has not violated any Legal Require-
ment the violation of which could have a material adverse effect on
the Acquired Assets, the Assumed Liabilities or the financial
condition, operating results, assets, customer or supplier
relations, or employee relations of the Business, and the Seller
has not received written notice alleging any such violation.
(b) Required Permits. The Seller has complied in all
material respects with (and is in compliance in all material
respects with) all permits, licenses and other authorizations
required for the occupation of the Seller's facilities and the
operation of the Business. The items listed on the attached
Permits Schedule constitute all of the permits, filings, notices,
licenses, consents, authorizations, accreditation, waivers, and
approvals of, to or with any Government Entity which are used by
the Seller in or are required for the ownership of the Acquired
Assets or the conduct of the Business (as it is presently conducted
by the Seller).
(c) Environmental and Safety Matters.
(i) Except as set forth on the attached
Environmental Matters Schedule, Seller has complied with all
Environmental and Safety Requirements.
(ii) Without limiting the generality of the
foregoing, except as set forth on the attached Environmental
Matters Schedule, Seller has obtained and complied with, and
is in compliance with, all permits, licenses and other
authorizations required pursuant to Environmental and Safety
Requirements for the occupation of its facilities and the
operation of its Business. A list of all such permits,
licenses and other authorizations is set forth on the attached
Environmental Matters Schedule.
(iii) Seller has not received any written notice,
report or other information regarding any liabilities or
potential liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, relating to Seller or its
facilities and arising under Environmental and Safety
Requirements.
(iv) Except as set forth on the Environmental
Matters Schedule, none of the following exists at any property
or facility owned or operated by Seller:
1) Underground storage tanks or surface
impoundments;
2) Asbestos-containing material in any form or
condition; or
3) Materials or equipment containing
polychlorinated biphenyls.
(v) Except as set forth on the attached
Environmental Matters Schedule, Seller has not treated,
stored, disposed of, arranged for or permitted the disposal
of, transported, handled, or Released any substance, including
without limitation any hazardous substance, or owned or
operated any facility or property, so as to give rise to
liabilities of Seller for response costs, natural resource
damages or attorneys fees pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), as amended, or similar state Environmental and
Safety Requirements.
(vi) Neither this Agreement nor the consummation of
the transaction that is the subject of this Agreement will
result in any obligations for site investigation or cleanup,
or notification to or consent of government agencies or third
parties, pursuant to any of the so-called "transaction-
triggered" or "responsible property transfer" Environmental
and Safety Requirements.
(vii) Seller has not, either expressly or by
operation of law, assumed or undertaken any liability,
including without limitation any obligation for corrective or
remedial action, of any other person relating to Environmental
and Safety Requirements.
(viii) Except as set forth on the attached
Environmental Matters Schedule, without limiting the
foregoing, no facts, events or conditions relating to the past
or present facilities, properties or operations of Seller will
give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental and Safety Requirements
existing as of the Closing Date, or give rise to any other
liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental and
Safety Requirements existing as of the Closing Date, including
without limitation any relating to onsite or offsite Releases
or threatened Releases of hazardous materials, substances or
wastes, personal injury, property damage or natural resource
damage.
5.17 Product Warranty. Except as set forth on the
attached Warranties Schedule, all products manufactured, serviced,
distributed, sold or delivered by the Seller in connection with the
Business have been manufactured, serviced, distributed, sold and/or
delivered in conformity with all applicable contractual commitments
and all express and implied warranties. No material liability of
the Seller exists for replacement or other damages in connection
with any such product.
5.18 Customers. Since the date of the Latest Balance
Sheet, to Seller's Knowledge, Seller has not received any notice
that any of the Seller's ten largest customers by dollar volume
intend to stop, or materially decrease the rate of, buying products
from the Seller.
5.19 Disclosure. Neither this Article 5 nor any sched-
ule, attachment, written statement, document, certificate or other
item, as the same may be amended from time to time, supplied to the
Purchaser by or on behalf of the Seller with respect to the
transactions contemplated by the Transaction Documents contains any
untrue statement of a material fact or omits a material fact
necessary to make each statement contained herein or therein not
misleading.
5.20 Accuracy on Closing Date. Each representation and
warranty set forth in this Article 6 and all information contained
in any exhibit, schedule or attachment to this Agreement or in any
certificate or other writing delivered by, or on behalf of, the
Seller to the Purchaser will be true and correct as of the time of
the Closing as though then made, except (i) as affected by the
transactions expressly contemplated by the Transaction Documents,
(ii) to the extent that such representation or warranty relates
solely to an earlier date and (iii) to the extent that the Seller
has advised the Purchaser otherwise in writing at least five days
prior to the Closing.
ARTICLE 6
ACCESS TO AND PRESERVATION OF RECORDS
6.1 Access to Records. To the extent reasonably
required for any bona fide business purpose, each Party will allow,
and will use its best efforts to cause its Affiliates to allow, the
other Party (and the other Party's agents, representatives and
Affiliates) access to all business records and files concerning the
Business, the Acquired Assets or the Assumed Liabilities which
relate to the period prior to the Closing Date and will permit such
Persons to make copies of the same. Such access will be granted
upon reasonable advance notice, during normal business hours, and
in such a manner so as not to interfere unreasonably with the
operations of the Person affording such access. Without limiting
the generality of the foregoing, if either Party or any of its
Affiliates actively is contesting or defending against any charge,
complaint, action, suit, proceeding, hearing, investigation, claim,
or demand in connection with (a) any transaction contemplated by
the Transaction Documents, or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction
on or prior to the Closing relating to the Business, then the other
Party will cooperate, and use its best efforts to cause its
Affiliates to cooperate, with the contesting or defending Person
and its counsel in such contest or defense, make available such
other Party's and its Affiliates' personnel and provide such
testimony and access to books and records as are reasonably
requested in connection with such contest or defense, all at the
contesting or defending Person's expense (unless the contesting or
defending Person is entitled to indemnification therefor pursuant
to Section 7.2 or 7.3). No provision of this Article 6 will be
construed so as to limit the Seller's obligation to transfer to the
Purchaser all Books and Records as part of the Acquired Assets.
6.2 Preservation of Records. Unless otherwise consented
to in writing by the Seller or the Purchaser (as the case may be),
the Purchaser on one hand and the Seller and the Stockholder on the
other will not, for a period of ten years following the Closing
Date, destroy, alter or otherwise dispose of any of the business
records and files concerning the Business, the Assumed Liabilities
or the Acquired Assets acquired by the Purchaser hereunder or
retained by the Seller or the Stockholder without first offering to
surrender to the Seller or the Purchaser, as the case may be, such
business records and files or any portion thereof of which the
Seller or the Stockholder on one hand or the Purchaser on the other
may intend to destroy, alter or dispose. The party to whom such
business records and files are offered shall have not less than 30
days after delivery of written notice stating the such business
records and files are to be disposed of to take possession of such
business records and files.
ARTICLE 7
SURVIVAL AND INDEMNIFICATION
7.1 Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing
by any Party in connection herewith shall survive the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, regardless of any investigation made by any
Party or on its behalf. Neither a Party's participation in the
consummation of any transaction pursuant to any Transaction
Document nor any waiver of any condition to such participation
(including any condition that a representation or warranty of any
other Party be true and correct) will constitute a waiver by such
participating Party of any representation or warranty of any Party
or otherwise affect the survival of any such representation or
warranty.
7.2 Indemnification Obligations of the Seller and
Stockholder.
(a) Subject to the limitations set forth in (b) below, in
addition to any other right or remedy available to the Purchaser at
law or in equity, the Seller and the Stockholder will jointly and
severally indemnify the Purchaser and its Affiliates, stockholders,
officers, directors, employees, agents, representatives and
permitted successors and assigns (collectively, the "Purchaser
Indemnities") in respect of, and save and hold each Purchaser
Indemnitee harmless against and pay on behalf of or reimburse each
Purchaser Indemnitee as and when incurred, any Loss which any
Purchaser Indemnitee suffers, sustains or becomes subject to as a
result of, in connection with, relating or incidental to or by
virtue of, without duplication:
(i) any misrepresentation or breach of any representation
or warranty by the Seller or the Stockholder set forth in this
Agreement or any Schedule, Exhibit, certificate or other instrument
or document delivered to the Purchaser by the Seller or the
Stockholder pursuant to any Transaction Document;
(ii) any nonfulfillment or breach of any covenant or
agreement of the Seller or the Stockholder set forth in any
Transaction Document;
(iii) any liability or obligation of the Seller or the
Stockholder which is not an Assumed Liability; or
(iv) any liability or obligation associated with or
relating to the matters identified on the Environmental Indemnity
Schedule attached hereto.
(b) The indemnification provided for in Section 7.2(a)
above is subject to the following limitations:
(i) Seller and Stockholder will be liable to
Purchaser with respect to claims referred to in (a)(i) above
only if Purchaser gives Seller and Stockholder written notice
thereof on or before the first anniversary of the Closing Date
except for claims arising from breaches of the representations
and warranties (A) set forth in Section 5.9 as to which claims
must be made prior to the expiration of the applicable statute
of limitations with respect thereto, (B) set forth in Section
5.17(c) as to which claims must be made within 42 months after
the Closing Date and (C) set forth in Sections 5.1 and 5.3 as
to which claims may be made at any time;
(ii) with respect to claims referred in (a)(i)
above, Seller and Stockholder will not be liable for any
Losses until the aggregate amount of all such Losses exceeds
$300,000 and then Seller and Stockholder will be liable for
the amount of such Losses in excess of $150,000, provided that
with respect to a breach of clause (i) of Section 5.6(c) the
foregoing will not apply and Seller and Stockholder will be
liable for Losses with respect to such breach if the Loss
exceeds $20,000 with respect to any single asset or $100,000
in the aggregate for all assets described in Section
5.6(c)(i);
(iii) with respect to claims referred to in (a)(i)
above, Seller's and Stockholder's aggregated liability with
respect to Losses will not exceed $9 million;
(iv) the amount of any Loss subject to
indemnification under Section 7.2(a) shall be calculated net
of an amount equal to the difference between (A) the amount of
insurance proceeds actually received with respect to such Loss
and (B) the amount of all increases in insurance premiums
attributable solely to such Loss; and
(v) the amount of any Loss subject to
indemnification under Section 7.2(a) will be calculated net of
the net present value of any Tax Benefit inuring to the
Indemnified Party on account of such Loss (which Tax Benefit
will be reasonably established by the Indemnified Party and
discounted to the anticipated year of benefit, which in any
event will not exceed five years, at the Indemnified Party's
incremental cost of borrowed funds). A "Tax Benefit" means
any Loss which is reasonably likely to result in any refund of
income Taxes paid or reduction in the amount of income Taxes
which otherwise would have been paid currently.
