FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10281
Smith Corona Corporation
(Exact name of registrant as specified in its charter)
Delaware 51-0286862
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Outstanding at
Class February 6, 1995
Common Stock, par value $.01 30,250,000
per share
SMITH CORONA CORPORATION
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - December 31, 1994
and June 30, 1994 1
Consolidated Income Statements - For the three and
six months ended December 31, 1994 and 1993 2
Consolidated Statement of Changes in Stockholders'
Equity - For the six months ended
December 31, 1994 3
Consolidated Statements of Cash Flows - For the
six months ended December 31, 1994 and 1993 4
Notes to Consolidated Financial Statements 5-9
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 9-11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11-12
Signatures 13
Exhibit Index
SMITH CORONA CORPORATION
CONSOLIDATED BALANCE SHEETS
($ in thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1994 1994
<S> <C> <C>
ASSETS (audited)
Current assets:
Cash and cash equivalents $ 9,258 $ 6,472
Accounts receivable (net of allowance
for doubtful accounts of $1,386 and
$1,512, respectively) 56,084 48,210
Inventories 63,095 62,695
Prepaid expenses and other current
assets 3,192 3,716
Deferred income taxes 9,143 10,131
Net assets of discontinued operations - 19,072
Total current assets 140,772 150,296
Property, plant and equipment, net 35,865 36,782
Deferred income taxes 7,708 4,371
Other assets 2,479 2,239
TOTAL $186,824 $193,688
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables $ 19,234 $ 27,379
Accrued liabilities 26,121 26,935
Income taxes payable 5,732 5,001
Dividends payable 756 1,512
Total current liabilities 51,843 60,827
Bank loans 15,000 20,002
Postretirement benefits 12,585 12,650
Pension liability 19,224 20,361
Other long-term liabilities 4,344 4,126
Total liabilities 102,996 117,966
Stockholders' equity:
Common stock-30,250,000 shares issued
and outstanding 303 303
Additional paid-in capital 44,697 44,697
Retained earnings 38,828 30,722
Total stockholders' equity 83,828 75,722
TOTAL $186,824 $193,688
See accompanying notes to consolidated financial statements.
</TABLE>
SMITH CORONA CORPORATION
CONSOLIDATED INCOME STATEMENTS
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $ 63,351 $ 74,137 $123,465 $146,354
Cost of goods sold 50,076 60,036 97,179 114,417
Gross margin 13,275 14,101 26,286 31,937
Selling, administrative
and research expenses 12,449 12,856 23,719 24,996
Operating income 826 1,245 2,567 6,941
Interest expense 312 173 555 366
Income from continuing
operations before income
taxes 514 1,072 2,012 6,575
Income taxes 190 364 744 2,235
Income from continuing
operations 324 708 1,268 4,340
Discontinued operations (net of
income taxes):
Income from operations 115 836 385 1,231
Gain on disposal of
discontinued operations 8,722 - 8,722 -
Net income $ 9,161 $ 1,544 $10,375 $ 5,571
Earnings per common share-
Income from continuing
operations $.01 $.02 $.04 $.14
Discontinued operations (net of
income taxes):
Income from operations - .03 .01 .04
Gain on disposal of
discontinued operations .29 - .29 -
Net income per share $.30 $.05 $.34 $.18
See accompanying notes to consolidated financial statements.
</TABLE>
SMITH CORONA CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the six months ended December 31, 1994
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
Additional
Common Paid-In Retained
Stock Capital Earnings Total
<S> <C> <C> <C> <C>
Balance June 30, 1994 $303 $44,697 $30,722 $75,722
Net income - - 10,375 10,375
Dividends declared
($.075 per share) - - (2,269) (2,269)
Balance December 31, 1994 $303 $44,697 $38,828 $83,828
See accompanying notes to consolidated financial statements.
</TABLE>
SMITH CORONA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
<TABLE>
<CAPTION>
Six months ended
December 31,
1994 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $10,375 $ 5,571
Adjustments to reconcile net
income to net cash (used in) provided by
continuing operating activities:
Discontinued operations (9,107) (1,231)
Depreciation and amortization 2,913 2,507
Deferred income taxes (2,349) 1,860
Other noncash items 627 -
Changes in assets and liabilities:
Accounts receivable (7,874) (21,970)
Inventories (400) 21,134
Prepaid expenses and
other current assets 524 (767)
Other assets (262) (510)
Trade payables (8,145) (3,371)
Accrued liabilities and income taxes
payable (83) (1,675)
Postretirement benefits and pension
liability (1,202) 552
Other long-term liabilities 218 322
Net cash (used in) provided by continuing
operations (14,765) 2,422
Net cash provided by discontinued
operations 679 1,787
Net cash (used in) provided by operating
activities (14,086) 4,209
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of discontinued
operations 27,500 -
Capital expenditures (2,601) (4,885)
Net cash provided by (used in) investing
activities 24,899 (4,885)
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank loans, net (5,002) (2,669)
Dividends paid (3,025) (3,025)
Net cash used in financing activities (8,027) (5,694)
Increase (decrease) in cash and cash
equivalents 2,786 (6,370)
Cash and cash equivalents:
At beginning of period 6,472 13,800
At end of period $ 9,258 $ 7,430
See accompanying notes to consolidated financial statements.
</TABLE>
SMITH CORONA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
($ in thousands, except per share amounts)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The accompanying interim consolidated financial
statements, although not necessarily indicative of results of
operations for the entire fiscal year, include all adjustments of
a normal recurring nature which are, in the opinion of
management, necessary for a fair presentation of the results for
the periods covered. They have been prepared by Smith Corona
Corporation (the "Company") without audit in accordance with the
instructions to Form 10-Q and should be read in conjunction with
the consolidated financial statements and the notes thereto for
the fiscal year ended June 30, 1994, as contained in the
Company's Annual Report to Stockholders on Form 10-K.
Certain reclassifications have been made to the prior year's
financial statements to conform with the current presentation.
In addition, amounts in the prior year's financial statements have
been reclassified to reflect continuing operations (see Note 6).
NOTE 2 - CONTINGENCIES
Certain past practices of the Company regarding hazardous
substances and/or hazardous wastes are the subject of
investigation by federal and state regulatory authorities, or are
the subject of lawsuits filed by such authorities. At December
31, 1994 and June 30, 1994, the Company recorded approximately
$3,077 and $3,274, respectively, related to environmental
matters, of which $395 and $606, respectively, are classified as
a current liability in the consolidated balance sheets. Certain
estimated costs of performing environmental remediation were
discounted at a rate of 5% per annum based on the estimated
timing of such payments. Because of the uncertainties associated
with assessing environmental matters, the related ultimate
liability is not determinable. However, based on facts presently
known, management does not believe that these investigations or
lawsuits, if resolved adversely to the Company, would
individually or in the aggregate have a material adverse effect
on the Company's financial position or results of operations.
The Company is involved in proceedings with the New York
Department of Environmental Conservation (the "DEC") and the
United States Environmental Protection Agency regarding the
clean-up of a now-closed manufacturing facility and certain waste
disposal sites in upstate New York. The remedial investigation
and feasibility study of the now-closed manufacturing facility
site has been completed. The feasibility study report has been
approved by the DEC and the record of decision has been
finalized. On March 31, 1993, the Company executed a final
signed consent order from the DEC and remedial actions commenced.
Remediation activities at the site have been delayed as a result
of an extension of the public comment period to address the
remediation plan approved by the DEC. Management believes that
the Company has made adequate provision for the approved
remediation activities.
In June 1992, the Company was served with a summons and
complaint in a private contribution action. The action, which
lists the Company as a defendant with fourteen other defendants,
seeks contribution for response costs incurred to date, and to be
incurred in the future, for the remediation of a site in
Cortland, New York. Management does not believe it disposed of
any hazardous substances at this site and is vigorously
contesting this matter.
On November 4, 1994, the Company instituted an action
against CoStar Corporation ("CoStar") in the United States
District Court for the District of Connecticut. This action
relates to envelope printers purchased by the Company from CoStar
and label printers manufactured by a third party for the Company.
The Company seeks rescission of two agreements relating to the
envelope printers, damages and a declaratory judgment on certain
issues relating to the label printer. On November 5, 1994,
CoStar served its answer and counterclaim and impleaded DH
Technologies, Inc., the manufacturer of one of the envelope printer
models. In that pleading, CoStar also seeks rescission of the envelope
printer agreements, a declaratory judgment on certain issues relating
to the label printer and other equitable relief and damages. As of
the date of this filing, the Company and CoStar have reached an
agreement in principle settling the litigation. The agreement
does not involve the payment of damages by either party.
On June 8, 1990, the Company filed suit in the United States
District Court for the District of Tennessee against Pelikan,
Inc. alleging patent infringement and false advertising. On
February 24, 1992, the Court entered a judgment awarding the
Company approximately $3,120 plus post-judgment interest.
Pelikan filed an appeal, petitioning for a rehearing by the Court
of Appeals, and subsequently offered to pay to the Company a
portion of the judgment aggregating approximately $1,900. The
$1,900 portion of the judgment was reflected in the June 30, 1993
financial statements. Pelikan's petition for rehearing was
subsequently denied and on August 9, 1993, the Company and
Pelikan entered into an agreement pursuant to which Pelikan
agreed to pay $525 to the Company for fees, expenses and costs
incurred in the suit along with the remaining $1,220 judgment.
On August 11, 1993, Pelikan paid the settlement amount to the
Company and satisfied the judgment, including interest.
The Company is also a defendant or plaintiff in various
other legal actions which have arisen in the ordinary course of
its business. It is the opinion of management, based on advice
of counsel with respect to legal matters, that the ultimate
resolution of these matters and the environmental matters
discussed above will not have a material adverse effect on the
Company's financial position or results of operations.
NOTE 3 - INVENTORIES
A summary of inventories, by major classification, is as
follows:
<TABLE>
<CAPTION>
December 31, June 30,
1994 1994
($ in thousands)
<S> <C> <C>
Raw materials and supplies $ 1,254 $ 1,352
Work-in-process 23,199 27,702
Finished goods 38,642 33,641
Total $63,095 $62,695
</TABLE>
NOTE 4 - RESTRUCTURING COSTS
Over the past few years, the Company has faced intense
competition from foreign producers. In July 1992, in order to
maintain its leadership as the low-cost producer in a highly
competitive worldwide business, the Board of Directors approved,
and the Company announced, a plan to phase out the Company's
manufacturing operations in Cortland, New York and relocate them
to a new facility in Mexico. As a result of this decision,
during fiscal 1993, the Company provided $16,500 in restructuring
charges, of which approximately $3,000 was non-cash in nature.
Now that the Mexican facility is fully operational, this action
is expected to result in lower manufacturing costs of
approximately $15,000 annually, primarily due to lower labor
costs. The fiscal 1995 activity in the restructuring accrual is
as follows:
<TABLE>
<CAPTION>
Asset
($ in thousands) Severance Impairments Total
<S> <C> <C> <C>
June 30, 1994 balance $3,305 $827 $4,132
Activity (1,473) (571) (2,044)
December 31, 1994 balance $1,832 $256 $2,088
</TABLE>
NOTE 5 - CASH FLOWS
Aggregate borrowings under the Company's revolving credit
facility amounted to $560,008 and $381,567 for the six months
ended December 31, 1994 and 1993, respectively, while aggregate
repayments were $565,010 and $384,236 for the same periods,
respectively.
NOTE 6 - DISCONTINUED OPERATIONS
On November 4, 1994 the Company sold substantially all of
the assets and liabilities of Histacount Corporation, a wholly-owned
subsidiary, for $14,500 subject to final closing balance
sheet adjustment. The after-tax gain on the sale includes
utilization of a capital tax-loss carry-forward. On July 5, 1994
the Company sold substantially all of the assets and liabilities
of SCM Office Supplies, Inc., a wholly-owned subsidiary, for
$13,000. The proceeds from the two sales were used to reduce the
Company's debt.
Accordingly, the prior year income statement reflects SCM
Office Supplies, Inc.'s and Histacount Corporation's operating
results as discontinued operations and the balance sheet
segregates the net assets of discontinued operations.
Net assets and summary operating results of discontinued
operations are as follows:
<TABLE>
<CAPTION>
($ in thousands) June 30, 1994
<S> <C>
Current assets $15,665
Non-current assets 10,396
Total liabilities (6,989)
Net assets $19,072
</TABLE>
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
($ in thousands) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $1,747 $20,580 $5,774 $43,515
Income from operations
before income taxes $182 $1,263 $612 $1,866
Income taxes 67 427 227 635
Net income from operations 115 836 385 1,231
Gain on disposal of assets
(net of tax benefit
of $285) 8,722 - 8,722 -
Net income $8,837 $ 836 $9,107 $ 1,231
</TABLE>
NOTE 7 - DIVIDENDS
On November 15, 1994, the Board of Directors declared a
quarterly cash dividend of $.025 per share of common stock
payable on January 6, 1995 to stockholders of record as of
December 20, 1994. The dividend in the second quarter of fiscal
1994 was $.05 per share of common stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Net sales of $63.4 million for the quarter ended December
31, 1994 decreased 14.4 percent from last year's second quarter
net sales of $74.1 million. Competitive product pricing actions
in core products persisted in the second quarter. Although
the Company responded with selective price reductions, it did not
meet all price cuts and consequently experienced a decline in
typewriter and personal word processor volume, both in the
domestic and international markets. The year-to-year decrease in
second quarter sales was approximately two thirds volume related
and one third price related. New product sales for the quarter
increased approximately $2.0 million over the prior year with the
growth in volumes of facsimile machines, laminators and PC label
printers.
During the six months ended December 31, 1994, net sales
were $123.5 million, a 15.6 percent decrease from last year's
comparable period net sales of $146.4 million. Approximately
three quarters of the decrease related to lower volumes with the
balance relating to pricing reductions. New product net sales
for the six month period were $6.7 million as compared with $2.8
million for last year.
Gross margin, as a percentage of net sales, was 21.0 percent
and 21.3 percent for the three and six months ended December 31,
1994, as compared to 19.0 percent and 21.8 percent, respectively,
for the comparable periods last year. Included in gross margin
for the six months ended December 31, 1993, was a benefit of $1.8
million pretax (1.2 percent of net sales), representing the final
payment from Pelikan, Inc. in a patent infringement case. In
spite of price reductions, the gross margin percentage on
manufactured products was improved through lower product costs,
primarily labor in the Mexican manufacturing operations.
Selling, general and administrative expenses for the three
and six months ended December 31, 1994 decreased $.4 million and
$1.3 million, respectively over the comparable prior periods.
The decrease for the six month period was primarily the result of
lower employee-related expenses partially offset by higher
advertising and marketing expenses.
The Company's effective tax rate was 37.0 percent for the
three and six months ended December 31, 1994 as compared to 34.0
percent for the comparable periods a year ago. The change in the
effective tax rate relates principally to the projected mix of
domestic and foreign source income.
Financial Condition
The Company's primary source of liquidity and capital
resources, on both a short- and long-term basis, are cash flows
generated from operations and borrowings under its credit
facility.
Income from continuing operations has been adversely
impacted by lower sales volumes and price reductions. The
Company's future operating results are dependent upon its ability
to continually adjust to the keenly competitive market
environment. Management, in conjunction with a Special Committee
of the Board of Directors, continues to look at opportunities to
enhance shareholder value, including reviewing product cost
improvements, other cost reduction measures and strategic
alliances.
During the six months ended December 31, 1994, the Company's
operating activities employed $14.1 million of cash largely as a
result of increased receivables and decreased trade payables.
Accounts receivable increased $7.9 million from June 30, 1994
primarily related to increased sales late in the quarter and
changes in customer payment terms. Trade payables decreased $8.1
million from June 1994 as a result of lower production levels.
A quarterly cash dividend of $1.5 million ($.05 per share)
was paid in each fiscal year's first and second quarters. After
reviewing the first quarter results and the outlook for the
remainder of the fiscal year, management recommended to the Board
of Directors a reduction in the dividend of up to 50 percent. On
November 15, 1994, the Board of Directors voted to reduce the
quarterly dividend by 50 percent to $.025 per share effective
with the dividend paid on January 6, 1995.