7.3 Indemnification Obligations of the Purchaser. The
Purchaser will indemnify the Seller and its Affiliates,
stockholders, officers, directors, employees, agents,
representatives and permitted successors and assigns (collectively,
the "Seller Indemnities") and hold each of them harmless against
any Loss which such Seller Indemnitee suffers, sustains or becomes
subject to as a result of, in connection with, relating to or by
virtue of, without duplication:
(a) any misrepresentation or breach of any
representation or warranty by the Purchaser set forth in this
Agreement or any certificate or other instrument or document
delivered to the Purchaser pursuant to any Transaction Document;
(b) any nonfulfillment or breach of any covenant or
agreement of the Purchaser set forth in any Transaction Document;
or
(c) any Assumed Liability.
7.4 Indemnification Procedures.
(a) Notice of Claim. Any Person making a claim for
indemnification pursuant to Section 7.2 or 7.3 above (an
"Indemnified Party") must give the Party from whom indemnification
is sought (an "Indemnifying Party") written notice of such claim
(an "Indemnification Claim Notice") promptly after the Indemnified
Party receives any written notice of any action, lawsuit,
proceeding, investigation or other claim (a "Proceeding") against
or involving the Indemnified Party by a Government Entity or other
third party or otherwise discovers the liability, obligation or
facts giving rise to such claim for indemnification; provided that
the failure to notify or delay in notifying an Indemnifying Party
will not relieve the Indemnifying Party of its obligations pursuant
to Section 7.2 or 7.3, as applicable, except to the extent that
such failure actually harms the Indemnifying Party. Such notice
must contain a description of the claim and the nature and amount
of such Loss (to the extent that the nature and amount of such Loss
is known at such time).
(b) Control of Defense: Conditions. With respect to
the defense of any Proceeding against or involving an Indemnified
Party in which the Government Entity or other third party in
question seeks only the recovery of a sum of money for which
indemnification is provided in Section 7.2 or 7.3, at its option an
Indemnifying Party may appoint as lead counsel of such defense any
legal counsel selected by the Indemnified Party; provided that
before the Indemnifying Party assumes control of such defense it
must first
(i) enter into an agreement with the Indemnified
Party (in form and substance satisfactory to the Indemnified
Party) pursuant to which the Indemnifying Party agrees to be
fully responsible (with no reservation of any rights other
than the right to be subrogated to the rights of the
Indemnified Party) for all Losses relating to such Proceeding
and unconditionally guarantees the payment and performance of
any liability or obligation which may arise with respect to
such Proceeding or the facts giving rise to such claim for
indemnification, and
(ii) furnish the Indemnified Party with evidence
that the Indemnifying Party, in the Indemnified Party's sole
judgment, is and will be able to satisfy any such liability.
(c) Control of Defense: Exceptions, etc.
Notwithstanding Section 7.4(b), the Indemnified Party will be
entitled to participate in the defense of such claim and to employ
counsel of its choice for such purpose at its own expense; provided
that the Indemnifying Party will bear the reasonable fees and
expenses of such separate counsel incurred prior to the date upon
which the Indemnifying Party effectively assumes control of such
defense. The Indemnifying Party will not be entitled to assume
control of the defense of such claim, and will pay the reasonable
fees and expenses of legal counsel retained by the Indemnified
Party, if
(i) the Indemnified Party reasonably believes that
an adverse determination of such Proceeding could be
detrimental to or injure the Indemnified Party's reputation or
future business prospects,
(ii) the Indemnified Party reasonably believes that
there exists or could arise a conflict of interest which,
under applicable principles of legal ethics, could prohibit a
single legal counsel from representing both the Indemnified
Party and the Indemnifying Party in such Proceeding, or
(iii) a court of competent jurisdiction rules that
the Indemnifying Party has failed or is failing to prosecute
or defend vigorously such claim; and
The Indemnifying Party must obtain the prior written consent of the
Indemnified Party (which the Indemnified Party will not unrea-
sonably withhold) prior to entering into any settlement of such
claim or Proceeding or ceasing to defend such claim or Proceeding.
7.5 Payment. Subject to Section 7.6(g), the
Indemnifying Party shall pay the Indemnified Party to the extent
the Indemnified Party is entitled to payment hereunder in
immediately available funds promptly after the Indemnified Party
provides the Indemnifying Party with notice of a claim hereunder
and the parties reasonably agree that there is a reasonable basis
for liability of Losses in respect of such claim, or a final
result, determination, finding, judgment and/or award is made
pursuant to the terms of Section 7.6 below.
7.6 Arbitration Procedure.
(a) The Purchaser and the Seller agree that the
arbitration procedure set forth below shall be the sole and
exclusive method for resolving and remedying claims for money
damages arising out of the provisions of Article 7 (the
"Disputes"). Nothing in this Section 7.6 shall prohibit a Party
from instituting litigation to enforce any Final Determination (as
defined below). The Parties hereby agree and acknowledge that,
except as otherwise provided in this Section 7 or in the Commercial
Arbitration Rules of the American Arbitration Association as in
effect from time to time, the arbitration procedures and any Final
Determination hereunder shall be governed by, and shall be enforced
pursuant to the New York Arbitration Act.
(b) In the event that any Party asserts that there
exists a Dispute, such Party shall deliver a written notice to each
other Party involved therein specifying the nature of the asserted
Dispute and requesting a meeting to attempt to resolve the same.
If no such resolution is reached within ten business days after
such delivery of such notice, the Party delivering such notice of
Dispute (the "Disputing Person") may, within 45 business days after
delivery of such notice, commence arbitration hereunder by
delivering to each other Party involved therein a notice of
arbitration (a "Notice of Arbitration"). Such Notice of
Arbitration shall specify the matters as to which arbitration is
sought, the nature of any Dispute, the claims of each Party to the
arbitration and shall specify the amount and nature of any damages,
if any, sought to be recovered as a result of any alleged claim,
and any other matters required by the Commercial Arbitration Rules
of the American Arbitration Association as in effect from time to
time to be included therein, if any.
(c) The Purchaser and the Seller each shall select one
non-neutral arbitrator expert in the subject matter of the Dispute
(the arbitrators so selected shall be referred to herein as the
"Purchaser's Arbitrator" and the "Seller's Arbitrator,"
respectively). In the event that either Party fails to select an
arbitrator as set forth herein within 20 days from the delivery of
a Notice of Arbitration, then the matter shall be resolved by the
arbitrator selected by the other Party. The Seller's Arbitrator
and the Purchaser's Arbitrator shall select a third independent,
neutral arbitrator expert in the subject matter of the dispute, and
the three arbitrators so selected shall resolve the matter
according to the procedures set forth in this Section 7.6. If the
Seller's Arbitrator and the Purchaser's Arbitrator are unable to
agree on a third arbitrator within 20 days after their selection,
the Seller's Arbitrator and the Purchaser's Arbitrator shall each
prepare a list of three independent arbitrators. The Seller's
Arbitrator and the Purchaser's Arbitrator shall each have the
opportunity to designate as objectionable and eliminate one
arbitrator from the other arbitrator's list within seven days after
submission thereof, and the third arbitrator shall then be selected
by lot from the arbitrators remaining on the lists submitted by the
Seller's Arbitrator and the Purchaser's Arbitrator.
(d) The arbitrator(s) selected pursuant to Section
7.6(c) above will determine the allocation of the costs and
expenses of arbitration based upon the percentage which the portion
of the contested amount not awarded to each Party bears to the
amount actually contested by such Party. For example, if the
Purchaser submits a claim for $1,000 and if the Seller contests
only $500 of the amount claimed by the Purchaser, and if the
arbitrator(s) ultimately resolves the dispute by awarding the
Purchaser $300 of the $500 contested, then the costs and expenses
of arbitration will be allocated 60% (i.e., 300/500) to the
Seller and 40% (i.e., 200/500) to the Purchaser.
(e) The arbitration shall be conducted in New York, New
York under the Commercial Arbitration Rules of the American
Arbitration Association as in effect from time to time, except as
modified by the agreement of all of the parties to this Agreement.
The arbitrator(s) shall so conduct the arbitration that a final
result, determination, finding, judgment and/or award (the "Final
Determination") is made or rendered as soon as practicable, but in
no event later than 90 business days after the delivery of the
Notice of Arbitration nor later than 10 days following completion
of the arbitration. The Final Determination must be agreed upon
and signed by the sole arbitrator or by at least two of the three
arbitrators (as the case may be). The Final Determination shall be
final and binding on all parties and there shall be no appeal from
or reexamination of the Final Determination, except for fraud,
perjury, evident partiality or misconduct by an arbitrator
prejudicing the rights of any Party and to correct manifest
clerical errors.
(f) The Purchaser and the Seller may enforce any Final
Determination in any state or federal court located in New York,
New York. For the purpose of any action or proceeding instituted
with respect to any Final Determination, each Party hereto hereby
irrevocably submits to the jurisdiction of such courts, irrevocably
consents to the service of process by registered mail or personal
service and hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may have or hereafter have
as to personal jurisdiction, the laying of the venue of any such
action or proceeding brought in any such court and any claim that
any such action or proceeding brought in any court has been brought
in an inconvenient forum.
(g) Any Party required to make a payment pursuant to
this Section 7.6 shall pay the Party entitled to receive such
payment within three days of the delivery of the Final
Determination to such responsible Party. If any Party shall fail
to pay the amount of any damages, if any, assessed against it
within such three day period, the unpaid amount shall bear interest
from the date of such delivery at the lesser of (i) the prime rate
of interest published by the Board of Governors of the Federal
Reserve System as the "Bank Prime Loan" rate, in effect from time
to time (which rate shall be adjusted on the effective date of each
change in such prime rate) plus 2.00% and (ii) the maximum rate
permitted by applicable usury laws. Interest on any such unpaid
amount shall be compounded semi-annually, computed on the basis of
a 360-day year consisting of twelve 30-day months and shall be
payable on demand. In addition, such Party shall promptly
reimburse the other Party for any and all costs and expenses of any
nature or kind whatsoever (including but not limited to all
attorneys' fees) incurred in seeking to collect such damages or to
enforce any Final Determination.
7.7 Exclusive Remedy. The foregoing indemnification
provisions shall be the exclusive remedy pursuant to Sections
7.2(a)(i) and 7.3(a) for any breach of representation or warranty
set forth in this Agreement or any Schedule, Exhibit, certificate
or other instrument or document furnished pursuant to any
Transaction Document; provided, however, that the foregoing
indemnification provisions are in addition to, and not in
derogation of, any statutory or common law remedy any Party may
have for any matter other than breach of a representation or
warranty set forth in this Agreement or any Schedule, Exhibit,
certificate or other instrument or document furnished pursuant to
any Transaction Document.
ARTICLE 8
CONDITIONS TO THE CLOSING
8.1 Conditions of the Purchaser's Obligation. The
Purchaser's obligation to effect the Sale and the Assumption at the
Closing is subject to the satisfaction as of the Closing of the
following conditions precedent:
(a) Representations and Warranties. Each representation
and warranty set forth in Article 5 will be true and correct in all
material respects at and as of the Closing as though then made
(without giving effect to any disclosure made by the Seller
pursuant to Section 5.20 above), except to the extent of any change
solely caused by the transactions expressly contemplated by the
Transaction Documents.
(b) Covenants. The Seller and the Stockholder will have
performed and observed in all material respects each covenant or
other obligation required to be performed or observed by them
pursuant to the Transaction Documents prior to the Closing.
(c) Compliance with Applicable Laws. The consummation
of the transactions contemplated by the Transaction Documents will
not be prohibited by any Legal Requirement or subject the
Purchaser, the Business or the Acquired Assets to any penalty or
liability arising under any applicable Legal Requirement or imposed
by any Government Entity.
(d) Proceedings. No action, suit or proceeding will be
pending or threatened before any Government Entity the result of
which could prevent or prohibit the consummation of any transaction
pursuant to the Transaction Documents, cause any such transaction
to be rescinded following consummation, or adversely affect the
Purchaser's right to acquire or hold the Acquired Assets or conduct
the Business or the Seller's performance of its obligations
pursuant to the Transaction Documents, and no judgment, order,
decree, stipulation, injunction or charge having any such effect
will exist.
(e) Consents. The applicable waiting periods, if any,
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR Act") will have expired or been terminated. All other
filings, notices, licenses, consents, authorizations,
accreditation, waivers, approvals and the like of, to or with any
Government Entity or any other Person that are required for the
consummation of the Sale, the Assumption or any other transaction
contemplated by the Transaction Documents or the ownership of the
Acquired Assets or the conduct of the Business by the Purchaser
thereafter and which are designated with an asterisks on the
Consents Schedule (the "Consents") will have been duly made or
obtained.
(f) License Agreement and Guaranty. Purchaser and
Seller will have entered into a License Agreement in the form of
Exhibit A attached hereto (the "License Agreement"), which will be
guaranteed by the Stockholder pursuant to a Guaranty in the form of
Exhibit B attached hereto (the "Guaranty"), and the License
Agreement and the Guaranty will be in full force and effect.
(g) Opinion of Counsel. The Purchaser will have
received from Winthrop, Stimson, Putnam & Roberts, legal counsel
for the Seller, an opinion with respect to the matters mutually
agreed to by Purchaser and Seller, addressed to the Purchaser,
dated the Closing Date, and in form satisfactory to the Purchaser's
special legal counsel.
(h) Financing. The proceeds of the financing
contemplated by the Letter Agreement dated June 7, 1994 between
Congress Financial Corporation (the "Lender") and the Purchaser
shall be available in full at the Closing on the terms set forth in
such Letter Agreement.
(i) Title Insurance. The Purchaser shall have obtained,
at the Purchaser's sole cost and expense: (i) with respect to each
parcel of Owned Real Property an ALTA owner's policy of title
insurance in form satisfactory to Lender in its sole discretion
issued by a title insurer (the "Title Company") reasonably
satisfactory to the Purchaser, in such amount as is satisfactory to
the Lender, insuring title to the Owned Real Property in the
Purchaser subject only to the Permitted Liens ("Title Policies");
and (ii) with respect to each parcel of Leased Real Property
required by the Lender, an ALTA leasehold policy of title insurance
in form satisfactory to Lender in its sole discretion issued by the
Title Company in such amount as is satisfactory to the Lender
insuring title to the Leasehold estate in such Parcel of Leased
Real Property in the Purchaser subject only to Permitted Liens.
The Title Policies shall contain endorsements as required by
Lender.
(j) Surveys. The Purchaser shall have received, at the
Purchaser's sole cost and expense, a current ALTA/ACSM survey of
each parcel of Owned Real Property and Leased Real Property with
respect to which a Title Policy is required made in accordance with
the 1992 ALTA/ACSM standards including items 1 through 13 of Table
A thereof or such similar standards as are generally followed by
surveyors in Indiana for similar properties made by a surveyor
licensed in the jurisdiction in which such parcel of Owned or
Leased Real Property is located and certified to the Purchaser, the
Lender and the Title Company as having been so made, disclosing the
location of all improvements, easements, party-walls, sidewalks,
roadways, utility lines and other matters required to be shown on
the surveys and showing each such parcel of Owned or Leased Real
Property to be free from encroachments of improvements located
thereon onto adjacent property and to be free from encroachments of
improvements located on property adjacent onto such parcel Owned
Real Property.
(k) Seller Closing Documents. The Seller will have de-
livered to the Purchaser the following documents:
(i) an Officer's Certificate of the Seller, dated
the Closing Date, stating that the conditions specified in
Sections 8.1(a) through 8.1(h), inclusive, have been fully
satisfied;
(ii) a copy of the resolutions duly adopted by the
Seller's board of directors and stockholders authorizing the
Seller's execution, delivery and performance of the
Transaction Documents to which the Seller is a party and the
consummation of the Sale and all other transactions
contemplated by the Transaction Documents, as in effect as of
the Closing, certified by an officer of the Seller;
(iii) a certificate (dated not less than five
business days prior to the Closing) of the Secretary of State
of the States of Delaware and Indiana as to the good standing
of the Seller in the States of Delaware and Indiana;
(iv) the Books and Records;
(v) such a bill of sale, warranty deeds, warranty
assignments of leases and all other instruments of conveyance
which are necessary or desirable to effect the Sale, including
documents acceptable for recordation in the United States
Patent and Trademark Office, the United States Copyright
Office and any other similar Government Entity;
(vi) copies of the Consents; and
(vii) such other documents relating to the
transactions contemplated by the Transaction Documents as the
Purchaser reasonably requests.
All corporate and other proceedings or actions taken or required to
be taken by the Seller in connection with the transactions
contemplated by the Transaction Documents, and all documents
incident thereto, must be reasonably satisfactory in form and
substance to the Purchaser and its special legal counsel. Any
condition set forth in this Section 8.1 may be waived only in a
writing executed by the Purchaser.
8.2 Conditions of the Seller's Obligation. The Seller's
obligation to effect the Sale at the Closing is subject to the
satisfaction as of the Closing of the following conditions
precedent:
(a) Representations and Warranties. Each representation
and warranty set forth in Article 4 will be true and correct in all
material respects at and as of the Closing as though then made
(without giving effect to any disclosure made by the Purchaser
pursuant to Section 4.5 above), except to the extent of any change
solely caused by the transactions expressly contemplated by the
Transaction Documents.
(b) Covenants. The Purchaser will have performed in all
material respects each covenant or other obligation required to be
performed by it pursuant to the Transaction Documents prior to the
Closing.
(c) Compliance with Applicable Laws. The consummation
of the transactions contemplated by the Transaction Documents will
not be prohibited by any Legal Requirement or subject the Seller to
any penalty or liability arising under any Legal Requirement or
imposed by any Government Entity.
(d) Opinion of Counsel. Seller and Stockholder will
have received from Kirkland & Ellis, legal counsel for the
Purchaser, an opinion with respect to the matters mutually agreed
to by Purchaser and Seller, addressed to the Seller and
Stockholder, dated the Closing Date, and in form satisfactory to
the Seller's special legal counsel.
(e) Proceedings. No action, suit or proceeding will be
pending or threatened before any Government Entity the result of
which could prevent or prohibit the consummation of any transaction
pursuant to the Transaction Documents, cause any such transaction
to be rescinded following such consummation or adversely affect the
Purchaser's performance of its obligations pursuant to the
Transaction Documents, and no judgment, order, decree, stipulation,
injunction or charge having any such effect will exist.
(f) Purchaser Closing Documents. The Purchaser will
have delivered to the Seller the following documents:
(i) an Officer's Certificate of the Purchaser,
dated the Closing Date, stating that the conditions specified
in Sections 8.2(a) through 8.2(f), inclusive, have been fully
satisfied;
(ii) all instruments which are necessary or
desirable to effect the Assumption; and
(iii) such other documents relating to the trans-
actions contemplated by the Transaction Documents to be
consummated at the Closing as the Seller reasonably requests.
All corporate and other proceedings or actions taken or required to
be taken by the Purchaser in connection with the transactions
contemplated by the Transaction Documents, and all documents
incident thereto, must be reasonably satisfactory in form and
substance to the Seller and its legal counsel. Any condition set
forth in this Section 8.2 may be waived only in a writing executed
by the Seller.
ARTICLE 9
OTHER COVENANTS
9.1 Interim Agreements of the Seller and the
Stockholder. The Seller and the Stockholder each covenants and
agrees that prior to the Closing, unless the Purchaser agrees
otherwise in writing, or as otherwise expressly contemplated or
permitted by the Transaction Documents, the Seller will conduct the
Business in, and the Seller will not take any action with respect
to the Business other than in, the ordinary course, on an arm's-
length basis and in accordance in all material respects with all
Legal Requirements and the Seller's past custom and practice.