The Company's borrowing resources at December 31, 1994
consisted of a revolving credit agreement with two banks, which
provides availability of $32.0 million. The Company is currently
in the process of renegotiating its revolving credit agreement
which expires on June 25, 1996. The Company also had an
uncommitted line of credit agreement of $20.0 million at June 30,
1994 which was eliminated on January 31, 1995. At
December 31, 1994, bank loans had been reduced to $15.0 million
from $20.0 million at June 30, 1994. Proceeds from the sale of
discontinued operations of $27.5 million were used to pay down
bank loans which were subsequently increased to finance accounts
receivable and payment of accounts payable. The Company had no
material commitments for capital expenditures at December 31,
1994.
From time to time the Company enters into foreign exchange
contracts to reduce its exposure to foreign currency rate
changes. As of December 31, 1994, the Company had approximately
$10.0 million of such contracts outstanding which mature at
various dates through June 28, 1995. Recognized gains and losses
on these contracts are recorded in net income in the period in
which the exchange rate changes.
The Company believes that its funds generated from
operations, together with its borrowing capabilities will be
sufficient to meet its operating cash and capital expenditure
requirements in the foreseeable future.
PART II - Other Information
Item 1. Legal Proceedings.
Information required by this item is incorporated by
reference from "Note 2 - Contingencies" in the Notes to
Consolidated Financial Statements appearing on page 5
of this Form 10-Q Quarterly Report.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Stockholders of the Company
held on November 15, 1994, the following individuals
were elected directors of the Company:
<TABLE>
<CAPTION>
Total Votes Total Votes
Directors For Withheld
--------- ----------- -----------
<S> <C> <C>
G.L. Thompson 28,409,350 784,601
W.D. Henderson 28,395,947 798,004
D.H. Clarke 27,658,747 1,535,204
T.C. DeFazio 28,389,745 804,206
G.H. Hempstead 28,452,652 741,299
J.G. Raos 28,523,456 670,495
C.C. Sergeant 28,417,579 776,372
R. Van Buren 28,511,906 682,045
R.R. West 28,446,702 747,249
R.J. Kammerer 28,443,286 750,665
</TABLE>
At the same meeting, the appointment of Deloitte &
Touche LLP as independent certified public accountants
for the Company for the fiscal year ending June 30,
1995 was ratified by a vote of 28,823,123 for, 221,803
against, and 149,025 abstaining.
The Amendment to the Smith Corona Corporation 1990
Stock Option Plan was also approved by a vote of
27,473,134 for, 1,091,697 against, 595,040
abstaining and 34,080 did not vote.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.12 Smith Corona Corporation 1990 Stock
Option Plan, adopted effective as of
December 1, 1989, amended through
November 15, 1994.
10.44 Asset Purchase Agreement, dated as of
November 4, 1994, by and among HC Delaware
Acquisition Corporation (the "Purchaser"),
Histacount Corporation (the "Seller") and
Smith Corona Corporation (the
"Stockholder").
27 Financial Data Schedule
(b) Reports on Form 8-K
One Current Report on Form 8-K was filed with the
Commission during the second quarter of the Company's
1995 fiscal year.
1. The Form 8-K Current Report dated November 10,
1994 reported a press release under Item 5
announcing the Company consummated the sale of
substantially all of the assets and liabilities of
Histacount Corporation, a wholly-owned subsidiary
of the Company, to a subsidiary of CSS Industries,
Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SMITH CORONA CORPORATION
February 13, 1995 By: /s/ Thomas C. DeFazio
----------------------
Thomas C. DeFazio
Executive Vice President and
Chief Financial Officer
By: /s/ John A. Piontkowski
------------------------
John A. Piontkowski
Vice President & Controller
(Principal Accounting Officer)
EXHIBIT INDEX
Exhibit
10.12 Smith Corona Corporation 1990 Stock Option Plan,
adopted effective as of December 1, 1989, amended
through November 15, 1994.
10.44 Asset Purchase Agreement, dated as of November 4, 1994,
by and among HC Delaware Acquisition Corporation (the
"Purchaser"), Histacount Corporation (the "Seller") and
Smith Corona Corporation (the "Stockholder").
27 Financial Data Schedule
SMITH CORONA CORPORATION
1990 STOCK OPTION PLAN
ADOPTED EFFECTIVE AS OF
DECEMBER 1, 1989
AMENDED THROUGH NOVEMBER 15, 1994
SMITH CORONA CORPORATION
1990 STOCK OPTION PLAN
TABLE OF CONTENTS
Page
ARTICLE I PURPOSE OF PLAN. . . . . . . . . . . . . . . . . . . . . . 1
1.1 Establishment of Plan. . . .. . . . . . . . . . . . . . . . . 1
1.2 Plan Purpose . . . . . . . .. . . . . . . . . . . . . . . . . 1
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 "Board" . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 "Change of Control". . . . . . . . . . . . . . . . . . . . . 1
2.3 "Committee". . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 "Company". . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.5 "Date of Grant". . . . . . . . . . . . . . . . . . . . . . . 1
2.6 "Disability" . . . . . . . . . . . . . . . . . . . . . . . . 1
2.7 "Expiration Date". . . . . . . . . . . . . . . . . . . . . . 1
2.8 "Option" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.9 "Optionee" . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.10 "Retirement" . . . . . . . . . . . . . . . . . . . . . . . . 2
2.11 "Share" or "Shares". . . . . . . . . . . . . . . . . . . . . 2
2.12 "Special Employment Termination" .. . . . . . . . . . . . . . 2
2.13 "Terminated" or "Termination for Cause". .. . . . . . . . . . 2
ARTICLE III RIGHTS TO BE GRANTED . . . . . . . . . . . .. . . . . . . . 3
3.1 Non qualified Options. . . . . . . . . . . . .. . . . . . . . 3
ARTICLE IV STOCK SUBJECT TO PLAN . . . . .. . . . . . . . . . . . . . . 3
4.1 Shares Available . . . . . . . .. . . . . . . . . . . . . . . 3
4.2 Stock Subject to Expired Options. . . . . . . . . . . . . . . 3
ARTICLE V ADMINISTRATION OF PLAN . . . . . . . . . . . . .. . . . . . . 3
5.1 Administration . . . . . . . . . . . . . . . . .. . . . . . . 3
ARTICLE VI GRANT OF RIGHTS . . . . . . . . . . . . . . . .. . . . . . . 3
6.1 Option Grants. . . . . . . . . . . . . . . . . .. . . . . . . 3
ARTICLE VII ELIGIBILITY. . . . . . . . . . . . . . . . . .. . . . . . . 3
7.1 Eligibility. . . . . . . . . . . . . . . . . . .. . . . . . . 3
ARTICLE VIII OPTION AGREEMENTS AND TERMS . . . . . . . . . . . . . . . 4
8.1 Time of Grant. . . . . . . . . . . . . . . . . . . . . . . . 4
8.2 Option Price . . . . . . . . . . . . . . . . . . . . . . . . 4
8.3 Restrictions on Transferability. . . . . . . . . . . . . . . 4
8.4 Payment Upon Exercise of Options . . . . . . . . . . . . . . 4
8.5 Issuance of Certificate Upon Exercise of Options . . . .. . . 4
8.6 Fractional Shares. . . . . . . . . . . . . . . . . . . .. . . 4
8.7 Vesting of Options . . . . . . . . . . . . . . . . . . .. . . 5
8.8 Expiration of Options. . . . . . . . . . . . . . . . . .. . . 5
8.9 Date of Exercise . . . . . . . . . . . . . . . . . . . .. . . 5
8.10 Multiple Grants of Options . . . . . . . . . . . . . . .. . . 5
ARTICLE IX RIGHTS AS SHAREHOLDERS. . . . . . . . . . . . . . . . . . . 5
9.1 Shareholder Rights . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE X CHANGES IN CAPITALIZATION, MERGERS, DISPOSITIONS AND
CERTAIN OTHER TRANSACTIONS . . . . . . . . .. . . . . . . . . 6
10.1 Changes in Capitalization. . . . . . . . . .. . . . . . . . . 6
10.2 Other Transactions . . . . . . . . . . . . .. . . . . . . . . 6
ARTICLE XI PLAN NOT TO AFFECT EMPLOYMENT . . . . . . . . .. . . . . . . 6
11.1 Employment . . . . . . . . . . . . . . . . . . .. . . . . . . 6
ARTICLE XII INTERPRETATION . . . . . . .. . . . . . . . . . . . . . . . 6
12.1 In General . . . . . . . . . .. . . . . . . . . . . . . . . . 6
12.2 Securities Laws. . . . . . . .. . . . . . . . . . . . . . . . 6
ARTICLE XIII AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . 7
13.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE XIV EFFECTIVE DATE AND TERM OF PLAN. . . . . . . . . . . . . . 7
14.1 Effective Date and Term. . . . . . . . . . . . . . . . . . . 7
ARTICLE XV GENERAL . . . . . . . . . . . .. . . . . . . . . . . . . . . 7
15.1 Applicable Law . . . . . . . . .. . . . . . . . . . . . . . . 7
SMITH CORONA CORPORATION
1990 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF PLAN
1.1 Establishment of Plan. The Company (as herein defined) hereby
establishes a stock option plan, as set forth herein, which shall be known
as the Smith Corona Corporation 1990 Stock Option Plan (hereinafter the
"Plan").
1.2 Plan Purpose. The purpose of the Plan is to assist the Company
in retaining valued employees by offering them a stake in the Company s
success and to promote decision-making at the executive level that leads to
the enhancement of shareholders value.
ARTICLE II
DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below unless otherwise expressly provided. Any masculine
terminology shall be deemed to refer either to a male or a female, and the
definition of any terms in the singular shall also include the plural,
whichever is appropriate in the context.
2.1 "Board" means the Board of Directors of the Company.
2.2 "Change of Control" means (1) a reorganization, consolidation or
merger of the Company with or into another entity, (2) a sale, transfer or
lease of substantially all of the Company s property or (3) the acquisition
by an entity or group not affiliated with Hanson PLC or the Company, of 20%
or more of the outstanding Shares unless Hanson PLC also owns 20% or more
of the outstanding Shares on and after such acquisition.
2.3 "Committee" means the committee described in Article V.
2.4 "Company" means Smith Corona Corporation and, where the context
requires, a subsidiary of Smith Corona Corporation.
2.5 "Date of Grant" means the date on which an Option is granted.
2.6 "Disability" means disability as defined in the Company s
Long-Term Disability Plan.
2.7 "Expiration Date" means the earliest of the following:
(i) if Optionee shall cease to be employed by the Company for
any reason other than death, Disability, Retirement or Termination for
Cause, thirty (30) days after the date of termination of employment;
or
(ii) if Optionee shall cease to be employed by the Company
because of Disability, death or as a result of a Special Employment
Termination, the date twelve(12) months after the date Optionee
terminates employment because of Disability, death or a Special
Employment Termination; or
(iii) if Optionee shall cease to be employed by the Company
because of Retirement, the later of twelve (12) months from the date
of Retirement, or three (3) years and six (6) months from the Date of
Grant; or
(iv) if the Optionee is Terminated for Cause, the date of
termination of employment; or
(v) the day before the tenth anniversary of the Date of Grant.
2.8 "Option" means any stock option granted under the Plan and
described in Article III.
2.9 "Optionee" means a person to whom an Option has been granted
under the Plan, which Option has not been exercised and has not expired or
terminated.
2.10 "Retirement" means retirement on or after the earliest date
permitted under the terms of the Company s pension plans as amended from
time to time.
2.11 "Share" or "Shares" means a share or shares of Common Stock,
$.01 par value, of the Company.
2.12 "Special Employment Termination" means either (A) termination of
employment within eighteen (18) months after a Change of Control either (i)
by action of the Company other than a Termination for Cause or (ii)
voluntarily by the Optionee on account of (a) reduction in the Optionee s
base salary in effect immediately prior to the Change of Control, (b)
discontinuance of any bonus or other compensation plan (including, without
limitation, the Company s Supplemental Executive Retirement Plan), any
stock-related plan (including, without limitation, the Plan), life
insurance plan, health plan, disability plan, vacation plan, severance plan
or similar benefit plan (as the same existed immediately prior to the
Change of Control) in which the Optionee participated or was eligible to
participate immediately prior to the Change of Control unless the Optionee
is simultaneously accorded an equivalent benefit or opportunity or any
amendment to any such plan which adversely affects the Optionee s
participation in, eligibility for, or materially reduces benefits under,
any such plan, unless the Optionee is simultaneously accorded an equivalent
benefit or opportunity, (c) the Optionee s demotion or a material reduction
in the Optionee s duties or responsibilities from those which existed
immediately prior to the Change of Control other than as a natural
consequence, after the Change of Control, of the Company no longer being
subject to the requirements of the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, or the Company being a
subsidiary or division of the acquiror or (d) the assignment of new duties
requiring a relocation of the Optionee s domicile; or (B) with respect to
any Optionee employed by a subsidiary of the Company, a sale or other
disposition of such subsidiary to an entity or group not affiliated with
Hanson PLC or the Company irrespective of whether the Optionee continues in
the employment of the acquiror.
2.13 "Terminated" or "Termination for Cause" means a termination on
account of (i) a material breach by Optionee of his or her obligations to
the Company, (ii) employment by another firm while in the Company s employ,
(iii) theft, embezzlement, bribery or act of comparable dishonesty or
disloyalty or breach of trust against the Company, (iv) the conviction of
the Optionee for a felony (or a plea of nolo contendere thereto), or (v)
the willful engaging by the Optionee in conduct materially injurious to the
Company.
ARTICLE III
RIGHTS TO BE GRANTED
3.1 Non-qualified Options. Rights that may be granted under the Plan
are non-qualified stock options, which give the Optionee the right to
purchase a specified number of Shares for a price established by the
Committee for a specified period of time all as set forth in the Option
Agreement.
ARTICLE IV
STOCK SUBJECT TO PLAN
4.1 Shares Available. A total of 3,900,000 Shares in the aggregate
will be reserved for and may be issued pursuant to the Plan upon exercise
of Options. The Shares so delivered may, at the option of the Company, be
either treasury Shares or Shares originally issued for such purposes.
4.2 Stock Subject to Expired Options. If an Option covering Shares
terminates or expires without having been exercised in whole or in part,
other Options may be granted covering the Shares as to which the
unexercised Option relates.
ARTICLE V
ADMINISTRATION OF PLAN
5.1 Administration. The Plan shall be administered by the
Compensation and Benefits Committee of the Board ("Committee"), which shall
be composed of not less than three (3) directors of the Company appointed
by the Board, none of whom shall be eligible (or shall have been eligible
within one (1) year prior to the date of his appointment) to be granted
Options under the Plan or to be selected as a participant under any other
discretionary plan of the Company or any of its affiliates entitling him or
her to acquire stock, stock options or stock appreciation rights of the
Company.
ARTICLE VI
GRANT OF RIGHTS
6.1 Option Grants. The Committee may grant Options to eligible
employees of the Company in such number and with such frequency as the
Committee determines in its sole discretion.
ARTICLE VII
ELIGIBILITY
7.1 Eligibility. Eligible employees to whom Options may be granted
shall be officers and other key employees of the Company, including persons
who are also officers and other key employees of a subsidiary of the
Company.
ARTICLE VIII
OPTION AGREEMENTS AND TERMS
All Options shall be evidenced by Option Agreements that shall be
executed on behalf of the Company and by the Optionee to whom such Options
are granted. The terms of each Option Agreement shall be determined from
time to time by the Committee, consistent, however, with the following:
8.1 Time of Grant. All Options shall be granted within ten (10)
years from the earlier of (a) the effective date of adoption of the Plan by
the Board or (b) approval of the Plan by the shareholders of the Company.
8.2 Option Price. The option price per Share shall be determined by
the Committee but shall be equal to or greater than the fair market value
of a Share. For the purposes of this Plan, the fair market value on any
date shall be the average of the high and low sale prices of a Share as
quoted on the New York Stock Exchange.