Without limiting the generality of the preceding sentence, the
Seller and the Stockholder covenant that:
(a) the Seller will not, directly or indirectly
(i) sell, pledge, dispose of or encumber any
Acquired Asset, other than sales of inventory in the ordinary
course of the Business and sales of inventory in categories
against which special reserves are required to be taken on the
Inventory Valuation Schedule,
(ii) engage in any activity which would accelerate
the collection of its accounts or notes receivable, delay the
payment of its accounts payable, or reduce or otherwise
restrict the amount of inventory (including raw material,
packaging, work-in-process, or finished goods) on hand, in
each case, other than in the ordinary course of the conduct of
the Business and except for sales of inventory in categories
against which special reserves are required to be taken on the
Inventory Valuation Schedule,
(iii) acquire (by merger, exchange, consolidation,
acquisition of stock or assets or otherwise) any corporation,
partnership, joint venture or other business organization or
division or material assets thereof,
(iv) incur any Indebtedness or issue any debt
securities which (if such Indebtedness existed, or such debt
securities were outstanding, on the Closing Date) would
constitute Assumed Liabilities,
(v) take any action with respect to the grant of
any bonuses, salary increases, severance or termination pay,
(vi) declare, set aside, or pay any dividend or make
any distribution with respect to its capital stock (other than
dividends and/or distributions or intercompany account
settlements paid solely in cash) or redeem, purchase, or
otherwise acquire any of its capital stock,
(vii) not take any action which would render any
representation or warranty made by the Seller in this
Agreement untrue in any material respect at (or at any time
prior to) the Closing;
(viii) adopt any employee benefit or welfare plan, or
(ix) enter into or modify, or propose to enter into
or modify, any agreement, arrangement or understanding with
respect to any of the matters referred to in clauses (i)
through (vii) above;
(b) the Seller will use its best efforts to cause its
current insurance policies not to be canceled or terminated, and
not to permit any of the coverage pursuant to any such policy to
lapse, unless at the time of such termination, cancellation or
lapse there is in full force and effect a replacement policy which
provides coverage in an amount which is not less than the amount of
the coverage pursuant to the canceled, terminated or lapsed policy;
(c) the Seller will
(i) insofar as such matters relate to the Acquired
Assets, the Assumed Liabilities or the Business, use its best
efforts to (1) preserve intact the organization and goodwill
of the Business, (2) keep available the services of its
officers and employees as a group, and (3) maintain
satisfactory relationships with its material financing
sources, suppliers and customers and other Persons having
business relationships with it,
(ii) upon reasonable request, confer with
representatives of the Purchaser and the Purchaser's present
and proposed financing sources regarding the Acquired Assets,
the Assumed Liabilities and the Business,
(iii) upon reasonable request, arrange meetings with
such customers of, and suppliers to, the Seller as the
Purchaser shall reasonably designate in order that the Seller
and the Purchaser may confer with such customers and suppliers
regarding the Business and the nature of the transactions
contemplated by this Agreement,
(iv) maintain its facilities and assets in the
ordinary course of the Business consistent with past practice,
and
(v) notify the Purchaser of any emergency or other
change in the normal course of the Business or in the
condition of the Acquired Assets or the operation of the
Business and any governmental or third party complaint,
investigation or hearing (or communication indicating that
such a complaint, investigation or hearing is or may be
contemplated) if such emergency, change, complaint,
investigation or hearing could reasonably be expected to be
material, individually or in the aggregate, to the Acquired
Assets, the Assumed Liabilities or the financial condition,
operating results, assets, customer or supplier relations, or
employee relations of the Business, and
(d) the Seller promptly will notify the Purchaser if it
discovers that any representation or warranty by the Seller set
forth in this Agreement was untrue when made or subsequently has
become untrue, and will promptly supplement or amend the Schedules
made a part of this Agreement with respect to any matter hereafter
arising which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or
described in a Schedule hereto or in any representation and
warranty of Seller which has been rendered inaccurate; and
(e) the Seller will permit representatives of the
Purchaser and the Purchaser's present and proposed financing
sources to have full access (at reasonable times and in a manner so
as not to unreasonably interfere with the Seller's normal business
operations) to all the Seller's personnel and all premises,
properties, books, records, contracts, Tax records and other
documents of the Seller pertaining to the Business, and will allow
such Persons to make and retain copies of such documents.
9.2 Exclusivity. Neither the Seller nor the Stockholder
(subject to the fiduciary obligations of their respective boards of
directors will (i) solicit, initiate, or encourage the submission
of any proposal or offer from any Person relating to the
acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of the Seller (including any
acquisition structured as a merger, consolidation, or share
exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The
Stockholder will not vote any shares of the Seller in favor of any
such acquisition structured as a merger, consolidation, or share
exchange. The Seller will notify the Purchaser immediately if any
Person makes any proposal, offer, inquiry, or contact with respect
to any of the foregoing.
9.3 Notice by the Purchaser. From the date of this
Agreement until the Closing, the Purchaser promptly will notify the
Seller if any representation or warranty of the Purchaser set forth
in this Agreement was untrue when made or subsequently has become
untrue.
9.4 Additional Interim Agreements. Each Party will use
reasonable efforts to:
(a) take or cause to be taken all actions, and do or
cause to be done all things, which are necessary, proper or
advisable to cause any other Party's conditions set forth in
Sections 8.1 and 8.2 to be fully satisfied (including, in the case
of the Purchaser, obtaining title insurance and surveys as
contemplated by Sections 8.1(j) and (k)), and
(b) consummate and make effective as promptly as
practicable the transactions contemplated by the Transaction
Documents, including using reasonable efforts to obtain the
Consents.
9.5 Benefits Matters.
(a) Transferred Employees. Purchaser shall have no
obligation to hire any employee of Seller but may offer to employ,
as of the Closing Date, some or all of the employees of Seller as
Purchaser shall so desire. Any employee of Seller who accepts
Purchaser's offer of employment (the "Transferred Employees") shall
be hired under the terms and conditions of employment as offered to
such person by Purchaser. To the extent required by law, Purchaser
shall recognize the bargaining representative currently
representing Seller's employees (the "Union"), however, unless
Purchaser notifies the Union to the contrary, Purchaser shall not
assume Seller's bargaining agreement with the Union. The Purchaser
shall indemnify and hold harmless the Seller and the Stockholder
from and against all liability arising under the Worker Adjustment
and Retraining Notification Act of 1988, as amended ("WARN"), as a
result of the Purchaser's failure to offer employment to any Person
who is an active employee of the Seller as of the Closing Date or
as a result of actions taken by the Purchaser after the Closing
Date. At the Closing, the Seller shall provide to the Purchaser a
list of all employees of the Seller whose employment has been
terminated within 90 days prior to the Closing Date.
(b) Employee Benefits.
(i) Comparable Benefits: Crediting of Service:
Assumption of Liability. Except as otherwise provided in Section
9.5(b)(iii) below, as of the Closing Date, the Purchaser shall
provide the Transferred Employees employee benefits which in the
aggregate are substantially comparable (but not necessarily
identical on a plan or program basis) to those provided by the
Seller as of the Closing Date under the employee benefit plans
listed on the Employee Benefits Schedule (other than with respect
to pension plan benefits and post-employment health and welfare
benefits which will not be provided by the Purchaser). The
Purchaser shall grant the Transferred Employees credit for service
with the Seller for purposes of eligibility and vesting under
benefit plans to be provided by the Purchaser.
(ii) Vacation. The Purchaser agrees to provide vacation
benefits similar to those provided to the Transferred Employees by
the Seller as of the Closing Date. The Purchaser shall accept the
vacation balances owing to Transferred Employees as of the Closing
Date, provided that the Seller provides to the Purchaser a schedule
of all vacation vested as of June 30, 1994 and the pro rata
vacation time earned for the period, if any, from June 30, 1994
through the Closing Date but not taken or paid as of the Closing
Date and such amount is properly accrued on the Closing Balance
Sheet.
(iii) Group Health. The Purchaser shall, with respect to
all Transferred Employees (and their "qualified beneficiaries"
within the meaning of Section 4980B(g) of the Code) who were
covered by "group health plans," within the meaning of Section
5000(b)(1) of the Code, maintained by the Seller immediately prior
to the Closing Date and who are not denied coverage under
Purchaser's group health plans because they have been treated for
any condition within the 90-day period ending on the Closing Date,
cover such persons under the group health plans maintained by the
Purchaser, which plans shall recognize pre-existing health
conditions and shall recognize payments made by Transferred
Employees under the Seller's group health plans for purposes of
deductibles and out-of-pocket maximums under the Purchaser's plans.
With respect to Transferred Employees (and their "qualified
beneficiaries" within the meaning of Section 4980B(g) of the Code)
who were covered by "group health plans," within the meaning of
Section 5000(b)(1) of the Code, maintained by the Seller
immediately prior to the Closing Date and who are denied coverage
under Purchaser's group health plans because they have been treated
for any condition within the 90-day period ending on the Closing
Date ("Non-covered Persons"), such Non-covered Persons will not be
covered under the Purchaser's plans and the Seller shall make
available to such Non-covered Persons continuation of coverage
under the provisions of COBRA on the same terms as made available
to other terminated employees for a period of at least one year
following the Closing Date. The Purchaser shall not be responsible
or liable for continuation of coverage under the provisions of
COBRA where the event entitling the person to continuation of
coverage occurred on or prior to the Closing Date, including with
respect to Non-covered Persons and other employees of Seller who
are not Transferred Persons. The parties hereto agree that there
will be no reserve on the Draft Balance Sheet with respect to the
above described matters.
(iv) Pre-closing Obligations. Purchaser shall not assume
any liability for any claim (including, without limitation, medical
and workers compensation claims) incurred on or prior to the
Closing Date or benefit accrued prior to the Closing Date. The
Seller shall be responsible for all liability relating to any
claims incurred (whether or not reported and whether or not paid)
on or prior to the Closing Date or benefits accrued prior to the
Closing Date and no reserve for such claims shall be reflected on
the Closing Balance Sheet. In addition, without limiting the
generality of the foregoing, the Purchaser shall not assume any
responsibility for or obligation to any person who is not a
Transferred Person, including without limitation, any retired or
former employee of the Seller.
(v) Salaried and Hourly Pension Plans. Purchaser shall
not assume sponsorship of or any responsibility or obligation under
the Salaried Pension Plan or the Hourly Pension Plan (the "Pension
Plans"). Each employee of Seller who is a participant in the
Pension Plans will be fully vested in all benefits accrued
thereunder as of the Closing Date. Seller shall retain
responsibility for all benefits accrued under the Pension Plans and
shall distribute such benefits to the Transferred Employees in
accordance with the terms of the plans and as required by law.
(vi) 401(k) Plan. Purchaser shall not assume sponsorship
of or any responsibility under the salaried 401(k) plan or the
hourly 401(k) plan. Each employee of Seller who is a participant
in the 401(k) plans will be fully vested in all benefits accrued
thereunder as of the Closing Date. Seller shall retain all
responsibility for such plans and shall distribute the account
balances maintained thereunder to the Transferred Employees in
accordance with the terms of the plans and as required by law. The
Purchaser shall permit Transferred Employees, at their election, to
rollover their balances in such 401(k) plans of Seller into the
Purchaser's 401(k) plan.
(vii) Nonqualified Plans. The Purchaser shall not assume
any liability or responsibility under any nonqualified employee
benefit plans of Seller (including any Section 125 plan), whether
or not attributable to Transferred Employees.
(viii) Required Documentation. In connection with the
implementation of this Section 9.5(b), the Seller and the Purchaser
shall cooperate in the preparation and filing of all documentation
which may be required to be filed with the Internal Revenue
Service, the Department of Labor or any other applicable
governmental agency.
(c) Retention Bonuses. On or about January 14, 1994,
Stockholder entered into the retention agreements listed on
Schedule 9.5(c) attached hereto (the "Retention Agreements") with
those of Seller's employees listed on Schedule 9.5(c) (the
"Retention Employees") in anticipation of the sale of the Business.
Under the Retention Agreement, a bonus will be paid to the
Retention Employees if the Business is sold and the Retention
Employees satisfy the conditions set forth in the Retention
Agreement. The retention bonus will be paid in two installments,
the first coming due shortly after closing, and the second coming
due six months after closing (assuming the Retention Employee has
satisfied the conditions for payment). Seller will pay the first
installment of the retention bonus under the Retention Agreements.
Purchaser hereby agrees to assume Stockholders and/or Seller's
obligation for the second installment due under the Retention
Agreements entered into with respect to each Retention Employee
hired by Purchaser as of the Closing Date; provided such employee
(i) satisfies each condition set forth in the Retention Agreement
and (ii) is employed by Purchaser for the six months following the
Closing Date.
(d) Severance. Purchaser agrees to establish and
maintain for a period one year after the Closing Date a severance
policy which shall be identical to that maintained by Stockholder
as of the date hereof; provided, however, such severance policy
shall only apply to all employees of the Seller at the time of
Closing who are not represented by the Union. Purchaser shall also
offer to John Noblitt an agreement which provides severance
benefits substantially similar to his current arrangement in effect
with Seller.
9.6 Transfer Taxes. Purchaser will be liable for all
transfer, sales and use Taxes, if any, arising from the
consummation of the transactions contemplated hereby; provided,
however, that Seller will be liable for any transfer, sales and use
Taxes related to the ownership and disposition of the Excluded
Assets.
9.7 Non-Compete.
(a) As a significant inducement to Purchaser to enter
into and to perform its obligations under this Agreement, Seller
and Stockholder agree that, for a period of two years after the
Closing Date, they will not anywhere in the United States, directly
or indirectly, either for themselves or any other Person, compete
with the Business; provided, however, that this Section 9.7 will
not prohibit Seller or Stockholder from (i) acquiring up to 5% of
the outstanding securities of any class of a corporation which is
publicly traded, (ii) acquiring any business not more than the
lesser of (A) 10% or (B) $5 million of the total revenue of which
is derived from businesses or products which compete with the
Business; or (iii) acquiring any business larger than that referred
to in clause (ii) above but not more than the lesser of (A) 50% or
(B) $40 million of the total revenue of which is derived from
businesses or products which compete with the Business (provided
that (x) upon acquisition thereof such competing businesses are
offered to be sold to the Purchaser at a price which is mutually
agreeable to the Purchaser and the Stockholder (or, if the
Purchaser desires to purchase such businesses but the parties
cannot agree on price, at a price equal to the fair value of such
businesses, as determined by a nationally recognized investment
banking firm mutually acceptable to the Purchaser and the
Stockholder) and (y) if the Purchaser does not desire to purchase
such businesses, the Stockholder disposes of such competing
businesses within 6 months following notification from the
Purchaser that it does not desire to purchase such businesses).
(b) If, at the time of enforcement of this Section 9.7,
a court holds that the duration, scope or area restrictions stated
herein are unreasonable under circumstances then existing, the
parties agree that the maximum duration, scope or area reasonable
under such circumstances will be substituted for the stated
duration, scope or area.
(c) Seller and Stockholder agree that in the event of any
breach of any provisions of this Section 9.7, Purchaser will have
the right, in addition to any other rights and remedies existing in
its favor, to enforce its rights and Seller's and Stockholder's
obligations under this Section 9.7 not only by an action or actions
for damages but also by an action or actions for specific
performance and/or injunctive or other equitable relief in order
to enforce or prevent any violations of the provisions of this
Section 9.7.
(d) Each Party agrees that no portion of the Purchase
Price is being paid nor will be allocated to the agreement not-to-
compete set forth in this Section 9.7.
9.8 Transaction Expenses. Each of the Parties will be
responsible for all costs and expenses incurred by such Party in
connection with the negotiation, preparation and entry into the
Transaction Documents and the consummation of the transactions to
be consummated pursuant to the Transaction Documents.
9.9 Further Assurances. From and after the Closing, the
Seller will execute all documents and take any other action which
it is reasonably requested to execute or take to further effectuate
the transactions contemplated by the Transaction Documents.
9.10 Announcements. Prior to the Closing, the Purchaser
will not make any public announcement of or regarding the
transactions contemplated by this Agreement without the prior
approval of the Seller as to the timing and content of such
announcement (which approval the Seller may not unreasonably
withhold or delay). Neither the Seller nor the Stockholder will
make any public announcement of or regarding the transactions
contemplated by this Agreement without the prior approval of the
Purchaser as to the timing and content of such announcement (which
approval the Purchaser may not unreasonably withhold or delay);
provided that the Stockholder may, without the Purchaser's
approval, make a public announcement with respect to the
transactions contemplated by this Agreement to the extent required
by law or by obligations pursuant to any listing agreement with any
securities exchange so long as prior to making any such public
announcement the Stockholder gives the Purchaser the opportunity to
review and comment upon the contents thereof.
9.11 Property Taxes and FICA.
(a) FICA. The alternative procedure established in
Section 5 of Revenue Procedure 84-77, 1984-2 C.B. 753, relating to
employment tax returns and statements shall be adopted by the
Purchaser and the Seller for Transferred Employees. The Seller
shall, in a timely fashion, furnish the Purchaser with the
information it needs to comply with this procedure.
(b) Property Taxes. Real and personal property Taxes
relating to the Acquired Assets for a taxable period that includes
the Closing Date shall be pro rated between the Seller and the
Purchaser according to the number of days in such taxable period on
or before the Closing Date and the number of days in such taxable
period after the Closing Date. The period to which a Tax paid in
advance or paid in arrears relates shall be determined under
applicable federal, state and local Tax law.
9.12 Public Offering. In the event that Purchaser or
Ampad Holding Corporation desire to file a registration statement
under the Securities Act of 1933, as amended, which requires
financial information of Seller for pre-Closing periods, Seller and
Stockholder will, and will permit their accountants to, provide
Purchaser with such financial information as Purchaser reasonably
requests.
9.13 Obsolete Inventory. The Seller shall have the
right, at its sole cost and expense, upon reasonable notice to the
Purchaser, at any time within 30 days of the Closing which is
during normal business hours and is reasonably acceptable to the
Purchaser, to take possession of all or any portion of the
inventory of the Seller which is part of the Excluded Assets (the
"Obsolete Inventory"). The Purchaser shall have the right to
dispose of, for its own account and without any liability to the
Seller whatsoever, any Obsolete Inventory which Seller does not
take possession of within such 30-day period. Notwithstanding
anything to the contrary set forth in this Agreement, the Seller
shall be permitted to dispose of the Obsolete Inventory to any
Person (other than any competitor of the Purchaser or any Person
that is a customer of the Purchaser or the Business as of the
Closing Date or is a wholesaler or distributor who services any
such customer), so long as the Seller disposes of such inventory in
a manner which could not reasonably be expected to have a material
adverse effect on the Purchaser or the Business.
ARTICLE 10
OTHER AGREEMENTS
10.1 Termination. This Agreement may be terminated:
(a) at any time prior to the Closing by mutual agreement
of the Purchaser and the Seller,
(b) by the Purchaser, at any time when any Party other
than the Purchaser is in breach of any of its material obligations
pursuant to this Agreement or if any representation or warranty of
any Party other than the Purchaser is false or misleading in any
material respect (provided that such condition is not the result of
any breach of any covenant, representation or warranty of the
Purchaser set forth in any Transaction Document),
(c) by the Seller, at any time when the Purchaser is in
breach of any of its material obligations pursuant to this
Agreement or if any representation or warranty of the Purchaser is
false or misleading in any material respect (provided that such
condition is not the result of any breach of any covenant,
representation or warranty of a Party other than the Purchaser set
forth in any Transaction Document), or
(d) by the Purchaser or the Seller, at any time after
July 15, 1994, if the Closing has not then occurred.
Any termination of this Agreement pursuant to any of clauses
10.1(b) through (d) will be effected by written notice from the
terminating Party to the Purchaser (if the Seller is the
terminating Party) or the Seller (if the Purchaser is the
terminating Party). Any termination of this Agreement pursuant to
clause 10.1(b) or (c) will not terminate the liability of any Party
for any breach or default of any representation, warranty, covenant
or other agreement set forth in any Transaction Document which
exists at the time of such termination (other than a breach of a
representation or warranty which has been supplemented or amended
to cure such breach prior to the time of termination).
10.2 Remedies. No failure to exercise, and no delay in
exercising, any right, remedy, power or privilege under this
Agreement by any Party will operate as a waiver of such right,
remedy, power or privilege, nor will any single or partial exercise
of any right, remedy, power or privilege under this Agreement
preclude any other or further exercise of such right, remedy, power
or privilege or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided
pursuant to this Agreement are cumulative and not exhaustive of any
other rights, remedies, powers and privileges which may be provided
by law.