8.3 Restrictions on Transferability. No Option shall be transferable
or assignable otherwise than by will or the laws of descent and
distribution and, during the lifetime of the Optionee, an Option shall be
exercisable only by such Optionee. Upon the death of an Optionee, the
person to whom the rights shall have passed by will or by the laws of
descent and distribution may exercise any Options only in accordance with
the provisions of Section 8.7(a).
8.4 Payment Upon Exercise of Options. Full payment for Shares
purchased upon the exercise of an Option shall be made in cash or in Shares
already owned by the Optionee having a total fair market value upon such
exercise, as determined by the Committee, equal to the option price or a
combination of cash and Shares having a total fair market value, as so
determined, equal to the option price.
8.5 Issuance of Certificate Upon Exercise of Options. Upon payment
of the option price and satisfaction of the requirements of the Option
Agreement, a certificate for the number of whole Shares and a check for the
fair market value on the date of exercise of any fractional Share to which
the Optionee is entitled shall be delivered to such Optionee by the
Company; provided, however, that the Optionee has remitted to the Company
an amount determined by the Company, necessary to satisfy applicable
federal, state or local tax withholding requirements. The Company shall
not be obligated to deliver any certificates for Shares until there has
been such compliance with such laws or regulations as the Company may deem
applicable including tax withholding requirements under federal, state, or
local laws. The Company shall use its best efforts to effect such
compliance.
8.6 Fractional Shares. Only whole Shares shall be issuable upon
exercise of Options. Any right to a fractional Share shall be satisfied in
cash.
8.7 Vesting of Options. An Option shall not be exercisable, in whole
or in part, until the completion of three (3) years of service with the
Company (including any approved leave of absence) following the Date of
Grant, except, however,
(a) In the event an Optionee ceases to be employed by the
Company by reason of his death, any Option held by such Optionee shall
be exercisable for a period of up to twelve (12) months from the date
of death by the person to whom the rights of the Optionee shall have
passed by will or by the laws of descent and distribution.
(b) In the event an Optionee ceases to be employed by the
Company by reason of his Disability, an Option held by such Optionee
shall be exercisable for a period of up to twelve (12) months from the
date of such termination.
(c) In the event an Optionee ceases to be employed by the
Company by reason of his Retirement, an Option held by such Optionee
shall be exercisable for a period not to exceed the later of,
(1) twelve (12) months from the date of retirement, or
(2) three (3) years and six (6) months from the Date
of Grant.
(d) In the event an Optionee incurs a Special Employment
Termination, any Option held by such Optionee shall be exercisable for
a period of up to twelve (12) months from the effective date of such
Special Employment Termination.
8.8 Expiration of Options. No Option granted hereunder shall be
exercisable after the Expiration Date.
8.9 Date of Exercise. The date of exercise of an Option shall be the
date on which written notice of exercise, addressed to the Company at its
main office, is hand delivered, telecopied, or mailed first class postage
prepaid; provided, however, that the Company shall not be obligated to
deliver any certificates for Shares pursuant to the exercise of an Option
until the Optionee shall have made payment in full of the option price for
such Shares in accordance with Section 8.5 and applicable income
withholding taxes.
8.10 Multiple Grants of Options. The grant, exercise, termination or
expiration of any Option shall have no effect upon any other Option held by
the same Optionee.
ARTICLE IX
RIGHTS AS SHAREHOLDERS
9.1 Shareholder Rights. An Optionee shall not have any right as a
shareholder with respect to any Shares subject to his Options until the
date of the issuance to him of a stock certificate for such Shares.
ARTICLE X
CHANGES IN CAPITALIZATION, MERGERS,
DISPOSITIONS AND CERTAIN OTHER TRANSACTIONS
10.1 Changes in Capitalization. In the event of a stock dividend,
stock split, recapitalization, subdivision, issuance of rights, or other
similar corporate change, the Board or Committee shall make full
anti-dilution adjustments in the aggregate number of Shares that may be
covered by Options issued pursuant to the Plan and the number of Shares
subject to, and the option price of, each then outstanding Option.
10.2 Other Transactions. If during the term of any Option, the
Company shall be merged into or consolidated with or otherwise combined
with or acquired by another person or entity, or there is a divisive
reorganization or a liquidation or partial liquidation of the Company, the
Company may take such action as the Board shall determine to be reasonable
under the circumstances in order to permit Optionees to realize the value
of rights granted to them under the Plan.
ARTICLE XI
PLAN NOT TO AFFECT EMPLOYMENT
11.1 Employment. Neither the Plan nor any Option shall confer upon
any employee of the Company any right to continue in the employment of the
Company.
ARTICLE XII
INTERPRETATION
12.1 In General. The Committee shall have the power to interpret the
Plan and to make and amend rules for putting it into effect and
administering it. All interpretations and determinations of the Committee
shall be final, conclusive and binding on all interested parties. Options
granted under the Plan shall be non-qualified options, which shall
constitute property subject to federal income tax pursuant to the
provisions of Section 83 of the Internal Revenue Code of 1986, as amended,
and the Plan shall qualify for the exemption available under Rule 16b-3 (or
any similar rule) of the Securities and Exchange Commission. The
provisions of the Plan shall be interpreted and applied insofar as possible
to carry out such intent.
12.2 Securities Laws. The Committee shall have the power to make
each grant under the Plan subject to such conditions as it deems necessary
or appropriate to comply with the then existing requirements of the
Securities Act of 1933 or the Securities Exchange Act of 1934, and any
applicable state securities laws.
ARTICLE XIII
AMENDMENTS
13.1 Amendments. The Plan may be amended by the Board, but any
amendment that requires the approval of the shareholders of the Company in
order to maintain the exemption available under Rule 16b-3 (or any similar
rule) of the Securities and Exchange Commission, shall require the approval
of the holders of such portion of the shares of the capital stock of the
Company present and entitled to vote on such amendment as is required by
applicable state law and the terms of the Company s By-laws, as then in
effect, to make the amendment effective. No outstanding Option shall be
adversely affected by any amendment without the written consent of the
Optionee or other person then entitled to exercise such Option.
ARTICLE XIV
EFFECTIVE DATE AND TERM OF PLAN
14.1 Effective Date and Term. The Plan shall become effective on the
date determined when the Plan is adopted by the Board, and shall expire no
later than ten (10) years from such date, unless sooner terminated by the
Board. The Board shall submit the Plan to the shareholders of the Company
for their approval following the adoption of the Plan by the Board. Any
Option granted before the approval of the Plan by the Company s
shareholders shall be expressly conditioned upon, and shall not be
exercisable until, such approval. If such shareholder approval is not
received before one (1) year from the effective date of adoption, the Board
shall have the right to terminate the Plan, in which case all Options
granted under the Plan shall expire.
ARTICLE XV
GENERAL
15.1 Applicable Law. The issuance of Shares on the exercise of an
Option shall be subject to all of the applicable requirements of the
Delaware General Corporation Law and other applicable laws, including
federal or state securities laws, and all Shares issued under the Plan
shall be subject to the terms and restrictions contained in the By-laws of
the Company, as amended from time to time. The interpretation or
construction of the Plan shall be governed by the laws of the State of New
York, without bringing into effect the principles of conflicts of law.
ASSET PURCHASE AGREEMENT
by and among
HC DELAWARE ACQUISITION CORP.,
RAPIDFORMS, INC.,
HISTACOUNT CORPORATION
and
SMITH CORONA CORPORATION
Dated as of November 4, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Purchase and Sale of Assets; Assumption
of Certain Obligations by the Purchaser. . . . 2
1.1 The Purchase. . . . . . . . . . . . . . . . . . . . . 2
1.2 Certain Definitions . . . . . . . . . . . . . . . . . 2
ARTICLE II The Closing. . . . . . . . . . . . . . . . . . . 11
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Deliveries and Payments by the Purchaser. . . . . . . 11
2.3 Deliveries by the Seller . . . . . . . . . . . . 11
2.4 Purchase Price Adjustment. . . . . . . . . . . . 11
2.5 Change of Name. . . . . . . . . . . . . . . . . . . . 14
ARTICLE III Representations and Warranties of the
Seller and Smith Corona . . . . . . . . . . . 14
3.1 Organization of the Seller and Smith Corona . . . . . 15
3.2 Authorization and Noncontravention. . . . . . . . . . 16
3.3 The Purchased Assets. . . . . . . . . . . . . . . . . 17
3.4 Financial Statements. . . . . . . . . . . . . . . . . 18
3.5 Undisclosed Liabilities . . . . . . . . . . . . . . . 19
3.6 Absence of Certain Changes. . . . . . . . . . . . . . 20
3.7 Accounts Receivable . . . . . . . . . . . . . . . . . 20
3.8 Inventory . . . . . . . . . . . . . . . . . . . . . . 21
3.9 Condition of Tangible Purchased Assets. . . . . . . . 22
3.10 Litigation. . . . . . . . . . . . . . . . . . . . . . 22
3.11 Compliance with Law . . . . . . . . . . . . . . . . . 23
3.12 Approvals and Consents. . . . . . . . . . . . . . . . 23
3.13 Intellectual Property . . . . . . . . . . . . . . . . 24
3.14 Material Agreements . . . . . . . . . . . . . . . . . 24
3.15 Employee Benefit Plans. . . . . . . . . . . . . . . . 27
3.16 Labor Matters . . . . . . . . . . . . . . . . . . . . 32
3.17 Accounts Payable. . . . . . . . . . . . . . . . . . . 34
3.18 Insurance . . . . . . . . . . . . . . . . . . . . . . 34
3.19 Environmental Matters . . . . . . . . . . . . . . . . 35
3.20 Other Governmental Licenses . . . . . . . . . . . . . 37
3.21 Finders and Investment Bankers. . . . . . . . . . . . 37
3.22 Relations with Customers and Suppliers. . . . . . . . 38
3.23 Transactions with Affiliates. . . . . . . . . . . . . 38
3.24 Books of Account. . . . . . . . . . . . . . . . . . . 38
3.25 Full Disclosure . . . . . . . . . . . . . . . . . . . 39
ARTICLE IV Representations and Warranties of the
Purchaser and Rapidforms . . . . . . . . . . . 39
4.1 Organization of the Purchaser and Rapidforms. . . . . 39
4.2 Authorization and Noncontravention. . . . . . . . . . 40
4.3 Litigation. . . . . . . . . . . . . . . . . . . . . . 41
4.4 Approvals and Consents. . . . . . . . . . . . . . . . 41
4.5 Finders and Investment Bankers. . . . . . . . . . . . 41
4.6 Access to Funds . . . . . . . . . . . . . . . . . . . 42
ARTICLE V Covenants . . . . . . . . . . . . . . . . . 42
5.1 Operation of Business . . . . . . . . . . . . . . . . 42
5.2 Preservation of Business. . . . . . . . . . . . . . . 43
5.3 Approvals and Consents; Cooperation . . . . . . . . . 44
5.4 Access. . . . . . . . . . . . . . . . . . . . . . . . 45
5.5 Taxes and Fees. . . . . . . . . . . . . . . . . . . . 45
5.6 Post-Closing Access to Information; Preservation
of Records. . . . . . . . . . . . . . . . . . . . . 46
5.7 Employee Benefits and Related Matters . . . . . . . . 47
5.8 Confidentiality . . . . . . . . . . . . . . . . . . . 55
5.9 Covenant Not to Compete.. . . . . . . . . . . . . . . 55
5.10 Update Schedules. . . . . . . . . . . . . . . . . . . 58
5.11 Further Assurances. . . . . . . . . . . . . . . . . . 58
5.12 Accounts Receivable . . . . . . . . . . . . . . . . . 59
ARTICLE VI Conditions to Closing. . . . . . . . . . . . . . 60
6.1 Conditions to Each Party's Obligation
to Close. . . . . . . . . . . . . . . . . . . . . . 60
6.2 Conditions to Obligation of the Purchaser
to Close. . . . . . . . . . . . . . . . . . . . . . 61
6.3 Conditions to Obligation of the Seller and
Smith Corona to Close . . . . . . . . . . . . . . . 62
ARTICLE VII Indemnity. . . . . . . . . . . . . . . . . . . . 63
7.1 Indemnity by the Purchaser and Rapidforms . . . . . . 63
7.2 Indemnity by the Seller and Smith Corona. . . . . . . 64
7.3 Claims Procedure. . . . . . . . . . . . . . . . . . . 66
7.4 Limitations on Indemnification. . . . . . . . . . . . 69
7.5 Exception to Limitations. . . . . . . . . . . . . . . 69
7.6 Effect of Investigation . . . . . . . . . . . . . . . 70
ARTICLE VIII Termination. . . . . . . . . . . . . . . . . . . 70
8.1 Termination . . . . . . . . . . . . . . . . . . . . . 70
8.2 Effect of Termination . . . . . . . . . . . . . . . . 71
ARTICLE IX Miscellaneous. . . . . . . . . . . . . . . . . . 71
9.1 Expenses. . . . . . . . . . . . . . . . . . . . . . . 71
9.2 Survival. . . . . . . . . . . . . . . . . . . . . . . 71
9.3 Public Communications . . . . . . . . . . . . . . . . 72
9.4 Knowledge . . . . . . . . . . . . . . . . . . . . . . 72
9.5 Notices . . . . . . . . . . . . . . . . . . . . . . . 72
9.6 Amendments; Waivers . . . . . . . . . . . . . . . . . 74
9.7 Section Headings. . . . . . . . . . . . . . . . . . . 74
9.8 Counterparts. . . . . . . . . . . . . . . . . . . . . 74
9.9 Assignment. . . . . . . . . . . . . . . . . . . . . . 74
9.10 Bulk Sales. . . . . . . . . . . . . . . . . . . . . . 75
9.11 Governing Law . . . . . . . . . . . . . . . . . . . . 75
9.12 Arbitration . . . . . . . . . . . . . . . . . . . . . 75
9.13 Entire Agreement. . . . . . . . . . . . . . . . . . . 76
9.14 Severability. . . . . . . . . . . . . . . . . . . . . 76
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is
made and entered into as of the 4th day of November, 1994, by and
among HC DELAWARE ACQUISITION CORP., a Delaware corporation (the
"Purchaser"), RAPIDFORMS, INC., a New Jersey corporation and the
holder of all of the outstanding capital stock of the Purchaser
("Rapidforms"), HISTACOUNT CORPORATION, a New York corporation
(the "Seller"), and SMITH CORONA CORPORATION, a Delaware
corporation ("Smith Corona") and the holder of all of the
outstanding capital stock of the Seller.
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the production and
direct marketing of customized, high quality stationery, printed
promotional materials, office forms and office personal use
products (the "Business"); and
WHEREAS, Smith Corona and the Seller desire for the
Seller to sell and transfer to the Purchaser, and the Purchaser
desires to purchase and assume from the Seller, substantially all
of the assets and certain liabilities related to the Business in
accordance with the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants and undertakings contained herein, and intending to be
legally bound, the parties hereto agree as follows:
<PAGE>
ARTICLE I
Purchase and Sale of Assets; Assumption
of Certain Obligations by the Purchaser
1.1 The Purchase. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as hereinafter
defined), the Seller shall sell, assign, transfer, convey and
deliver, or cause to be sold, assigned, transferred, conveyed and
delivered, to the Purchaser all of the Seller's right, title and
interest in and to the Purchased Assets (as hereinafter defined);
and the Purchaser shall pay to the Seller the amount set forth in
Section 2.2 hereof and assume and discharge or perform when due
the Assumed Liabilities (as hereinafter defined). Such
transaction is hereinafter referred to as the "Purchase."
1.2 Certain Definitions. As used herein, the following
terms have the meanings indicated:
(a) "Assumed Liabilities" means
(1) all liabilities and obligations of the Seller
reflected or reserved against in the Final Statement to the
extent reflected thereon and not paid or discharged prior to the
Closing;
(2) all liabilities and obligations of the Seller
in respect of contracts, agreements, leases, and commitments
entered into in connection with the Business set forth on
Schedule 3.14 or not required to be disclosed thereon because of
the term or amount involved, other than liabilities and
obligations set forth as Excluded Liabilities; and
(3) the obligations to Employees assumed by the
Purchaser pursuant to Section 5.7 hereof.
(b) "Closing" means the closing described in Section
2.1 hereof.
(c) "Closing Date" means the date on which the Closing
takes place.
(d) "Closing Date Net Assets" means the assets less
liabilities, excluding intercompany accounts (the "net
controllable assets") of the Seller that are reflected in the
Final Statement.
(e) "Closing Statement" means the statement of net
controllable assets of the Seller as of the Closing Date
delivered by the Purchaser to the Seller pursuant to Section
2.4(a) hereof, which statement shall be prepared by the Purchaser
in accordance with generally accepted accounting principles,
using the last-in-first-out inventory valuation method, excluding
the capitalization of prospecting costs and incorporating the
principles set forth on Schedule 1.2(e).
(f) "Employees" means persons employed by the Seller
in connection with the Business and listed on Schedule 5.7(a).
(g) "Encumbrance" means any mortgage, lien, pledge,
security interest, charge, claim, restriction or other defect of
title of any nature.
(h) "Environmental Condition" means any condition or
circumstance, that (1) requires abatement or correction under any
Environmental Law, (2) gives or has given rise to any civil or
criminal liability under any Environmental Law, or (3) creates or
has created a public or private nuisance.
(i) "Environmental Law(s)" means any and all federal,
state, provincial, local laws and foreign laws and requirements
relating to health and safety and pollution or protection of the
environment, including laws, regulations and requirements
relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial,
toxic or Hazardous Substances into the environment (including
without limitation ambient air, surface water, groundwater or
land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
(j) "Excluded Assets" means the following assets:
(1) the corporate seal, minute books, stock books
and other records having to do with the corporate organization
and capitalization of the Seller;
(2) all right, title and interest of the Seller
in and to cash and cash equivalents, including without limitation
all petty cash, cash in bank, exchanges and cash in transit
accounts of the Seller;
(3) all right, title and interest of the Seller
in and to intercompany accounts receivable between the Seller and
its affiliates;
(4) all rights as beneficiary under the life
insurance policy for Bernard Slater;
(5) all rights under leases of real property
Related to the Business (the "Real Property"), including any
buildings, structures and improvements thereon or appurtenances
thereto;
(6) all rights to the name "Smith Corona
Corporation" and all derivations thereof; and
(7) all rights of the Seller under this
Agreement, including the consideration delivered to the Seller by
the Purchaser for the Purchased Assets.
(k) "Excluded Liabilities" means all liabilities and
obligations of the Seller and the Business other than the Assumed
Liabilities including, but not limited to, any liability or
obligation in respect of any of the following:
(1) any liability or obligation in connection
with products manufactured and/or distributed by the Business
prior to the Closing except as reserved for on the Final
Statement;
(2) any liability or obligation of the Seller or
the Business in respect of any claim, regardless of when made or
asserted, which arises out of or is based upon the failure of the
Seller to comply with any applicable federal, state, local or
foreign law, ordinance, code, rule or regulation in connection
with the operations of the Business prior to the Closing,
including without limitation those arising out of the matters
disclosed on Schedules 3.10 or 3.16;
(3) any liability or obligation of the Seller or
the Business in respect of any tort claim, regardless of when
made or asserted, arising in whole or in part out of actions
occurring prior to the Closing;
(4) any liability or obligation in respect of any
claim, regardless of when made or asserted, arising out of the
handling, storage, disposal or treatment, or arranging with a
transporter for handling, storage, disposal or treatment, prior
to the Closing of Hazardous Substances at properties operated by
a party other than the Seller;
(5) any liability or obligation in respect of any
claim, regardless when made or asserted, arising out of any
Environmental Condition prior to the Closing on the real property
used by the Business including without limitation the following:
(i) any and all transformers on such property which are regulated
under EPA's PCB Regulations, 40 CFR, Part 761; (ii) any and all
asbestos or asbestos-containing materials present on such
property; (iii) any and all underground storage tanks present on
such property; (iv) any discharges of non-sanitary waste to the
on-site septic system present on such property; (v) any and all
pools or ponds used or formerly used for the storage or disposal
of wastewaters including without limitation leaching ponds or
pools on such property; and (vi) any and all Environmental
Conditions disclosed on Schedule 3.19;
(6) any liability or obligation in respect of
federal, state or local income or other tax, incident to or
arising as a consequence of the conduct of the Business prior to
the Closing or the consummation of this Agreement and the
transactions contemplated hereby;
(7) any liabilities or obligations to employees
or former employees of the Seller as of the Closing except as
specifically assumed by the Purchaser pursuant to Section 5.7
hereof or accrued on the Final Statement, including without
limitation any liabilities or obligations arising out of or
regarding (i) post-retirement medical benefits, (ii) unfunded
retirement benefits, (iii) health benefits for any person
currently covered by COBRA under the Seller's medical plan, (iv)
any employee benefit plan or policy other than an Assumed Plan
(as hereinafter defined in Section 5.7 hereof), (v) any incident
or condition occurring prior to the Closing giving rise to a
workers compensation claim or disability claim regardless of when
reported (vi) the Supplemental Employee Retirement Plan between
Smith Corona and John F. Bendik and (vii) any medical expense
incurred by any employee of the Seller prior to the Closing
regardless of when reported.
(8) any liability for intercompany accounts
payable between the Seller and Smith Corona or any other
affiliate; and
(9) any liability or obligation arising out of
the agreement dated September 19, 1969 among the Seller, Smith
Corona, Bernard W. Slater and Eleanor Slater relating to the
acquisition of the Seller by Smith Corona.
(l) "Final Statement" means the Closing Statement,
after giving effect to the provisions of Section 2.4(b) hereof.
(m) "Hazardous Substance" means (A) any gasoline,
petroleum products, explosives, alcohols, chemical solvents,
polychlorinated biphenyls ("PCBs"), (B) any substance, waste,
material or good defined as hazardous, radioactive, extremely
hazardous or toxic, or as a pollutant or contaminant, under any
Environmental Law, or by any federal, state or municipal
government or governmental agency, and (C) any asbestos,
asbestos-containing substances or urea formaldehyde insulation.
(n) "Permitted Encumbrance" means any mechanic's liens
and liens for taxes not yet due and payable or being contested in
good faith by appropriate proceedings.
(o) "Purchase Price" means the sum of the purchase
price paid pursuant to Section 2.2 hereof and the amount of the
Assumed Liabilities, each as adjusted pursuant to Section 2.4(b)
hereof.
(p) "Purchased Assets" means all assets, properties or
rights that are Related to the Business, other than the Excluded
Assets, including, without limitation, the following:
(1) all trade accounts receivable arising out of
the sale or other disposition of goods or services Related to the
Business;
(2) all raw materials, supplies and manufactured
goods constituting inventories Related to the Business including
without limitation inventories marked with the name "Smith Corona
Corporation" or a derivation thereof;
(3) all machinery, equipment, furniture, fixtures
and other personal property Related to the Business which is
owned by the Seller (the "Owned Equipment") and all rights of the
Seller to all machinery, equipment, furniture, fixtures and other
personal property Related to the Business which is leased by the
Seller (the "Leased Equipment"; and, together with the Owned
Equipment, the "Equipment");
(4) to the extent used or held for use in the
Business or necessary for the operation of the Business, all
intellectual property rights, including all rights in or to
patents, trademarks, service marks, copyrights, copyrightable
works, product designations, trade names, permits, approvals,
ideas, plans, specifications, formulae, processing procedures,
quality standards, data, trade secrets, inventions,
investigations, designs, processes, production methods and
techniques, software, know-how, books, records, manuals and other
information, and including, without limitation, all such
intellectual property rights listed on Schedule 3.13 (the
"Intellectual Property");
(5) all mailing lists and customer lists Related
to the Business;
(6) all agreements, contracts, leases and
licenses that are Related to the Business;
(7) all permits, licenses, franchises, consents,
authorizations of any foreign or domestic federal, state or local
governmental body Related to the Business, except to the extent
that the transfer thereof to the Purchaser would violate
applicable laws or regulations;
(8) all of the Seller's claims, causes of action,
choses in action, rights of recovery and rights of set-off of any
kind relating to the Purchased Assets or the Assumed Liabilities
other than rights of the Seller under this Agreement;
(9) all telephone, telex and telecopy numbers
(including "800" numbers) Related to the Business and all rights
to directory listings of such numbers;
(10) all documents, files, records and other
materials Related to the Business; and
(11) without limiting the generality of the
foregoing, all assets, properties and rights reflected on the
Final Statement.
(q) "Related to the Business" means related to, used
in connection with, or necessary to, the operations of the
Business prior to the Closing, except (i) the "Smith Corona
Corporation" name and derivations thereof and (ii) as
specifically set forth on Schedule 3.3.
(r) "Statement of Net Assets" means the statement of
net controllable assets of the Seller at June 30, 1994 attached
as Schedule 3.4(b) hereto.
ARTICLE II
The Closing
2.1 Closing. The closing of the Purchase (the "Closing")
shall take place at the offices of Morgan, Lewis & Bockius, 2000
One Logan Square, Philadelphia, PA at 10:00 a.m., local time,
contemporaneously with the execution of this Agreement. The
Closing shall be effective at 12:01 a.m. on the Closing Date.
2.2 Deliveries and Payments by the Purchaser. At the
Closing, the Purchaser shall deliver the following:
(a) $14,500,000, payable to the Seller in immediately
available funds by wire transfer; and
(b) Such instruments of assumption and other
instruments or documents as may be reasonably necessary to carry
out the Purchase and to comply with the terms hereof.
2.3 Deliveries by the Seller. At the Closing, the
Seller shall deliver the Purchased Assets and such bills of sale,
other instruments of assignment or transfer and such other
instruments or documents as may be reasonably necessary to carry
out the Purchase and to comply with the terms hereof.
2.4 Purchase Price Adjustment. (a) As soon as
practicable, but not more than thirty (30) calendar days after
the Closing Date, the Purchaser shall prepare and deliver to the
Seller the Closing Statement. During the preparation of the
Closing Statement by the Purchaser and during the period of any
dispute within the contemplation of Section 2.4(b) hereof, the
Purchaser shall provide the Seller and the Seller's authorized
representatives reasonable access to the books, records,
facilities and employees of the Business and shall cooperate with
the Seller and the Seller's authorized representatives, in each
case to the extent reasonably required in order to observe the
physical count of the inventory and to investigate the basis for
any such dispute. The Seller and its representatives shall have
the right to communicate with and to review the work papers,
schedules, memoranda and other documents prepared or reviewed by
the Purchaser in connection with its preparation of the Closing
Statement. Subject to Section 2.4(b) hereof, the Closing
Statement shall be conclusive and binding as the "Final
Statement."
(b) The Seller may dispute any amounts reflected
on the Closing Statement, but only on the basis that such amounts
were not arrived at in accordance with generally accepted
accounting principles, using the last-in-first-out inventory
valuation method, excluding the capitalization of prospecting
costs and incorporating the principles set forth on Schedule
1.2(e); provided, however, that the Seller shall notify the
Purchaser in writing of each disputed item, and specify the
amount thereof in dispute and the basis for such dispute, within
30 calendar days of the Seller's receipt of the Closing
Statement. In the event of such a dispute, the Purchaser, the
Seller and their respective independent certified public
accountants shall attempt to reconcile their differences, and any
resolution by the Purchaser and the Seller as to any disputed
amounts shall be in writing and signed by the Purchaser and the
Seller and shall thereafter be final, binding and conclusive. If
the Purchaser and the Seller are unable to reach a resolution
with such effect within fifteen (15) business days of the
Purchaser's receipt of the Seller's written notice of dispute,
then the Purchaser and the Seller shall submit the items
remaining in dispute for resolution to Coopers & Lybrand, or
another "big six" independent accounting firm (other than the
Purchaser's accountant or the Seller's accountant) mutually
appointed by the Seller and the Purchaser (such accounting firm
being herein referred to as the "Independent Accounting Firm"),
which shall, within thirty (30) calendar days after submission,
determine and report to the parties upon such disputed items, and
such report shall be final, binding and conclusive. The fees and
disbursements of the Independent Accounting Firm shall be
allocated between the Purchaser and the Seller in the same
proportion that the aggregate amount of such disputed items so
submitted to the Independent Accounting Firm that is
unsuccessfully disputed by each (as finally determined by the
Independent Accounting Firm) bears to the total amount of such
disputed items so submitted.
(c) If the Closing Date Net Assets are less than
$4,185,000, then the Seller or Smith Corona shall pay to the
Purchaser an amount equal to such deficit, together with simple
interest thereon from the Closing Date to the date of payment at
the rate of five percent (5.0%) per annum, calculated on the
basis of a 365-day year.
(d) Any amount payable pursuant to Section 2.4(c)
hereof shall be paid by wire transfer of immediately available
funds to a bank account designated by the Purchaser, as soon as
practicable following the Closing Date and in no event more than
three (3) business days following determination of the Final
Statement.
2.5 Change of Name. The Seller agrees that following the
Closing it shall promptly change its name to a new name bearing
no resemblance to its present name. The Seller shall execute any
documentation necessary to allow the Purchaser to use the
"Histacount" name immediately after the Closing. If the Seller
is dissolved or otherwise ceases to be a separate entity, Smith
Corona shall be liable for any obligations of the Seller
hereunder.
ARTICLE III
Representations and Warranties of the Seller and Smith Corona
The Seller and Smith Corona hereby jointly and
severally represent and warrant to the Purchaser as follows:
3.1 Organization of the Seller and Smith Corona. (a) The
Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York and has all
necessary corporate power to own all the owned Purchased Assets
and to carry on the Business as now being conducted. The Seller
is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction in which the character of
its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to
be so qualified would not have a material adverse effect on the
business, financial condition, or operating results of the Seller
or the assets and liabilities of the Seller taken as a whole (a
"Material Adverse Effect"). Schedule 3.1 sets forth each
jurisdiction where the Seller is qualified as a foreign
corporation. The Seller has previously delivered to the
Purchaser a true and complete copy of the Certificate of
Incorporation and By-laws of the Seller in effect on the date
hereof.
(b) Smith Corona is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and has all necessary corporate power and authority
to own capital stock of the Seller. All of the shares of capital
stock of the Seller are owned of record and beneficially by Smith
Corona. The Seller does not own any shares of any corporation or
any ownership or other investment interest, either of record,
beneficially or equitably, in any association, partnership, joint
venture or other legal entity, other than certificates of
deposit, commercial paper, money market funds and similar cash
equivalents.
3.2 Authorization and Noncontravention. The execution,
delivery and performance of this Agreement has been duly
authorized by the Seller and Smith Corona. Each of the Seller
and Smith Corona has full corporate power and authority to enter
into this Agreement and to perform its respective obligations
hereunder. This Agreement constitutes a valid and legally
binding obligation of the Seller and Smith Corona enforceable
against the Seller and Smith Corona in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles. The execution and the delivery by the
Seller and Smith Corona of this Agreement and the consummation by
the Seller and Smith Corona of the Purchase will not (i) violate
any term or provision of the Certificate of Incorporation or By-
laws of the Seller or Smith Corona; (ii) conflict with or result
in a breach of or constitute a default under or result in the
termination of, or entitle any party to accelerate (whether after
the filing of notice or lapse of time or both), any agreement to
which the Seller or Smith Corona is a party or by which it is
bound or to which any of its assets are subject, or result in the
creation of any Encumbrance upon any of the Purchased Assets,
other than Encumbrances which, individually or in the aggregate,
would not have a Material Adverse Effect and would not materially
impair the ability of the parties hereto to consummate the
Purchase; or (iii) subject to obtaining the authorizations,
approvals, consents or waivers set forth in Schedule 3.12 and to
the expiration or early termination of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), violate or result in a breach
of or constitute a default under any judgment, order, decree,
law, rule, regulation or other restriction of any court,
government or governmental agency to which the Seller or Smith
Corona is subject, other than violations, breaches or defaults
which, individually or, in the aggregate, would not materially
impair the ability of the parties hereto to consummate the
purchase.