10.3 Consent to Amendments. No waiver, amendment,
modification or supplement of this Agreement will be binding upon
any Party unless such waiver, amendment, modification or supplement
is set forth in writing and is executed by such Party. No other
course of dealing between or among any of the Parties or any delay
in exercising any rights pursuant to this Agreement will operate as
a waiver of any rights of any Party.
10.4 Successors and Assigns. Except as otherwise
expressly provided in this Agreement, all covenants and agreements
set forth in this Agreement by or on behalf of the Parties will
bind and inure to the benefit of the respective successors and
assigns of the Parties, whether so expressed or not, except that
neither this Agreement or any of the rights, interests or
obligations hereunder may be assigned by the Seller without the
Purchaser's prior written consent. The Purchaser may (at any time
prior to the Closing), in whole or in part assign its rights
pursuant to this Agreement to one or more of its Affiliates, and
the Purchaser may, direct the Seller to convey the Acquired Assets,
in whole or in part, to one or more of the Purchaser's Affiliates;
provided, however, that in such event the Purchaser shall remain
fully liable for the fulfillment of all of its obligations
hereunder. Furthermore, the Purchaser may assign its rights under
this Agreement for collateral security purposes to any lenders
providing financing to the Purchaser or any of its Affiliates.
10.5 Governing Law. This Agreement will be governed by
and construed in accordance with the domestic laws of the State of
New York, without giving effect to any choice of law or conflict
provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the laws of any jurisdiction other
than the State of New York to be applied. In furtherance of the
foregoing, the internal law of the State of New York will control
the interpretation and construction of this Agreement, even if
under such jurisdiction's choice of law or conflict of law
analysis, the substantive law of some other jurisdiction would
ordinarily apply.
10.6 Notices. All demands, notices, communications and
reports provided for in this Agreement will be in writing and will
be either personally delivered, sent by telecopier, with receipt
requested or sent by reputable overnight courier service (delivery
charges prepaid) to any Party at the address specified below, or at
such address, to the attention of such other Person, and with such
other copy, as the recipient party has specified by prior written
notice to the sending Party pursuant to the provisions of this
Section 10.6.
If to the Seller:
SCM Office Supplies, Inc.
c/o Smith Corona Corporation
65 Locust Avenue
New Canaan, CT 06840
Attn: Mr. Thomas C. DeFazio
Telecopier No. (206) 972-4226
If to Stockholder:
Smith Corona Corporation
65 Locust Avenue
New Canaan, CT 06840
Attn: Thomas C. DeFazio
Telecopier No. (203) 972-4226
with a copy, which will
not constitute notice to
the Seller or the Stockholder, to:
Winthrop, Stimson, Putnam & Roberts
Financial Centre
695 East Main Street
Post Office Box 6760
Stamford, CT 06940-6760
Attn: G. William Sisley, Esq.
Telecopier No. (203) 965-8226
If to the Purchaser:
Ampad Corporation
17304 Preston Road, Suite 700
Dallas, TX 75252-5613
Attn: Gregory Benson
Telecopier No. (214) 733-6299
with a copy, which will
not constitute notice
to the Purchaser, to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: James L. Learner
Telecopier No. (312) 861-2200
Any such demand, notice, communication or report will be deemed to
have been given pursuant to this Agreement when delivered
personally or by telecopier, or on the business day after deposit
with a reputable overnight courier service, as the case may be.
10.7 Severability of Provisions. If any covenant,
agreement, provision or term of this Agreement is held to be
invalid for any reason whatsoever, then such covenant, agreement,
provision or term will be deemed severable from the remaining
covenants, agreements, provisions and terms of this Agreement and
will in no way affect the validity or enforceability of any other
provision of this Agreement.
10.8 Schedules and Exhibits. The Schedules and Exhibits
constitute a part of this Agreement and are incorporated into this
Agreement for all purposes. If and to the extent that any
information required to be furnished in any particular Schedule is
contained in any other Schedule attached hereto, such information
shall be deemed to be included in each Schedule to which it is
applicable, whether or not an explicit cross-reference appears,
provided that the applicability of such information to the Schedule
from which it is missing is readily apparent from its disclosure in
such other Schedule.
10.9 Counterparts. The Parties may execute this
Agreement in two or more counterparts (no one of which need contain
the signatures of all Parties), each of which will be an original
and all of which together will constitute one and the same
instrument.
10.10 No Third-Party Beneficiaries. Except as otherwise
expressly provided in this Agreement, no Person which is not a
Party will have any right or obligation pursuant to this Agreement.
10.11 Headings. The headings used in this Agreement are
for the purpose of reference only and will not affect the meaning
or interpretation of any provision of this Agreement.
10.12 Merger and Integration. Except as otherwise
provided in this Agreement, this Agreement sets forth the entire
understanding of the Parties relating to the subject matter hereof,
and all prior understandings, whether written or oral are
superseded by this Agreement.
10.13 Allocation of Purchase Price. The allocation of
the Purchase Price among the Acquired Assets shall be made in
accordance with Section 1060 of the Code and applicable Treasury
Regulations thereunder. The fair market value of the Acquired
Assets shall be determined jointly by the Purchaser and the Seller
reasonably and in good faith through arm's-length negotiations, and
such determination shall be used by the parties in allocating the
Purchase Price and in preparing (a) Form 8594, Asset Acquisition
Statement, for each of the Purchaser and the Seller, and (b) all
Tax Returns. Each of the Purchaser and the Seller shall file Form
8594, prepared in accordance with this Section, with its federal
income Tax Return for its Tax period including the Closing Date.
10.14 Bulk Sales Law. The Parties agree to waive
compliance with any bulk sales laws adopted by each of the
jurisdictions in which Acquired Assets are located to the extent,
if any, that such laws are applicable to the Sale.
* * * * *<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Asset
Purchase Agreement as of the date first written above.
AMPAD CORPORATION
By:___________________________
Its:__________________________
SCM OFFICE SUPPLIES, INC.
By:___________________________
Its:__________________________
SMITH CORONA CORPORATION
By:___________________________
Its:__________________________
<PAGE>
EXHIBIT A
TRADEMARK LICENSE AGREEMENT
AGREEMENT made this day of 1994,
by and between SCM Office Supplies, Inc., a Delaware corporation,
having its principal place of business at 2409 W. Second Street,
P.O. box 338, Marion, IN 47952 (hereinafter referred to as
"O.S.I."), and Ampad Corporation, a Massachusetts corporation,
having its principal place of business at 17304 Preston Road,
Suite 700, Dallas TX 75252-5613 (hereinafter referred to as
"Ampad").
NOW, THEREFORE, in consideration of the mutual
undertakings and agreements set forth below, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 The term "Licensed Trademarks" means the
trademarks listed on Schedule A attached hereto.
1.2 The term "Products" means the products listed on
Schedule B attached hereto.
ARTICLE II
GRANTS
2.1 O.S.I. hereby grants to Ampad a worldwide,
exclusive, royalty-free license to use the Licensed Trademarks
in connection with the manufacture, advertising, marketing,
distribution and sale of Products.
2.2. Ampad agrees that it will not use either of the
Licensed Trademarks as a trade name.
2.3 Ampad shall have the right to use the Licensed
Trademarks in combination or association with other names and
marks owned or used by Ampad. The use of such other names and
marks shall inure to the sole benefit of Ampad, and Ampad shall
retain all rights in such other names and marks, but shall not
retain any rights whatsoever to the combination or association of
such Licensed Trademarks with such other names and marks.
ARTICLE III
QUALITY CONTROL
3.1 Ampad shall maintain quality standards for all
Products in connection with which Ampad uses the Licensed
Trademarks that are at least substantially equivalent to the
quality standards maintained by O.S.I. in connection with the
Products prior to the effective date of this Agreement.
3.2 Upon reasonable request from O.S.I., Ampad shall
provide O.S.I. with access to the Products at Ampad's premises or
elsewhere to enable O.S.I. to determine whether Ampad is
maintaining the quality standards set forth in Section 3.1.
ARTICLE IV
PROTECTION OF THE LICENSED TRADEMARKS
4.1 Ampad acknowledges that O.S.I. is the owner of the
Licensed Trademarks for the Products and that all use of the
Licensed Trademarks by Ampad under this Agreement shall inure to
the benefit of O.S.I. Ampad acknowledges that it is not
acquiring any interest or right in the Licensed Trademarks apart
from the rights set forth in this Agreement. Ampad will not
contest or deny the validity of the Licensed Trademarks or the
title of O.S.I. thereto, register or attempt to register the
Licensed Trademarks, or in any way assist others in so doing.
Upon termination of this agreement, Ampad shall forthwith
discontinue entirely all use of the Licensed Trademarks and all
rights granted according to the terms of this Agreement shall
revert to O.S.I., provided, however, that Licensee shall have the
right to continue to use the Licensed Trademarks for a reasonable
period of time, not to exceed six (6) months to sell off or use
up its then existing inventory or supply of Products and
materials bearing the Licensed Trademarks, and to make
appropriate changes in signs, stationery, telephone directory
listings, trade name filings and the like.
4.2 Ampad agrees not to use at any time during the
term of this Agreement or thereafter any other word, trademark,
brand name, trade name, symbol, design or the like which
is confusingly similar to the Licensed Trademarks. Ampad will
not take any action which will harm or prejudice the Licensed
Trademarks or O.S.I.'s rights therein.
ARTICLE V
REPRESENTATION AND WARRANTY
5.1 O.S.I. represents and warrants that it has
sufficient rights with respect to the Licensed Trademarks to
grant the license hereunder, but only as to the United States of
America.
5.2 O.S.I. represents and warrants that within the
past ten (10) years it has not received any notice of
infringement with respect to the use of the Licensed Trademarks
in connection with the manufacture, advertising, marketing,
distribution and sale of Products.
ARTICLE VI
TERM, CANCELLATION AND TERMINATION
6.1 The term of this Agreement shall commence on the
date hereof and continue uninterrupted unless and until one or
more of the following events shall occur:
(i) Ampad shall give O.S.I. Notice of
termination;
(ii) Default by Ampad in the performance of
sections 2.2, 3.1, 3.2, 4.1, 4.2, 7.1 (ii) or 7.1 (iii) of this
Agreement which is not cured and continues for sixty (60) days
after receipt of written notice from O.S.I. of such default; or
(iii) Filing by or against Ampad of a petition in
bankruptcy or the making of an assignment for the benefit of
creditors.