3.3 The Purchased Assets. Except as set forth in Schedule
3.3, the Purchased Assets constitute in all material respects the
rights, properties and assets (real, personal or mixed, tangible
or intangible) used in the conduct of the Business as currently
conducted by the Seller. Schedule 3.3 specifically sets forth
all rights, properties and assets used by the Business (other
than the "Smith Corona Corporation" name and derivations thereof)
which are not Related to the Business. The Seller has good and
marketable title to the Purchased Assets which are owned by the
Seller, free and clear of all Encumbrances other than Permitted
Encumbrances. There are no existing agreements, options,
commitments or rights with, of or to any person to acquire any of
the Purchased Assets or any interest therein, except for those
contracts for the sale of inventory of the Seller entered into in
the ordinary course of the Business consistent with past
practice.
3.4 Financial Statements.
(a) Set forth on Schedule 3.4(a) are true and complete
copies of the unaudited balance sheets of the Seller as of June
30, 1992, 1993 and 1994, the related statements of income and
cash flows for the periods ending June 30, 1992, 1993 and 1994
and the Statement of Net Assets, including in all cases the notes
thereto, if any (collectively, the "Financial Statements"). The
Financial Statements are in accordance with the books and records
of the Seller, and have been prepared in all material respects in
accordance with generally accepted accounting principles, applied
on a consistent basis, except as disclosed on Schedule 3.4(b)
hereto, and fairly present the financial position of the Seller
as at the dates thereof and the results of its operations and
changes in financial position for the periods then ended. For
purposes of determining materiality with respect to consistency
with generally accepted accounting principles in the foregoing
sentence only, a deviation from generally accepted accounting
principles resulting individually or in the aggregate in a
difference of greater than 5% of net income for income statements
or 5% of net controllable assets for balance sheets shall be
deemed to be material.
(b) Since June 30, 1992, except for the capitalization
of prospecting costs, 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, conversions or
assumptions (unless required by objective changes in underlying
events) utilized in making accounting estimates.
3.5 Undisclosed Liabilities. In connection with the
Business there is no direct or indirect liability, indebtedness,
obligation, expense, claim, deficiency, guaranty or endorsement
of or by any person (other than endorsements of notes, bills and
checks presented to banks for collection or deposit in the
ordinary course of the Business) of any type, whether accrued,
absolute, contingent, matured, unmatured or other of the Business
("Liabilities") which would have a Material Adverse Effect,
except:
(a) those Liabilities adequately and specifically set
forth or reserved for on the Statement of Net Assets and not
heretofore paid or discharged;
(b) those Liabilities arising in the ordinary course
of the Business consistent with past practice under any contract
or commitment specifically disclosed on Schedule 3.14 or not
required to be disclosed thereon because of the term or amount
involved; and
(c) those Liabilities incurred, consistent with past
business practice, in the ordinary course of the Business since
the date of the Statement of Net Assets and not heretofore paid
or discharged.
3.6 Absence of Certain Changes. Except as set forth on
Schedule 3.6 or permitted or contemplated by this Agreement,
since June 30, 1994 (a) the Seller has operated the Business only
in the ordinary course and in substantially the same manner as it
has been operated in the past and not sold or transferred any
assets used in the Business except for sales from inventory in
the ordinary course of the Business, (b) the Seller has not, with
respect to the Business, suffered any damage, destruction or
casualty loss to its physical properties which has a Material
Adverse Effect, (c) the Seller has not entered into any
transaction except in the ordinary course of business; (d) the
Seller has not suffered any material adverse change in the
Business, (e) the Seller has not mortgaged, pledged, hypothecated
or subjected any of Purchased Assets to any Encumbrance other
than a Permitted Encumbrance, or (f) the Seller has not declared,
set aside or paid any dividends or made any other distributions
to Smith Corona.
3.7 Accounts Receivable. All accounts receivable as set
forth on the Statement of Net Assets or arising since the date
thereof, except to the extent reserved for on the Statement of
Net Assets, (a) have arisen only in the ordinary course of the
Business consistent with past practice for goods sold and
delivered or services performed, (b) are not subject to any valid
counterclaim, set-off or defense, (c) are collectible in full at
the recorded amounts thereof in the ordinary course of the
Business (without resort to litigation or assignment to a
collection agency), but in no event later than 180 days after the
Closing Date, subject to applicable reserves and to the
Purchaser's compliance with the provisions of Section 5.6(c) with
regard to maintenance of accounts receivable records and Section
5.12 hereof and (d) are owned free and clear of any Encumbrance
other than a Permitted Encumbrance.
3.8 Inventory. The inventory set forth on the Statement of
Net Assets or arising since the date thereof, except to the
extent reserved for on the Statement of Net Assets, was acquired
and has been maintained in the ordinary course of the Business
consistent with past practice, consists of new and unused items
of a quality and quantity usable or saleable in the ordinary
course of the Business consistent with past practice, is valued
using the last-in-first-out valuation method (giving effect to
the transfer of the LIFO debit from Smith Corona to the Seller as
of June 30, 1994 that arose from Hanson's acquisition of SCM
Corp. in 1986) and is valued at reasonable amounts based on the
ordinary course of the Business in accordance with generally
accepted accounting principles. Since June 30, 1994, (i) all
sales of inventory items have been made by the Seller in the
ordinary course of the Business at selling prices, net of all
costs to carry and sell, at least equal to the values reflected
on its books and (ii) all purchases of inventory items have been
made by the Seller and valued by the Seller on its books
consistent with past practice.
3.9 Condition of Tangible Purchased Assets. Except as
disclosed on Schedule 3.9, the Equipment (a) is usable in the
regular and ordinary course of the Business, (b) has been
maintained in the ordinary course of the Business consistent with
past practice and is free from known material defects, and (c)
conforms in all material respects to all applicable laws,
ordinances, codes, rules and regulations, and governmental
licenses and permits, and is therefore in satisfactory operating
condition, reasonable wear and tear excepted.
3.10 Litigation. Except as set forth in Schedule 3.10, (a)
there are no claims, actions, suits, proceedings, arbitrations or
governmental investigations involving the Business pending or, to
the knowledge of the Seller or Smith Corona, threatened or known
to be contemplated, against the Seller before any court,
governmental agency, authority or commission, or arbitrator, and
to the knowledge of the Seller and Smith Corona, there is no
valid basis for any such proceeding, (b) there are no judgments,
consents, decrees, injunctions, or any other judicial or
administrative mandates outstanding against the Seller, and (c)
no litigation or claims have been brought, or are known to be
contemplated or threatened, with respect to the transactions
contemplated by this Agreement.
3.11 Compliance with Law. Except as set forth in Schedule
3.11 and except with respect to environmental laws (compliance
with which is the subject of Section 3.19 hereof), to the
knowledge of the Seller or Smith Corona, the Business is being
conducted in compliance with all applicable federal, state, local
and foreign laws, rules and regulations, except where the failure
to so comply, individually or in the aggregate, would not have a
Material Adverse Effect. Without limiting the generality of the
foregoing sentence, neither the Seller nor to the knowledge of
the Seller or Smith Corona, any director or officer, employee or
agent of, or any consultant to, the Seller has unlawfully
offered, paid or agreed to pay directly or indirectly, any money
or anything of value to or for the benefit of any individual who
is or was an official or employee or candidate for office of the
government of any country or any political subdivision, agency or
instrumentality thereof or any employee or agent of any customers
or vendors of the Seller.
3.12 Approvals and Consents. Except for compliance with the
HSR Act and other than as set forth in Schedule 3.12, there are
no authorizations, approvals, consents or waivers required to be
obtained from or notices or filings required to be given to or
made with, any government, governmental agency or third party by
the Seller or Smith Corona in connection with the Purchase,
except where the failure to obtain such authorization, approval,
consent, or waiver or to give such notice or make such filing
will not have a Material Adverse Effect on the parties' ability
to consummate the Purchase or the Purchaser's operation of the
Business after the Closing.
3.13 Intellectual Property. Except as set forth in Schedule
3.13, the Seller is the sole and exclusive beneficial owner of
the Intellectual Property, free and clear of all claims,
encumbrances, charges or rights of others. Except as set forth
in Schedule 3.13, to the knowledge of the Seller or Smith Corona
(i) there are no proceedings pending, threatened or contemplated
which challenge the Seller's right to use any of its material
Intellectual Property in connection with the Business and (ii)
the Seller's use of Intellectual Property in connection with the
Business does not infringe upon or otherwise violate the rights
of others in any manner which would cause a Material Adverse
Effect. The Seller does not have any obligation to compensate
any person for the use of any Intellectual Property used in the
conduct of the Business nor has the Seller granted to any person
any license, option or other rights to be used in the Business,
regardless of whether the payment of royalties is required.
Schedule 3.13 sets forth a list of all Intellectual Property used
in connection with the Business (excluding copyrights which have
not been registered and are not material to the Business).
3.14 Material Agreements. Schedule 3.14 contains a list, as
of the date hereof, of each contract or agreement, whether
written or oral (including any and all amendments thereto), to
which the Seller or Smith Corona is a party or by which it is
bound (collectively, the "Commitments") relating to the Business,
described below:
(a) contract with any employee or consultant;
(b) contract for the future purchase of, or payment
for, supplies or products or services in any single instance
exceeding $5,000, or in the aggregate $25,000, or of a duration
of more than twelve months;
(c) contract to sell or supply products or to perform
services in excess of $5,000, or of a duration of more than
twelve months;
(d) contract to sell or supply products to the United
States Government or any agency thereof;
(e) representative or sales agency contract;
(f) contract, collective bargaining agreement or other
agreement with any labor union or organization;
(g) contract limiting or restraining it from engaging
or competing in any lines or business with any person or entity
or limiting or restraining any person or entity from competing
with the Business;
(h) contract with any customer providing for a volume
refund, retrospective price adjustment or price guarantee;
(i) commitment to guarantee the obligations of others;
(j) real property lease;
(k) equipment lease;
(l) mortgage, indenture, note debenture, bond, letter
of credit agreement, surety agreement, loan agreement or other
commitment for the borrowing or lending of money relating to the
Business or agreement for a line of credit or guarantee, pledge
or undertaking of indebtedness of any other person relating to
the Business;
(m) license, franchise, distributorship or other
agreement, including those which relate in whole or in part to
any software, intellectual property, technical assistance or
other know-how of or used by the Business in the prior twenty
four months;
(n) commitment or agreement for any capital
expenditure or leasehold improvement in excess of $25,000
relating to the Business;
(o) powers of attorney; or
(p) material contract not otherwise disclosed herein.
True and complete copies of such Commitments have been delivered
or made available to the Purchaser prior to the date hereof.
Except as disclosed in Schedule 3.14, the Seller is not in
default under any of the Commitments, which default either
individually or in the aggregate has a Material Adverse Effect
and, to the knowledge of Seller and Smith Corona, no third party
is in default under any of the Commitments. Schedule 3.12
identifies each Commitment which requires the consent or approval
to the assignment of such Commitment to the Purchaser. True and
correct copies of each Commitment have previously been delivered
to the Purchaser.
3.15 Employee Benefit Plans.
(a) Except for the plans set forth on Schedule 3.15
(the "Designated Plans"), the Seller does not sponsor or maintain
any plan, fund, program, policy, arrangement, contract or
commitment, whether or not qualified for federal income tax
purposes, whether or not funded, whether formal or informal, and
whether for the benefit of a single individual or more than one
individual, which is in the nature of (a) an employee pension
benefit plan (as defined in section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")),
(b) an employee welfare benefit plan (as defined in section 3(1)
of ERISA), (c) an incentive current or deferred compensation, or
other benefit or compensation arrangement for employees, former
employees, their dependents and/or their beneficiaries, or (d) an
arrangement that could be characterized as providing for
additional compensation, compensation associated with a change of
control, severance benefits, perquisites, or fringe benefits.
(b) The Seller does not sponsor or maintain, and is
not a contributing employer or otherwise a party to, or has any
obligation or liability under or with respect to, any defined
benefit plan within the meaning of Section 3(35) of ERISA or any
"multiemployer plan" (as defined in Section 3(37) of ERISA).
There are no circumstances pursuant to which the Seller may be
liable to the PBGC, to any such defined benefit plan (or to any
participant, beneficiary, trustee or fiduciary thereof) presently
or heretofore sponsored or maintained by any entity other than
the Seller, including within the concept of "entity other than
the Seller" any predecessor of the Seller, any former employer of
any present or former employees of the Seller, or any "controlled
company." For purposes of the preceding sentence, a "controlled
company" is any enterprise which, with the Seller, forms or
formed at any time since September 2, 1974 a controlled group of
corporations within the meaning of Section 414(b) of the Code, a
group of trades or businesses under common control within the
meaning of Section 414(c) of the Code, or any affiliated service
group within the meaning of Section 414(m) of the Code.
(c) With respect to each Designated Plan, the Seller
has delivered to the Purchaser true and complete copies of (i)
all documents governing such Designated Plan, and all amendments
thereto, (ii) all reports relating to such Designated Plan filed
by the Seller or any of its subsidiaries or officials of such
Designated Plan with the United States Department of Labor, the
Internal Revenue Service, or any other federal or state
regulatory agency, (iii) all summary plan descriptions, notices
and other reporting and disclosure material furnished to
participants with respect to such Designated Plan, (iv) all
actuarial, accounting and financial reports prepared with respect
to such Designated Plan, and (v) all currently effective Internal
Revenue Service rulings or determination letters relating to such
Designated Plan. Each financial or other report delivered to the
Purchaser pursuant hereto is accurate in all respects, and there
have been no adverse changes in the financial status of any
Designated Plan since the date of the most recent report provided
with respect thereto.
(d) The Seller has operated, and has caused its
appointees and nominees to operate, each Designated Plan which is
an Assumed Plan in a manner which is in material compliance with
the terms thereof and with all applicable law, regulations and
administrative agency rulings and requirements applicable
thereto. Each employee, former employee and every dependent of
the foregoing entitled to continuation of benefit coverage under
any employee welfare benefit plan sponsored by the Seller or any
of its subsidiaries has been accorded all the rights to which
such person is entitled as a matter of law or regulation.
(e) Full payment has been made of all amounts which
the Seller is required, under applicable law or under any
Designated Plan which is an Assumed Plan or any agreement related
to any such Designated Plan to which the Seller or any of its
subsidiaries is a party, to pay as contributions thereto with
respect to all plan years ended on or before the Closing, whether
or not such contributions are required to be made prior to the
Closing. The Seller has made adequate provision for reserves to
meet any employer contribution obligation under any Designated
Plan which is an Assumed Plan or any related agreements to which
the Seller or any of its subsidiaries is a party, with respect to
the plan year in which the Closing occurs. Benefits under all
Designated Plans are as represented in the documents provided
with respect to such Designated Plan and have not been increased
subsequent to the date of such documents.
(f) Each Designated Plan which is an Assumed Plan is
intended to be qualified under Sections 401(a), 401(k) and 501(a)
of the Code and either (i) has been determined to be so qualified
by the Internal Revenue Service or (ii) has an application
pending before the Internal Revenue Service. Nothing has
occurred since the date of the last such determination which
resulted or could result in the revocation of such determination.
As of the Closing Date, all amendments and actions required to
bring each Designated Plan which is an Assumed Plan into
conformity in all respects with all applicable laws have been
made or taken to the extent that such amendments or actions are
required by law to be made or taken in order to obtain a
favorable determination letter upon termination of the Designated
Plan, if applicable.
(g) There is no action, claim or demand of any kind
(other than routine claims for benefits) that has been brought or
threatened against any Designated Plan which is an Assumed Plan,
or the assets thereof, against any fiduciary of any such
Designated Plan, or against the Seller or any of its subsidiaries
with respect to any such Designated Plan, and neither the Seller
nor any of its subsidiaries has knowledge of any investigation or
administrative review that could result in the imposition on the
Seller or any of its subsidiaries or on any Designated Plan or
any fiduciary thereof of any penalty or assessment in connection
with any Designated Plan.