(iv) The failure of Ampad to use the Licensed
Trademarks for two (2) consecutive years.
ARTICLE VII
TRADEMARK INFRINGEMENT PROCEEDINGS
7.1 Ampad will promptly notify O.S.I. of any actual
or, to their knowledge, threatened infringement of either of the
Licensed Trademarks; and
(i) O.S.I. may, acting in its sole
discretion, elect to bring proceedings against such infringer at
its own expense, but if it does not or is unwilling so to do,
then it shall notify Ampad and Ampad may at its own expense and,
insofar as the law so permits, in its own name or in the name of
O.S.I. undertake proceedings against any such infringer on terms
that all costs and expenses shall be borne solely by Ampad. In
such an event, Ampad shall retain the entire amount of any
judgment. O.S.I. hereby consents, upon Ampad's consent, to be
joined as a necessary party in any such action.
(ii) If Ampad commences infringement
proceedings pursuant to this paragraph, it will not abandon
prosecution of such proceedings before final adverse judgment
rendered by a court of last resort, without first offering O.S.I.
the opportunity, at its own expense, to take over the conduct of
such proceedings.
(iii) If Ampad commences infringement
proceedings pursuant to this paragraph, it will not settle any
such proceeding without the consent of O.S.I., which consent
will not be unreasonably withheld.
(iv) If in any infringement action commenced
by Ampad pursuant to this paragraph, the infringer pleads or
brings proceedings for revocation or otherwise alleges or pleads
that the Licensed Trademarks or any of them or any of the claims
thereof are invalid, then Ampad will notify O.S.I. of such
infringement by the infringer, and O.S.I. may, upon notification
to Ampad within twenty (20) days of being notified of such
infringement by Ampad, take over, at its own cost, the sole
responsibility for the conduct of the action.
(v) Each party will at the request and
expense of any other party give all reasonable assistance to such
other party if such other party is engaged in proceedings to
enforce any of the Licensed Trademarks, provided that no party
need undertake any special work or extra staff so to assist such
other party but, if it is willing to do so and is so requested by
such other party, may in such case require that such other party
meets the reasonable cost of so doing.
ARTICLE VIII
NON ASSIGNABILITY
8.1. Subject to O.S.I.'s prior written approval, which
approval shall not be unreasonably withheld, this Agreement may
be assigned or transferred by Ampad to a non-competitor of Smith
Corona Corporation as part of the sale of all or substantially
all of Ampad's assets or business. Ampad shall notify O.S.I. of
any such intended assignment or transfer and, unless O.S.I.
notifies Ampad within ten (10) days of its objection to such an
assignment or transfer, O.S.I. shall be deemed to have given its
approval to such assignment or transfer. This Agreement may be
assigned by O.S.I.
ARTICLE IX
MISCELLANEOUS
9.1 Section 5.1 shall survive any expiration or
termination of this Agreement.
ARTICLE X
NOTICES
10.1 All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and
shall be delivered personally or by registered or certified mail,
postage prepaid, or sent by overnight delivery service as
follows:
If to Ampad: Ampad Corporation
17304 Preston Road
Suite 700
Dallas, TX 75252-5613
Telecopier: (214) 733-6299
Attention: Gregory Benson
With a copy to: Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Telecopier: (312) 861-2200
Attention: James L. Learner
(which will not constitute
Notice to Ampad)
If to O.S.I.: SCM Office Supplies, Inc.
c/o Smith Corona Corporation
65 Locust Avenue
New Canaan, CT 06840
Telecopier: (203) 972-4226
Attention: Thomas DeFazio
With copies to: Winthrop, Stimson, Putnam & Roberts
Financial Centre
695 East Main Street
P.O. Box 6760
Stamford, CT 06904-6760
Telecopier: (203) 965-8226
Attention: G. William Sisley
(which will not constitute
Notice to O.S.I.)
Malina & Wolson
60 East 42nd Street
New York, NY 10165-0501
Telecopier: (212) 983-8421
Attention: Milton Wolson
(which will not constitute
Notice to O.S.I.)
Any of the addresses or addressees set forth above may be changed
from time to time by written notice from the party requesting the
change.
Such notices and other communication shall for all
purposes of this Agreement be treated as being effective
immediately if delivered personally, or three (3) days after
mailing by certified or registered mail, return receipt
requested, first class postage, prepaid, or one (1) day after
deposit for delivery by an overnight delivery service.
ARTICLE XI
ALTERATIONS AND WAIVERS
11.1 The waiver, amendment or modification of an
provision of this Agreement or any right, power or remedy
hereunder, whether by agreement of the parties or by custom,
course of dealing or trade practice, shall not be effective
unless in writing and signed by the party against whom
enforcement of such waiver, amendment or modification is sought.
No failure or delay by either party in exercising any right,
power or remedy with respect to any of the provisions of this
Agreement shall operate as a waiver of such provisions with
respect to such occurrences.
ARTICLE XII
GOVERNING LAW
12.1 This Agreement shall be construed, governed and
enforced in accordance with the laws of the State of New York.
ARTICLE XIII
SEVERABILITY
13.1 In the event any provision of this Agreement or
the application of any such provision shall be held to be
prohibited or unenforceable in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability. The remaining provisions
of this Agreement shall remain in full force and effect, and any
such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any
other jurisdiction. The parties shall use their best efforts to
replace the provisions that is contrary to law with a legal one
approximating, to the extent possible, the original intent of the
parties.
ARTICLE XIV
NO THIRD-PARTY BENEFICIARIES
14.1 Nothing contained in this Agreement shall be
construed to give any person other than Licensor and Licensee any
legal or equitable right, remedy or claim under or with respect
to this Agreement.
ARTICLE XV
INTERACTION AND ENTIRE AGREEMENT
15.1 This Agreement sets forth the entire understanding
between the parties as to the subject matter hereof, supersedes
all previous and contemporaneous written or oral negotiations,
commitments, understandings, and agreements relating to the
subject matter hereof, and merges all prior and contemporaneous
discussions between the parties. No party shall be bound by any
definition, condition, representations, warranty, covenant or
provision other than as contained herein.
ARTICLE XVI
COUNTERPARTS AND HEADINGS
16.1 For the convenience of the parties, this Agreement
may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together constitute one
and the same instrument. All headings and captions are inserted
for convenience of reference only and shall not affect meaning or
interpretation.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the Effective Date.
SCM OFFICE SUPPLIES, INC.
By:
------------------------
Title:
------------------------
AMPAD CORPORATION
By:
------------------------
Title:
------------------------
<PAGE>
SCHEDULE A
Schedule A to Exhibit A to the Asset Purchase Agreement contains
the following graphic image:
Three black vertical bars in a horizontal pattern, each bar
containing a white letter so that the three together spell "SCM."
<PAGE>
SCHEDULE B
Electrostatic copy papers, adding machines tapes,
memo pads, writing tablets, stenographer
notebooks, notebook paper, legal pads, ruled
paper, memo fillers and tablets, scratch pads,
typing paper, wirebound notebooks, theme books for
notebook portfolios, printing paper, index cards,
poster boards, envelopes, business paper, business
envelopes, data processing forms, hanging folders,
tabs and inserts, hanging folder frames, file
folders, classification folders, expanding files
and wallets, card guides, desk and easel pads,
telephone message books and pads, facsimile paper,
computer labels, cash register rolls, calculator
and teletype rolls and credit card verification
rolls
<PAGE>
Exhibit B
GUARANTY AGREEMENT
GUARANTY AGREEMENT (this "Guaranty Agreement") dated as of [
], 1994 made by SMITH CORONA CORPORATION, a Delaware
corporation (the "Guarantor"), in favor of AMPAD CORPORATION, a
Massachusetts corporation ("Ampad").
WITNESSETH:
WHEREAS, the Guarantor is the legal and beneficial owner of
all of the issued and outstanding stock of SCM Office Supplies,
Inc., a Delaware corporation ("OSI");
WHEREAS, the Guarantor, OSI and Ampad have entered into an
Asset Purchase Agreement (the "Purchase Agreement") dated as of
June 8, 1994, pursuant to which, among other things, Ampad will
purchase from OSI, and OSI will sell to Ampad, substantially all of
the assets of OSI, all upon the terms and conditions set forth in
the Purchase Agreement;
WHEREAS, the Guarantor has agreed to guarantee the obligations
of OSI under a Trademark License Agreement dated as of the date
hereof by and between OSI and Ampad (the "License Agreement"); and
WHEREAS, it is a condition precedent to the closing of the
transactions contemplated by the Purchase Agreement that the
Guarantor execute and deliver this Guaranty Agreement to Ampad;
NOW, THEREFORE, in order to induce Ampad to consummate the
transactions contemplated by the Purchase Agreement and License
Agreement, the Guarantor hereby agrees with Ampad as follows:
1. Guaranty. The Guarantor hereby unconditionally and
irrevocably guarantees the observance and performance, when and as
due, of each and all of the obligations and liabilities of OSI
under the License Agreement (all of the foregoing obligations and
liabilities under the License Agreement being hereinafter called,
collectively, the "Guaranteed Obligations" and, individually, a
"Guaranteed Obligation").
2. Manner of Performance. The parties hereby acknowledge and
agree that the Guarantor's obligations under Section 1 are to be
construed, interpreted, enforced, applied, observed or performed as
fully as if (but only as fully as if) the Guarantor were jointly
and severally liable with OSI for each and every one of the
Guaranteed Obligations, and provided Ampad has complied with
Section 3 hereof.
3. Notice to the Guarantor. The Guarantor hereby agrees that
if any Guaranteed Obligation is not observed or performed, as the
case may be, when and as due, and if Ampad shall notify the
Guarantor of such non-performance, the Guarantor shall cause OSI to
promptly observe or perform or the Guarantor will promptly observe
or perform, as the case may be, such Guaranteed Obligation.