(h) The Seller has filed or caused to be filed on a
timely basis all returns, reports, statements, notices,
declarations, and other documents required by any federal, state,
local or foreign governmental agency, (including without
limitation, the Internal Revenue Service, the Department of
Labor, the PBGC and the Securities and Exchange Commission) with
respect to each Designated Plan which is an Assumed Plan. With
respect to each Designated Plan which is an Assumed Plan, the
Seller has delivered or caused to be delivered to every
participant, beneficiary and every other party entitled to such
material all plan descriptions, returns, reports, schedules,
notices, statements and similar materials, including without
limitation, summary Plan descriptions and reports as are required
under Title I of ERISA and/or the Code.
(i) The consummation of the transactions contemplated
by this Agreement will not result in any liability to the
Purchaser with respect to any of the Designated Plans other than
the Assumed Plans to the extent provided in Section 5.7 hereof.
(j) Except as expressly provided in Section 5.7, the
Seller has not taken any action which would commit the Purchaser
to establish or continue any plan, fund or program providing any
employee benefits of any kind whatsoever for any present or
former employee of the Business, nor has the Seller taken any
action prior to the Closing which would prevent the Purchaser
from changing the benefits provided by any Designated Plan which
is an Assumed Plan. Except as expressly provided in Section 5.7,
nothing in this Agreement or in the consummation of this
transaction will require the Purchaser to assume any obligation
of the Seller under any Designated Plan.
(k) To the best of Seller's knowledge, Schedule
3.15(k) contains a true and complete list of all material
"preexisting conditions" (as defined in Section 5.7(e)) of all
Hired Employees and their "qualified beneficiaries," within the
meaning of Section 4980(g) of the Code who were covered by a
group health plan maintained by the Seller immediately prior to
the Closing. It is understood that Schedule 3.15(k) need not
identify the names of the individuals who have such "preexisting
conditions."
3.16 Labor Matters. (a) Except as set forth in Schedule
3.16, (i) there is no unfair labor practice, charge or complaint
against the Seller with respect to the Business pending before
the National Labor Relations Board or any other U.S. governmental
agency arising out of the Seller's activities with respect to the
Business; (ii) there is no labor strike, slowdown, picketing or
other labor disturbance pending or, to the knowledge of the
Seller, threatened or contemplated, nor is any grievance
currently being asserted, against the Seller with respect to the
Business; and (iii) the Business has not experienced a work
stoppage during the past three (3) years.
(b) Except as set forth in Schedule 3.16, there are no
outstanding claims against the Seller (whether under federal,
state, local or foreign law, under any employment agreement or
policy, or otherwise) asserted by or on behalf of any present or
former employee or job applicant of the Seller on account of or
for (i) overtime pay, other than overtime pay for work done in
the current payroll period, (ii) wages or salary for any period
other than the current payroll period, (iii) any amount of
vacation pay or pay in lieu of vacation time off, other than
vacation time off or pay in lieu thereof earned in or in respect
of the current fiscal year, (iv) any amount of severance pay or
similar benefits, (v) unemployment insurance benefits, (vi)
workers' compensation or disability benefits, (vii) any violation
of any statute, ordinance, order, rule or regulation relating to
plant closings, employment terminations or layoffs, including but
not limited to The Workers Adjustment and Retraining Act
("WARN"), (viii) any violation of any statute, ordinance, order,
rule or regulations relating to employee "whistleblower" or
"right-to-know" rights and protection, (ix) any violation of any
statute, ordinance, order, rule or regulations relating to the
employment obligations of federal contractors or subcontractors
or (x) any violation of any statute, ordinance, order, rule or
regulation relating to minimum wages or maximum hours of work,
and the Seller is not aware of any such claims which have not
been asserted. Except as set forth under Schedule 3.16, no
person (including any governmental agency of any kind) has
asserted or threatened any claims against the Seller under or
arising out of any statute, ordinance, order, rule or regulation
relating to discrimination or occupational safety relating to the
Seller's hiring, conditions of employment or termination of any
of its employees.
3.17 Accounts Payable. (a) All accounts payable as set
forth on the Statement of Net Assets or arising since the date
thereof have been incurred in the ordinary course of the
Business. During the period between June 30, 1994 through the
Closing, all accounts payable have been paid by the Seller within
such time period as is customary for the Seller in accordance
with its past practice.
(b) Neither Smith Corona nor the Seller has taken any
action that would have the effect of deferring any account
payable or other liability of the Seller from a pre-Closing
period to any period commencing on or after the Closing Date.
3.18 Insurance. The Seller maintains policies of fire,
liability, title, worker's compensation and other forms of
insurance with respect to the Business, its property and the
Employees in such amounts and against such risks and losses as
are in the Seller's judgment prudent, which policies are in full
force and effect on the date hereof and shall be kept in full
force and effect by the Seller through the Closing Date.
Schedule 3.18 sets forth a list of all current insurance
policies, the policy limits for each policy, a list of all
current claims thereunder and all past general liability
insurance policies (primary and excess) since September, 1989,
the name of the insurer, the policy limits, and whether the
policy was a claims-made or occurrence policy.
3.19 Environmental Matters. Except as disclosed on Schedule
3.19:
(a) The Seller has conducted the Business in
compliance with all Environmental Laws, except where such
noncompliance would not have a Material Adverse Effect.
(b) No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand or notice has
been filed or commenced against the Seller alleging any violation
or failure to comply with any Environmental Law. The Seller is
not party to any agreement, consent order or adjudication of any
type with any person, including any government agency, that is
authorized under any Environmental Law,
(c) The Seller has obtained and has at all times
possessed all permits, licenses, registrations and other
authorizations necessary to conduct the Business under applicable
Environmental Laws, except such permits, licenses, registrations
and other authorizations which individually or in the aggregate
would not have a Material Adverse Effect (the "Environmental
Permits"). The Seller has filed timely and complete applications
for renewal of any such Environmental Permits that are required
to be renewed prior to the Closing. The Environmental Permits
necessary for the Seller to conduct the Business are currently in
effect and are listed in Schedule 3.19 and the Seller is in
material compliance with all terms and conditions of such
Environmental Permits and has not materially violated any of
same. The Seller has not received any notice of any proposal to
amend, revoke, reissue or replace any Environmental Permit, nor
have any events occurred that could form a reasonable basis for
any such action.
(d) There has not been any spill, release or
unauthorized discharge of any Hazardous Substance in connection
with the Business or at any of the properties or facilities used
by the Seller, where such spill, release or discharge was
required to be reported under the Environmental Law or would
require abatement or correction under any Environmental Law. The
Seller has not permitted any Hazardous Substances to be disposed
of, treated or stored on any property used by the Seller except
in accordance in all material respects with applicable
Environmental Laws.
(e) There is no Environmental Condition in connection
with the Business which has not been fully remediated in
accordance with applicable Environmental Laws at or relating to
the properties or facilities used by the Seller or, to the
knowledge of the Seller or Smith Corona, any predecessor, or at
or relating to any property owned, leased or operated at any time
by the Seller or, to the knowledge of the Seller or Smith Corona,
any such predecessor, or at or relating to any property at which
wastes have been deposited or disposed by or at the behest or
direction of the Seller or, to the knowledge of the Seller or
Smith Corona, any such predecessor, nor has the Seller received
written notice of any such Environmental Condition.
(f) The Seller has provided to the Purchaser a copy of
each environmental audit or facility investigation conducted by
the Seller, Smith Corona or their representatives relating to the
properties and facilities used by the Business.
3.20 Other Governmental Licenses. The Seller has all
governmental permits, licenses, registrations and other
authorizations without regard to the Environmental Permits
covered by Section 3.19 ("Governmental Licenses") necessary for
the conduct of the Business as presently conducted by it, except
where the absence thereof would not have a Material Adverse
Effect. All Governmental Licenses are set forth on Schedule
3.20. The Seller is not in default, nor has it received any
notice of any claim of default, with respect to any such
Governmental License. All such Governmental Licenses are
renewable by their terms or in the ordinary course of the
Business without the need to comply with any special
qualification procedures or to pay any amounts other than routine
filing fees and will not be adversely affected by the completion
of the acquisition. Schedule 3.20 identifies each Governmental
License which requires the consent or approval to the assignment
of such Governmental License to Rapidforms.
3.21 Finders and Investment Bankers. Except for Smith
Corona's and the Seller's engagement of Kenneth E. Sielatycki and
Chemical Securities Inc. (the "Seller's Advisors"), neither the
Seller nor Smith Corona has employed any broker or finder or
incurred any liability for any brokerage fees, commission or
finders' fees in connection with the Purchase. The fees and
disbursements of the Seller's Advisors with respect to such
engagement are to be paid by the Seller.
3.22 Relations with Customers and Suppliers. Since June 30,
1994, no customer representing more than 1% of net sales of the
Business or, since March 31, 1994, no supplier of the Business
has indicated to Smith Corona or the Seller that it intends to
cease its relationship with the Business either before or after
the consummation of the transactions contemplated hereby.
3.23 Transactions with Affiliates. Except as disclosed on
Schedule 3.23, neither Smith Corona, any director or officer of
the Seller or any member of his or her immediate family, owns or
has a controlling ownership interest in any corporation or other
entity that is a party to any Commitment or material business
arrangements or relationships with respect to the Business. All
disclosed transactions between Smith Corona and the Sellers with
respect to the Business and any shareholder or any affiliate have
been on substantially the same terms and conditions as similar
transactions between non-affiliated parties and are properly
recorded on the books and records of the Seller, except any
transaction which individually or in the aggregate would not have
a Material Adverse Effect.
3.24 Books of Account. The books, records and accounts of
the Seller accurately and fairly reflect, in all material
respects and in reasonable detail, the transactions and the
assets and liabilities of the Business. Neither Seller nor Smith
Corona has engaged in any transaction with respect to the
Business, maintained any bank account for the Business or used
any of the funds of the Seller in the conduct of the Business
except for transactions, bank accounts and funds which have been
and are reflected in the normally maintained books and records of
the Business.
3.25 Full Disclosure. There are and will be no materially
misleading misstatements in any of the representations and
warranties made by the Seller and Smith Corona in this Agreement,
the Schedules hereto or in any of the documents, certificates and
instruments delivered or to be delivered by the Seller or Smith
Corona pursuant to this Agreement (the "Transaction Documents")
and the Seller has not omitted to state any fact necessary to
make such representations and warranties in the Transaction
Documents not materially misleading.
ARTICLE IV
Representations and Warranties of the Purchaser and
Rapidforms. The Purchaser and Rapidforms hereby jointly and
severally represent and warrant to the Seller as follows:
4.1 Organization of the Purchaser and Rapidforms. The
Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has
all necessary corporate power to own all of its properties and
assets and to carry on its business as now being conducted.
Rapidforms is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey.
4.2 Authorization and Noncontravention. The execution,
delivery and performance of this Agreement has been duly
authorized by the Purchaser and Rapidforms. The Purchaser and
Rapidforms have full corporate power and authority to enter into
this Agreement and to perform their respective obligations
hereunder. This Agreement constitutes a valid and legally
binding obligation of the Purchaser and Rapidforms enforceable
against the Purchaser and Rapidforms in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles. The execution and the delivery by the
Purchaser and Rapidforms of this Agreement and the consummation
by the Purchaser of the Purchase will not (i) violate any term or
provision of the Certificate of Incorporation or By-laws of the
Purchaser or Rapidforms; (ii) conflict with or result in a breach
of or constitute a default under or result in the termination of,
or entitle any party to accelerate (whether after the filing of
notice or lapse of time or both) any agreement to which the
Purchaser or Rapidforms is a party or by which it is bound or to
which any of its assets are subject, or result in the creation of
any Encumbrance upon any of said assets, other than Encumbrances
which, individually or in the aggregate, would not have a
Material Adverse Effect and would not materially impair the
ability of the parties hereto to consummate the Purchase; or
(iii) subject to the expiration or early termination of the
applicable waiting period under the HSR Act, violate or result in
a breach of or constitute a default under any judgment, order,
decree, law, rule, regulation or other restriction of any court,
government or governmental agency to which the Purchaser or
Rapidforms is subject, other than violations, breaches or
defaults which,individually or in the aggregate, would not
materially impair the ability of the parties hereto to consummate
the Purchase.
4.3 Litigation. There are no claims, actions, suits,
proceedings, arbitrations or government investigations pending
or, to the knowledge of the Purchaser or Rapidforms, threatened
or known to be contemplated with respect to the transactions
contemplated by this Agreement.
4.4 Approvals and Consents. Except for compliance with the
HSR Act, there are no authorizations, approvals, consent or
waivers required to be obtained from, or notices or filings
required to be given to or made with, any government,
governmental agency or third party for the consummation by the
Purchaser of the Purchase.
4.5 Finders and Investment Bankers. The Purchaser has not
employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with
the Purchase.
4.6 Access to Funds. The Purchaser has, or has immediate
access to, and will have on the Closing Date, sufficient cash to
meet its obligations under Sections 2.2 and 2.4 hereof.
ARTICLE V
Covenants
5.1 Operation of Business. The Seller covenants and agrees
that, from the date hereof until the Closing Date, the Business
shall be operated in the ordinary course of business consistent
with past practice. Except as expressly provided by this
Agreement or consented to by the Purchaser, the Seller covenants
and agrees with respect to the Business that it will not:
(a) amend or modify in any material respect any
Commitment;
(b) do any act or omit to do any act which will cause
a breach of or default in any Commitment;
(c) enter into any Commitment over $10,000 or with a
duration in excess of six months;
(d) enter into any employment or consulting agreement
with any Employee or grant any increase in the compensation or
amend any benefits provided to the Employees other than regular
annual increases of base salary in the ordinary course of
business consistent with past practice;
(e) sell, transfer, or otherwise dispose of any
Purchased Assets having a value, individually or in the
aggregate, in excess of $10,000 other than inventory sold in the
ordinary course of business consistent with past practice;
(f) subject the Purchased Assets to any Encumbrance
which will not be released prior to or at the Closing;
(g) allow any current insurance policy to lapse unless
the Seller obtains a substantially similar substitute policy;
(h) issue, contract to issue, or cause to be issued or
contracted to issue, on behalf of the Business, additional debt
(excluding trade accounts payable in accordance with their terms)
or guarantees of debt;
(i) make or become obligated to make any capital
expenditures in excess of $10,000 for any single project or enter
into any commitments therefor;
(j) violate or allow to lapse any Environmental Permit
or Governmental License;
(k) make any changes to its charter or by-laws or
otherwise change its capital structure which affects the Seller's
ability to consummate the transaction contemplated by this
Agreement;
(l) violate any law, rule or regulation applicable to
the Business in any material respect; or
(m) agree to do any of the foregoing.
5.2 Preservation of Business. From the date hereof until
the Closing Date, the Seller shall use commercially reasonable
efforts to keep the Business substantially intact and to maintain
satisfactory relations with the Employees and with the suppliers
and customers of the Business.
5.3 Approvals and Consents; Cooperation. The parties
hereto shall use reasonable efforts, and cooperate with each
other, to obtain any governmental or third party authorizations,
approvals, consents or waivers required in order to consummate
the Purchase; provided, however, that neither the Seller nor the
Purchaser shall be required to pay any consideration therefor. To
the extent that the Seller's rights under any Commitment may not
be assigned without the consent of another person which has not
been obtained, this Agreement shall not constitute an agreement
to assign the same if an attempted assignment would constitute a
breach thereof or be unlawful. If any such consent shall not be
obtained or if any attempted assignment would be ineffective or
would impair the Purchaser's rights under the Commitment in
question so that the Purchaser would not in effect acquire the
benefit of all such applicable Commitment, the Seller or Smith
Corona shall obtain for the Purchaser the benefits thereunder and
shall cooperate, to the maximum extent permitted by law and such
Commitment, with the Purchaser in any other reasonable commercial
arrangement designed to provide such benefits to the Purchaser
and, in such event, the Purchaser shall perform under the
applicable terms thereof. Upon receipt of such required consent
the Seller and the Purchaser shall execute and deliver an
Assignment and Assumption Agreement, covering the subject
Commitment.
5.4 Access. From the date hereof until the Closing, the
Seller will furnish to the Purchaser any information with respect
to the Business as the Purchaser may from time to time reasonably
request. Beginning immediately upon the execution hereof, the
Seller, upon reasonable prior notice by the Purchaser, shall give
or cause to be given to the Purchaser and to its accountants,
counsel and other authorized representatives, during regular
business hours, in a manner so as not to unduly disrupt the
business of the Seller or the Business, reasonable access to all
of the facilities and management personnel of the Seller, and to
all of the records, documents, financial information and other
data Related to the Business except to the extent that such
access would violate any governmental regulation, law or order to
which the Business or the Employees are subject; provided,
however, that the Seller shall have the right to have a
representative present at all such times.
5.5 Taxes and Fees.
(a) The Purchaser shall pay any and all sales, use or
other transfer taxes which may be due or payable in connection
with the consummation of the Purchase. The Purchaser shall be
responsible for any and all fees and expenses payable in
connection with the transfer of the Intellectual Property to it.
Such payments shall not be treated as either an increase or
reduction in the Purchase Price. The Seller and the Purchaser
shall cooperate in filing any forms required to be filed with
respect to the determination and payment of the taxes described
in this Section 5.5.
(b) The Purchase Price shall be allocated among the
Purchased Assets in accordance with an allocation schedule to be
agreed to by the Purchaser and Smith Corona contemporaneously
with the agreement as to the Final Statement pursuant to Section
2.4 hereof. The Seller and the Purchaser agree that, to the
extent permitted by applicable law, they shall file all tax
returns and tax reports in accordance with and based upon such
allocation and shall take no position in any tax return, tax
proceeding or tax audit which is inconsistent with such
allocation.
5.6 Post-Closing Access to Information; Preservation of
Records.
(a) At all times after the Closing Date, each party
will permit the others and its representatives (including its
counsel and auditors) during normal business hours, to have
reasonable access to and examine and make copies, at the expense
of the copying party, of all books, records, files, documents and
insurance policies then in its possession which relate to the
conduct of the Business prior to the Closing Date. The Purchaser
may transfer such books and records to another person in
connection with a sale or transfer by the Purchaser to such other
person of all or any substantive part of the Business so long as
such person assumes and agrees to be bound by the Purchaser's
obligations under this Section 5.6.
(b) The Purchaser and the Seller agree to maintain all
books and records relating to taxes Related to the Business for a
period of seven (7) years from the Closing Date.
(c) Without limiting the scope of Section 5.6(b), the
Purchaser agrees, for at least seven (7) months after the Closing
Date, to maintain all records and files which relate to the
collection of accounts receivable included as Purchased Assets.
(d) The Seller agrees to maintain all books and
records relating to the administration of the Designated Plans
for a period of eighteen (18) months after the Closing Date.
5.7 Employee Benefits and Related Matters.
(a) Employment Status.
(1) Active Status: The Purchaser shall
offer employment on and as of the Closing Date to all active
Employees who are shown as such on Schedule 5.7(a) at their
current base salary which is indicated on Schedule 5.7(a).
Schedule 5.7(a) sets forth the date of the last salary increase
for each Employee. Employees on vacation or on temporary leave
for purposes of jury duty or annual two-week national
service/military duty shall be deemed to be active Employees.
(2) Nonmedical Leave: Employees who on the
Closing Date are shown on Schedule 5.7(a) as Employees on
nonmedical leaves of absence ("Nonmedical Leave Employees") shall
be offered employment and returned to active employment by the
Purchaser in accordance with the terms of their leaves or as may
be required by applicable law; provided, however, that no
Nonmedical Leave Employee shall be guaranteed reinstatement to
active service unless otherwise required by applicable law.
For purposes of this Section 5.7, nonmedical leaves
shall include leaves under the Federal Family and Medical Leave
Act, maternity (unless determined to be a medical leave) or
paternity leave, educational leave, military leave with veteran's
reemployment rights under federal law, personal leaves, or such
other leave which under applicable law would require an employer
to rehire such Nonmedical Leave Employee.
(3) Medical Leave: Employees who on the
Closing Date are shown on Schedule 5.7(a) as Employees on medical
leaves of absence for (i) one hundred eighty (180) calendar days
or less or (ii) more than one hundred eighty (180) calendar days
if such Employees are able, without material qualification, to
return to active employment within five business days after the
Closing Date (collectively, "Medical Leave Employees") shall be
offered employment and returned to active employment by the
Purchaser if no longer incapable of working (as determined under
the normal policies, practices and procedures of the Purchaser);
provided, however, that no Medical Leave Employee shall be
guaranteed reinstatement to active service if he or she is
incapable of working in accordance with the normal policies,
practices and procedures of the Purchaser.
(4) Hired Employees: Employees of the
Seller who are required in accordance with this Section 5.7 to be
offered employment by the Purchaser and who accept such
employment shall be considered to be employees of the Purchaser
on and as of the Closing Date ("Hired Employees"); provided,
however, that until such time, if ever, as each Nonmedical Leave
Employee or Medical Leave Employee is returned to active
employment by the Purchaser as provided above, such Nonmedical
Leave Employee or Medical Leave Employee shall not be a Hired
Employee and shall instead continue to be deemed an employee of
the Seller or Smith Corona. The offer of employment to the Hired
Employees by the Purchaser shall be for employment at will and
shall not be construed to limit the ability of the Purchaser to
terminate any or all such Hired Employees for any reason, subject
to the agreements to pay severance provided in Section 5.7(g)
hereof.
(b) Comparable Benefits: Crediting of Service;
Assumption of Liability; Coordination of Benefits. The Purchaser
shall acquire all assets and assume all liabilities and
obligations of the Seller in connection with the following
pension plans: Histacount Corporation Salaried and Non-Union
Hourly Employees Pension Plan, as amended and restated effective
as of January 1, 1993 (the "Salaried Plan"), and Histacount
Corporation Union Hourly Employees Pension Plan, as amended and
restated effective as of January 1, 1994 (collectively with the
Salaried Plan, the "Assumed Plans"). Each Hired Employee who
participated in an Assumed Plan prior to the Closing shall be
entitled to continue to participate after the Closing in such
Assumed Plan without regard to any eligibility period that might
otherwise be applicable. Each Hired Employee who participated in
an Assumed Plan prior to the Closing will not incur a reduction
in his accrued benefit as of the Closing by virtue of the
assumption of the Assumed Plan by the Purchaser. The Purchaser's
board of directors will expressly adopt and assume the Assumed
Plans as of the Closing and the Purchaser shall be responsible
for all expenses and costs of the Plan from and after the Closing
as well as all governmental reporting obligations for the Assumed
Plans from and after the Closing. The Seller and Purchaser will
cooperate in notifying all service providers to the Assumed Plans
of the change in plan sponsorship. The Purchaser shall grant the
Hired Employees credit for service with the Seller solely for
purposes of eligibility and vesting under the Assumed Plans and
as to any vacation, sick leave and severance plans of the
Purchaser covering such Hired Employee. The Purchaser shall not
provide the Hired Employees with any 401(k) or similar benefit;
however, the Purchaser shall increase the employer contribution
percentage under the Salaried Plan such that an additional
$55,000 would be payable on an annual basis under the Salaried
Plan. The Seller shall provide the Purchaser with reasonable
assistance with regard to coordination of employee benefits for
the Hired Employees and management of the Assumed Plans.
(c) Vacation. The Purchaser agrees to provide
vacation benefits after the Closing Date as set forth on Schedule
5.7(c). The Purchaser agrees to provide the vacation accrued by
the Seller on behalf of the Hired Employees as of the Closing
Date.
(d) Collective Bargaining Agreement. The Seller shall
obtain the consent of the Printing, Publishing and Media Workers
sector of the Communications Workers of America, Local 965 or its
successor (the "Union") to the Purchaser's assumption of the
collective bargaining agreement with the Union expiring
September 30, 1995.
(e) Group Health. The Purchaser shall offer group
health plan coverage to all Hired Employees and their "qualified
beneficiaries" within the meaning of Section 4980B(g) of the Code
who were covered by a group health plan maintained by the Seller
immediately prior to the Closing. Such coverage offered by the
Purchaser shall be comparable (other than with respect to
post-retirement medical benefits which will not be provided by the
Purchaser) to the coverage offered by the Seller prior to the
Closing. The Seller or Smith Corona shall reimburse the
Purchaser on a quarterly basis for the cost of medical claims for
the Hired Employees and their "qualified beneficiaries" provided
by the Purchaser attributable to any "preexisting conditions" (as
defined below). Such reimbursement shall be in an amount equal
to the amount of all approved claims for benefits under the
Purchaser's group health plan (or any successor coverage) that
are attributable to such "preexisting condition" and that are
incurred by any Hired Employee or "qualified beneficiary" between
the Closing Date and the date the Hired Employee terminates
employment with the Purchaser (which shall be no later than nine
months after the Closing Date) plus any period in which such
Hired Employee has continued coverage pursuant to COBRA (the
"Payment Period"). The term "preexisting condition" shall mean
for purposes of this Agreement, any significant ailment, illness
or medical condition with respect to which the Hired Employee or
"qualified beneficiary" had incurred a claim under Seller's group
health plan within six months prior to the Closing Date, whether
or not a claim for the same has been filed under the Seller's
group health plan. The term "significant ailment, illness or
medical condition" shall mean any ailment, illness or medical
condition requiring treatment costs and expenses, including
without limitation hospitalization costs and expenses, in excess
of $6,000 regardless of when incurred; it being understood that
upon exceeding the $6,000 threshold amount, the Purchaser shall
be entitled to reimbursement for all claims from the first dollar
incurred during the Payment Period relating to such significant
ailment, illness or medical condition. Without limiting the
foregoing, all approved claims for benefits under the Purchaser's
group health plan (or successor thereto) relating to the
conditions listed on Schedule 3.15(k) shall be deemed to be
attributable to "preexisting conditions." The Seller and Smith
Corona hereby agree that the Seller will pay any obligation for
post-retirement medical benefits for Hired Employees under the
terms of the Seller's current post-retirement medical benefit
policy.
(f) Management Retention Bonuses. Schedule 5.7(f)
sets forth a list of all management retention incentive bonus
agreements with Employees ("MRB Agreements"). On and as of the
Closing Date, the Purchaser shall assume the responsibility for
the payment of up to a maximum of Four Hundred Ninety-Six
Thousand Seven Hundred and Nine Dollars ($496,709) of management
retention incentive bonuses ("MRBs") under the MRB Agreements,
except that the Purchaser shall assume no responsibility for the
payment of any MRB to Bonnie Nackenson. The Purchaser covenants
and agrees to pay the MRBs to each of the designated managers of
the Seller listed on Schedule 5.7(f) hereto, other than Bonnie
Nackenson, up to the amount for each such manager set forth on
Schedule 5.7(f) in two (2) installments, one-half (1/2) on the
eighth (8th) day after the Closing Date and one-half (1/2) on the
six (6) months anniversary of the Closing Date, on the condition
that such manager remains an employee of the Purchaser or its
successor as of the payment dates. Upon termination without
cause by the Purchaser or its successor of any such manager,
however, the remaining balance of the MRB would be immediately
payable to such manager. Smith Corona shall reimburse the
Purchaser within 5 days after notice of payment for any payment
obligation under the MRB Agreements in excess of the $496,709
maximum referred to above. In addition, Smith Corona shall pay
directly to (i) Bonnie Nackenson any payment under her MRB
Agreement and (ii) John Bendik the obligations under paragraphs 3
and 5 of his MRB Agreement.
(g) Severance. In the event that any Hired Employee
other than John F. Bendik (who is entitled to severance equal to
one year's base salary under his MRB Agreement) is severed by the
Purchaser without cause within eighteen (18) months after the
Closing Date, the Purchaser shall pay such Hired Employee
severance plus applicable benefits (i) in the case of any
non-union employee, according to Smith Corona's and the Seller's
policy for non-union employees (two (2) weeks for every year of
service, up to a maximum of forty (40) weeks), and (ii) in the
case of any union employee, according to the terms of the
collective bargaining agreement between the Seller and the Union.
Part-time Employees of the Seller are not entitled to any
severance except payment until the end of the week for any
part-time Employee terminated before the end of a week. Schedule
5.7(g) sets forth the wage level and years of service for each
Employee and the severance due if such Employee were terminated
on the Closing Date.
(h) Required Documentation. In connection with the
implementation of this Section 5.7, 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.
(i) No Third-Party Beneficiaries. No provision of
this Section 5.7 shall create any third-party beneficiary rights
in any person or organization, including, without limitation,
employees or former employees (including any beneficiary or
dependent thereof) of the Seller or the Purchaser or any of their
respective affiliates, unions or other representatives of such
employees or former employees.
5.8 Confidentiality. The terms of the letter agreement
dated as of July 29, 1994 (the "Confidentiality Agreement") by
and among the Seller, Smith Corona and the Purchaser are
incorporated by reference herein and shall apply with full force
and effect to the Purchaser for the term set forth therein;
provided, however, that after the Closing, the Purchaser shall be
free to use any confidential information of the Business in any
manner that it desires.
5.9 Covenant Not to Compete.
(a) Non-Competition. The Seller and Smith Corona
hereby covenant and agree that for the five (5) year period after
the Closing Date they shall not, except with the prior written
consent of the Purchaser, directly or indirectly, own, manage,
operate, join, control, finance or participate in the ownership,
management, operation or control of any person or entity in the
business of direct marketing to the medical, legal and accounting
professions and to other businesses and institutions of
stationery, business cards, printed office forms, greeting cards,
appointment reminders and customized printed promotional products
in the United States or Canada.
The Seller and Smith Corona hereby covenant and agree
that for the two (2) year period after the Closing Date they
shall not, except with the prior written consent of the
Purchaser, directly or indirectly, own, manage, operate, join,
control, finance or participate in the ownership, management,
operation or control of any person or entity in the business of
direct marketing to medical, legal and accounting professions and
to other businesses and institutions of software to be installed
by the user in the user's personal computer that aids in
imprinting business forms, imprinted labels and imprinted tags in
the United States and Canada except for imprinted labels,
imprinted tags and software related to current or future hardware
products marketed by Smith Corona or similar products
manufactured by Smith Corona and marketed on an OEM basis to
others for resale.
Nothing in this Section 5.9(a) shall be construed as
prohibiting or otherwise restricting Smith Corona in any manner
from purchasing, producing, selling, distributing or marketing
any "Smith Corona" branded product or related supplies currently
marketed by Smith Corona through the Seller.
Section 5.9 shall not be construed to prohibit the
ownership of not more than 5% of the capital stock of any
corporation which is engaged in a business competitive with the
Business having a class of securities registered pursuant to the
Securities Exchange Act of 1934. In the event that the
provisions of this Section 5.9 should ever be adjudicated to
exceed the time or geographic limitations permitted by applicable
law, then such provisions shall be deemed reformed to the maximum
time or geographic limitations permitted by applicable law.
Without limiting the foregoing, the covenants contained herein
shall be construed after the Closing as separate covenants,
covering their respective subject matters, with respect to each
of the separate cities, counties and states of the United States
and the separate provinces of Canada (each such city, county,
state, province, country and political subdivision being herein
referred to as a "Jurisdiction"), in which the Purchaser
transacts or thereafter may transact the Business; and to the
extent that any covenant is adjudicated to be invalid or
unenforceable with respect to any one or more of such
Jurisdictions or businesses, (a) such covenant shall not be
affected with respect to each other Jurisdiction or business and
(b) such invalidity or unenforceability shall not affect any
other covenant of this Section 5.9 which can be given effect
without the invalid or unenforceable covenant. In accordance
with the foregoing, each covenant with respect to each
Jurisdiction shall be construed as severable and independent.
The covenants set forth in this Section 5.9 shall be binding upon
the successors and assignees of substantially all of the assets
of the Seller or Smith Corona, except that, in the event of any
such transaction, the foregoing shall not prohibit any such
successor or assignee from continuing any of its then existing
businesses, provided, however, that no customer lists, data bases
or other confidential information of the Business shall be
provided by the Seller or Smith Corona or their affiliates to any
such successor or assignee.