4. Absoluteness of Guaranty. Subject to the provisions of
Section 7 hereof, the obligations of the Guarantor under this
Guaranty Agreement shall be absolute and unconditional, present and
continuing, irrespective of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of or
termination of the existence of OSI, or any circumstance which
might constitute a legal or equitable discharge of a guarantor; it
being agreed that the obligations of the Guarantor under this
Guaranty Agreement shall not be discharged except by observance or
performance as herein provided.
5. Guaranty Not Affected. The Guarantor hereby consents and
agrees that, at any time and from time to time:
(a) the time, manner, place and/or terms and conditions
of observance or performance of all or any of the Guaranteed
Obligations may be extended, amended, modified or changed pursuant
to agreement between OSI and Ampad;
(b) the time for performance of or compliance with any
term, obligation, covenant or agreement on the part of OSI to be
performed or observed by OSI under the License Agreement may be
extended, or such performance or compliance waived, or failure in
or departure from such performance or compliance consented to; and
(c) the License Agreement may be amended or modified in
any respect by the parties thereto, all in such manner and upon
such terms as the parties thereto may deem proper, and without
notice to or further assent from the Guarantor, and all without
affecting this Guaranty Agreement or the obligations of the
Guarantor hereunder, which shall continue in full force and effect
until all of the Guaranteed Obligations and all obligations of the
Guarantor hereunder shall have been fully observed and performed.
6. Reinstatement. This Guaranty Agreement shall continue to
be effective or be reinstated, as the case may be, if at any time
observance or performance, or any part thereof, of any of the
Guaranteed Obligations is rescinded or must otherwise be restored
or returned by Ampad upon the insolvency, bankruptcy or
reorganization of OSI, all as though such observance or performance
has not been made.
7. Guarantor's Rights. By their acceptance of this Guaranty,
Ampad agrees that, notwithstanding any other provision of this
Guaranty Agreement, the Guarantor shall have the right to avail
itself of (a) any and all defenses to and valid setoffs,
counterclaims and claims of recoupment against any or all of the
Guaranteed Obligations that may at any time be available to the
Guarantor, OSI or any other person or entity and (b) any and all
other defenses, whether arising under any statute or at law or in
equity, available to the Guarantor as a defense against or
reduction of any or all of its liabilities or obligations
hereunder; provided, however, such defenses, setoffs,
counterclaims, claims of recoupment and other defenses shall only
be available to the Guarantor to the extent they would have been
available to the Guarantor if the Guarantor were a party to the
License Agreement with joint and several liability for the
obligations of OSI thereunder.
8. Representations. The Guarantor represents and warrants
that:
(a) The Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate right, power and
authority to execute, deliver and perform this Guaranty Agreement.
This Guaranty Agreement is the legal, valid and binding obligation
of the Guarantor, and is enforceable against the Guarantor in
accordance with its terms, except to the extent that enforceability
may be limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally, as well
as general principles of equity limiting the availability of the
remedy of specific performance.
(b) The execution and delivery by the Guarantor of this
Guaranty Agreement and the performance by the Guarantor of its
obligations hereunder have been duly authorized by all the
necessary corporate action of the Guarantor and do not and will not
violate any provision of the Certificate of Incorporation or By-
laws of the Guarantor or any judgment, order, decree, law or
regulation applicable to the Guarantor or do not and will not (i)
result in the breach of, or constitute a default under, or require
any consent (other than any consent which has been obtained) under
any agreement or instrument to which the Guarantor is a party or by
which the Guarantor or any of its properties may be bound or
affected or (ii) result in the creation or imposition of any lien,
charge, claim or encumbrance of any nature upon any of the assets
of the Guarantor.
(c) No authorization, consent or approval of or notice to
any federal, state or local governmental body or regulatory or
supervisory authority, or any third party, is required in
connection with the execution, delivery and performance by the
Guarantor of this Guaranty Agreement.
(d) No action, suit or other proceeding is pending or
threatened before any court, tribunal or governmental authority
seeking or threatening to restrain or prohibit, or which could in
any way affect, the performance of the Guarantor's obligations
contemplated by this Guaranty Agreement.
9. No Waiver; Amendments, Etc. No failure or delay on the
part of Ampad in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power
or remedy hereunder. No amendment, modification, termination or
waiver of any provision of this Guaranty Agreement, nor consent to
any departure by the Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by Ampad,
and then such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific
purpose given. No notice to or demand on the Guarantor in any case
shall entitle the Guarantor to further notice or demand in similar
or other circumstances.
10. Continuing Effect; Assignment. This Guaranty Agreement is
a continuing guaranty and (a) shall remain in full force and effect
until observance and performance in full of the Guaranteed
Obligations, (b) shall be binding upon the Guarantor, its
successors and assigns, and (c) shall inure to the benefit of, and
be enforceable by, Ampad and its successors and assigns. The
Guarantor may not assign or otherwise transfer or delegate the
performance of any of its obligations under this Guaranty
Agreement.
11. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be given in
writing and shall be delivered personally or sent by a nationally
recognized overnight courier, postage prepaid, and shall be deemed
to have been duly given when so delivered personally or one (1)
business day after the date of deposit with such nationally
recognized overnight courier. All such notices, claims,
certificates, requests, demands and other communications shall be
addressed to the respective parties at the addresses set forth
below or to such other address as the person to whom notice is to
be given may have furnished to the other in writing in accordance
herewith.
If to Ampad, to:
Ampad Corporation
17304 Preston Road, Suite 700
Dallas, TX 75252-5613
Attn: Mr. Gregory Benson
Telecopier No.: (214) 733-6299
with a copy, which will not constitute notice to Ampad, to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attn: James L. Learner, Esq.
Telecopier No.: (312) 861-2200
If to the Guarantor, to:
Smith Corona Corporation
65 Locust Avenue
New Canaan, CT 06840
Attn: Mr. Thomas C. DeFazio
Telecopier No.: (203) 972-4226
with a copy, which will not constitute notice to the
Guarantor, to:
Winthrop, Stimson, Putnam & Roberts
Financial Centre
695 East Main Street
Post Office Box 6760
Stamford, CT 06904-6760
Attn: G. William Sisley, Esq.
Telecopier No.: (203) 965-8226
12. Severability. The invalidity of any one or more phrases,
sentences, clauses, paragraphs, subsections or sections hereof
shall not affect the remaining portions of this Guaranty Agreement,
or any part thereof, all of which are inserted conditionally on
their being held valid in law and in the event that one or more of
the phrases, sentences, clauses, paragraphs, subsections or
sections contained herein should be invalid, or should operate to
render this Guaranty Agreement invalid, this Guaranty Agreement
shall be construed as if such invalid phrase or phrases, sentence
or sentences, clause or clauses, paragraph or paragraphs,
subsection or subsections or section or sections had not been
inserted.
13. Governing Law. This Guaranty Agreement and all rights
hereunder shall in all respects be governed by and construed in
accordance with the laws of the State of New York, without giving
effect to its principles of conflicts of law.
14. Entire Agreement. This Guaranty Agreement and the other
writings referred to herein or delivered pursuant hereto contain
the entire understanding of the parties hereto with respect to its
subject matter. There are no representations, promises,
warranties, covenants or undertakings other than as expressly set
forth herein or therein. This Guaranty Agreement supersedes all
prior agreements and understandings between the parties hereto with
respect to its subject matter.
15. Headings. The Section headings contained in this Guaranty
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Guaranty Agreement.<PAGE>
IN WITNESS WHEREOF, the Guarantor has duly executed this
Guaranty Agreement as of the date first written above.
SMITH CORONA CORPORATION
By:
------------------------
Name:
Title:
AMPAD CORPORATION
By:
------------------------
Name:
Title:<PAGE>
Supplement to Form 8-K
Pursuant to Item 601(b)2 of Regulation S-K, the
Schedules to the preceding Asset Purchase Agreement have not been
filed herewith. The following Schedules have been omitted:
1.) Purchaser/Brokerage Schedule - a claim for brokerage
commissions, finders' fees or similar compensation in connection
with the transactions contemplated by the Asset Purchase Agreement.
2.) Affiliated Transactions Schedule - any agreement,
contract, commitment or transaction between the Seller and any
officer, director, stockholder or affiliate of the Seller and any
material interest in any material property used by the Seller which
an officer, director, stockholder or affiliate of the Seller holds.
3.) Asset Schedule - nothing listed.
4.) Assumed Liabilities Schedule - certain liabilities assumed
by the Purchaser under the Asset Purchase Agreement.
5.) Brokerage Schedule - claims for brokerage commissions,
finders' fees or similar compensation in connection with the
transactions contemplated by the Asset Purchase Agreement based on
any arrangement or agreement which may be binding upon the Seller.
6.) Capitalization Schedule - nothing listed.
7.) Compliance Schedule - nothing listed.
8.) Consents Schedule - consents required by the Seller to
consummate the transactions contemplated by the Asset Purchase
Agreement.
9.) Contracts Schedule - certain material contracts to which
the Seller was a party.
10.) Developments Schedule - entities to whom confidential
information was disclosed.
11.) Employees Schedule - a possible labor relations concern.
12.) Employee Benefits Schedule - all employee plans
maintained or contributed to on behalf of the Seller's employees at
the time of the closing of the Asset Purchase Agreement.
13.) Environmental Indemnity Schedule - matters with respect
to which the Seller and the Stockholder will indemnify the
Purchaser relating to environmental matters.
14.) Environmental Matters Schedule - certain environmental
matters of which Purchaser wished to be made aware of.
15.) Financial Statements Schedule - nothing listed.
16.) Inventory Valuation Schedule - the manner in which
inventory was to be valued in connection with the purchase.
17.) Litigation Schedule - actions, suits, proceedings,
orders, investigations or claims pending against or affecting
Seller or the business.
18.) Organization Schedule - jurisdiction in which the Seller
is qualified to do business.
19.) Permits Schedule - permits, licenses, etc. held by the
Seller.
20.) Proprietary Rights Schedule - intellectual property owned
by or licensed to the Seller.
21.) Real Estate Schedule - owned and leased real estate.
22.) Receivables Schedule - the details of a potential set-off
relating to a receivable being transferred to the Purchaser.
23.) Taxes Schedule - an exception to the representations made
relating to tax matters by the Seller.
24.) Warranties Schedule - a potential warranty claim against
the Seller.
Registrant agrees to furnish supplementally a copy of any
omitted schedule to the Securities and Exchange Commission upon
request.