(b) Equitable Relief. The Seller and Smith Corona
acknowledge that the restrictions contained in Section 5.9(a)
hereof are reasonable and necessary to protect the legitimate
interests of the Purchaser, and that any violation of any
provision of this Section will result in irreparable injury to
the Purchaser and could not reasonably or adequately be
compensated in damages. The Seller and Smith Corona also
acknowledge that the Purchaser shall be entitled to preliminary
and permanent injunctive relief as well as an equitable
accounting of all earnings, profits and other benefits arising
from such violation, which rights shall be cumulative and in
addition to any other rights or remedies to which it may be
entitled.
5.10 Update Schedules. Between the date hereof and the
Closing Date, the Seller and Smith Corona will promptly disclose
to the Purchaser in writing any material information set forth in
the Schedules to this Agreement which no longer applies and any
information of the nature set forth in such Schedules which
arises after the date hereof and which would have been required
to be included in the Schedules if such information had been
available on the delivery date thereof.
5.11 Further Assurances. Following the Closing, at the
request of the Purchaser, the Seller or Smith Corona will
execute, acknowledge and deliver to the Purchaser such other
instruments of conveyance and transfer and will take such other
actions and execute and deliver such other documents,
certifications and further assurances as the Purchaser may
reasonably request in order to vest more effectively in the
Purchaser, or to put the Purchaser more fully in possession of,
any of the Purchased Assets, or to better enable the Purchaser to
complete, perform or discharge any of the Assumed Liabilities.
5.12 Accounts Receivable. From and after the Closing Date,
the Purchaser covenants and agrees to use best efforts (without
resorting to litigation) in accordance with Rapidforms' past
collection practices to collect all accounts receivable included
as Purchased Assets within 180 days after the Closing Date.
After the expiration of 180 days after the Closing Date, the
Purchaser shall assign to the Seller its right to any such
accounts receivable that remain uncollected (other than those
accounts requiring adjustment solely due to customer claims of
dissatisfaction) and shall furnish the Seller with copies of all
supporting documentation in the possession of the Purchaser as to
the uncollected accounts, such as correspondence or records of
telephone calls, relating to collection efforts by the Purchaser.
If the amount of uncollected accounts receivable (including
adjustments required to satisfy customers) as of such date
exceeds the amount of the applicable reserve set forth on the
Final Statement, then the Seller or Smith Corona shall pay to the
Purchaser the amount of such excess. If the amount of
uncollected accounts receivable (including adjustments required
to satisfy customers) as of such date is less than the amount of
the applicable reserve set forth on the Final Statement, then the
Purchaser shall pay to the Seller the amount of such deficit.
ARTICLE VI
Conditions to Closing
6.1 Conditions to Each Party's Obligation to Close. The
respective obligations of the Seller, Smith Corona and the
Purchaser to consummate the Purchase shall be subject to the
satisfaction, at or prior to Closing, of each of the following
conditions:
(a) The applicable waiting period under the HSR
Act shall have expired, and all authorizations, approvals,
consents and waivers required to be obtained from, and notices
and filings required to be given to or made with, any government,
governmental agency or third party in connection with the
Purchaser shall have been obtained, given or made, other than
those which, if not obtained, given or made, would not
individually or in the aggregate, impair the ability of the
parties hereto to consummate the Purchase or the Purchaser's
ability to operate the Business after the Closing.
(b) No court or other governmental body or public
authority of competent jurisdiction shall have issued an order
which shall then be effective restraining or prohibiting the
consummation of the Purchase.
(c) The Seller shall have entered into the Lease
Amendment for the land, buildings and improvements of the Seller
located at 965 Walt Whitman Road, Melville, New York (the
"Melville Facility") that the Seller currently leases from HM
Holdings, Inc., substantially in the form of Exhibit 6.1(c)
hereto.
(d) The Seller and the Purchaser shall have
entered into the Sublease for the Melville Facility,
substantially in the form of Exhibit 6.1(d) hereto.
(e) The form and content of all documents,
certificates and other instruments to be delivered pursuant to
this Agreement shall be reasonably satisfactory to each party and
its respective counsel.
6.2 Conditions to Obligation of the Purchaser to Close.
The obligation of the Purchaser to consummate the Purchase shall
be subject to the satisfaction, at or prior to Closing, of each
of the following conditions:
(a) The representations and warranties of the Seller
and Smith Corona contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date as
though restated and made at the Closing, except for changes
contemplated by this Agreement, and each of the Seller and Smith
Corona-shall have delivered to the Purchaser a certificate to the
foregoing effect, signed on behalf of such party by a duly
authorized officer of such party, and dated as of the Closing
Date.
(b) Each of the Seller and Smith Corona shall have
duly performed or complied in all material respects with all of
the obligations to be performed or complied with by it under the
terms of this Agreement on or prior to the Closing Date,
including without limitation the Union consent pursuant to
Section 5.7(d) hereof, and each of the Seller and Smith Corona
shall have delivered to the Purchaser a certificate to the
foregoing effect, signed on behalf of such party by a duly
authorized officer of such party, and dated as of the Closing
Date.
(c) The Purchaser shall have received the written
opinion dated the Closing Date of Winthrop, Stimson, Putnam &
Roberts, counsel for the Seller and Smith Corona, in form and
substance reasonably satisfactory to the Purchaser.
6.3 Conditions to Obligation of the Seller and Smith Corona
to Close. The obligation of the Seller and Smith Corona to
consummate the Purchase shall be subject to the satisfaction, at
or prior to Closing, of each of the following conditions:
(a) The representations and warranties of the
Purchaser contained in this Agreement shall be true and correct
in all material respects on and as of the Closing Date as though
restated and made at the Closing, except for changes contemplated
by this Agreement, and the Purchaser shall have delivered to the
Seller a certificate to the foregoing effect, signed on behalf of
the Purchaser by a duly authorized officer of the Purchaser and
dated as of the Closing Date.
(b) The Purchaser shall have duly performed or
complied in all material respects with all of the obligations to
be performed or complied with by it under the terms of this
Agreement on or prior to the Closing Date, and the Purchaser
shall have delivered to the Seller a certificate to the foregoing
effect, signed on behalf of the Purchaser by a duly authorized
officer of the Purchaser and dated as of the Closing Date.
(c) The Seller shall have received the written opinion
dated the Closing Date of Morgan, Lewis & Bockius, counsel for
the Purchaser and Rapidforms, in form and substance reasonably
satisfactory to the Seller.
ARTICLE VII
Indemnity
7.1 Indemnity by the Purchaser and Rapidforms. The
Purchaser and Rapidforms jointly and severally agree to indemnify
and hold harmless the Seller, Smith Corona, their affiliates and
their respective directors, officers and employees from and
against any losses, claims, liabilities, damages (but in no event
to include consequential damages to any party hereto) or expenses
(including reasonable attorneys' and expert witness fees)
(collectively, "Losses") (a) with respect to the Assumed
Liabilities; (b) resulting from the untruth, inaccuracy or breach
or nonfulfillment of any representation or warranty of the
Purchaser or Rapidforms contained herein or in any agreement or
instrument executed and delivered pursuant hereto (without
consideration of any materiality standard set forth therein) for
the period such representation or warranty shall survive
hereunder; (c) with respect to the severance obligations and MRB
obligations relating to the Employees to the extent explicitly
set forth in Sections 5.7(f) and (g) hereof; and (d) resulting
from the breach or nonfulfillment of any covenant or agreement of
the Purchaser or Rapidforms contained in this Agreement or in any
agreement or instrument executed and delivered pursuant hereto.
The indemnification obligations of the Purchaser and Rapidforms
set forth in this Article 7 shall be binding upon the successors
and assignees of substantially all of the assets of the Purchaser
or Rapidforms, respectively.
7.2 Indemnity by the Seller and Smith Corona. The Seller
and Smith Corona jointly and severally agree to indemnify and
hold harmless the Purchaser, Rapidforms, their affiliates and
their respective directors, officers, employees, agents and
representatives from and against any Losses (a) with respect to
the Excluded Liabilities; (b) resulting from the untruth,
inaccuracy or breach or nonfulfillment of any representation or
warranty of the Seller or Smith Corona contained herein or in any
agreement or instrument executed and delivered pursuant hereto
(without consideration of any materiality standard set forth
therein) for the period such representation or warranty shall
survive hereunder; (c) resulting from the breach or
nonfulfillment of any covenant or agreement of the Seller or
Smith Corona contained in this Agreement or in any agreement or
instrument executed and delivered pursuant hereto; (d) arising
out of the "premium point" program provided by Accountants'
Supply House and assumed by the Seller including without
limitation the retail price of merchandise supplied to customers
redeeming "premium points" and obligations under applicable
escheat laws arising from the "premium point" program, provided,
however, that the Purchaser agrees not to actively publicize or
promote such "premium points" program; (e) arising under the MRB
Agreements, other than the MRB Agreement with Bonnie Nackenson,
in excess of the maximum amount set forth in Section 5.7(f)
hereof, and arising under any failure of Smith Corona to pay the
obligations (i) to Bonnie Nackenson arising under her MRB
Agreement, or (ii) to John Bendik arising under paragraphs 3 or 5
of his MRB Agreement (f) relating to the Seller or the Business
in which the principal event giving rise thereto occurred prior
to the Closing Date or which result from or arise out of any
action or inaction prior to the Closing Date of the Seller, Smith
Corona or any director, officer, employee, agent or
representative of the Seller or Smith Corona regardless of
whether disclosed on a Schedule hereto, except for those which
the Purchaser specifically assumes pursuant to this Agreement.
The indemnification obligations of the Seller and Smith Corona
set forth in this Article 7 shall be binding upon the successors
and assignees of substantially all of the assets of the Seller or
Smith Corona, respectively.
7.3 Claims Procedure. All claims for indemnification
under this Section 7.3 shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which a
party or parties (the "Indemnifying Party") would be liable to
another party or parties (the "Indemnified Party") hereunder is
asserted against or sought to be collected from the Indemnified
Party by a third party, the Indemnified Party shall promptly
notify the Indemnifying Party of such claim or demand, specifying
the nature of such claim or demand and the amount or the
estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such
claim and demand) (the "Claim Notice"). The failure to promptly
notify the Indemnifying Party shall not release the Indemnifying
Party of its obligations hereunder, except to the extent that (i)
it is prejudiced by reason of such delay or failure or (ii) the
Indemnified Party shall have failed to notify the Indemnifying
Party within 90 days of realizing that it has a claim under this
Agreement. The Indemnifying Party shall have 30 days from the
receipt of the Claim Notice (the "Notice Period") to notify the
Indemnified Party (i) whether or not it disputes the liability of
the Indemnifying Party to the Indemnified Party hereunder with
respect to such claim or demand and (ii) whether or not it
desires, at the sole cost and expense of the Indemnifying Party,
to defend the Indemnified Party against such claim or demand. In
the event that the Indemnifying Party notifies the Indemnified
Party within the Notice Period that it desires to defend the
Indemnified Party against such claim or demand and except as
hereinafter provided, the Indemnifying Party shall have the right
to defend such claim or demand by appropriate proceedings, which
proceedings shall be promptly settled or prosecuted by it to a
final conclusion. If the Indemnified Party desires to
participate in, but not control, any such defense or settlement,
it may do so at its sole cost and expense. If the Indemnifying
Party elects not to defend the Indemnified Party against such
claim or demand (whether by not giving the Indemnified Party
timely notice as provided above or otherwise), then (x) the
amount of any such claim or demand, or (y) if the same be
contested by the Indemnified Party (but the Indemnified Party
shall have no obligation to contest any such claim or demand),
that portion thereof as to which such defense is finally
unsuccessful, shall be conclusively deemed to be a liability of
the Indemnifying Party hereunder except that if the Indemnifying
Party has disputed the liability of the Indemnifying Party to the
Indemnified Party hereunder, as provided above, such dispute
shall be resolved as provided in Section 9.12 hereof.
(b) If, in the reasonable opinion of the Purchaser,
notice of which shall be given in writing to the Seller, any such
claim or demand seeks material prospective relief which could
have a Material Adverse Effect on the Purchased Assets or the
Business, the Purchaser shall have the right to control the
defense of any such claim or demand at its sole cost and expense
but the amount of such cost and expense and any judgment or
settlement shall be included as part of the indemnification
obligations of the Seller hereunder. If the Purchaser should
elect to exercise such right, the Seller shall have the right to
participate in, but not control, the defense of such claim or
demand at the sole cost and expense of the Seller. If the Seller
has disputed the liability of the Seller to the Purchaser
hereunder, as provided above, such dispute shall be resolved as
provided in Section 9.12 hereof.
(c) In the event the Indemnified Party should have a
claim against the Indemnifying Party hereunder which does not
involve a claim or demand being asserted against or sought to be
collected from the Indemnified Party by a third party, the
Indemnified Party shall promptly send a Claim Notice with respect
to such claim to the Indemnifying Party. If the Indemnifying
Party does not notify the Indemnified Party within 30 days from
the receipt of the Claim Notice that it disputes such claim, the
amount of such claim shall be conclusively deemed a liability of
the Indemnifying Party hereunder. If the Indemnifying Party has
disputed such claim, as provided above, such dispute shall be
resolved as provided in Section 9.12 hereof.
(d) Nothing herein shall be deemed to prevent a party
from making a claim hereunder for potential or contingent claims
or demands, provided the Claim Notice sets forth the specific
basis for any such potential or contingent claim or demand to the
extent then feasible and such party has reasonable grounds to
believe that such a claim or demand may be made.
7.4 Limitations on Indemnification.
(a) Notwithstanding anything in this Agreement to the
contrary, an Indemnifying Party shall not be obligated to
indemnify an Indemnified Party for any Losses (i) to the extent
covered and paid by insurance paid for by the Indemnifying Party,
and (ii) to the extent paid by or recovered from any third party
on account of any such Losses, except that recoveries from
insurance or other third parties shall not be considered in
determining the obligation of the Seller and Smith Corona to
reimburse the Purchaser for the cost of medical claims relating
to preexisting conditions pursuant to Section 5.7 hereof.
(b) The Indemnifying Party shall not have any
liability to the Indemnified Party in respect of any claim for
indemnification pursuant to this Article VII for the breach of
any representation or warranty contained herein until the Losses
to the Indemnified Party, after taking into account Section
7.4(a) hereof, exceed a cumulative aggregate total of $100,000,
and then to the full extent of such Losses.
(c) Notwithstanding anything in the Agreement to the
contrary, the indemnification obligation of the Seller and Smith
Corona pursuant to Section 7.2 hereof, after taking into account
Section 7.4(a) hereof, shall not exceed the Purchase Price.
7.5 Exception to Limitations. Nothing herein shall be
deemed to limit or restrict in any manner any rights or remedies
which any party hereto has, or might have, at law, in equity or
otherwise, against any other party hereto based on the willful
misrepresentation or willful breach of warranty by such party
hereunder. Nothing contained in this Section 7.5 hereof shall
prevent any party hereto from seeking and obtaining specific
performance by the other party hereto of any of its obligations
under this Agreement or from seeking and obtaining injunctive or
other equitable relief against the other party's activities in
breach of this Agreement.
7.6 Effect of Investigation. Any claim for indemnification
shall not be invalid as a result of any investigation by or
opportunity to investigate afforded to the Purchaser.
ARTICLE VIII
Termination
8.1 Termination. Notwithstanding anything in this
Agreement to the contrary, this Agreement may be terminated only
(a) by the mutual written consent of the parties to this
Agreement, (b) by the Purchaser, the Seller or Smith Corona if,
for any reason (other than breach of this Agreement by the
terminating party), the Closing has not occurred (or cannot
occur) on or prior to November 30, 1994, or (c) by either party,
on written notice to the other party, upon material breach of
this Agreement by the non-terminating party, provided, however,
that the non-terminating party is first given notice of such
breach and fails to remedy, or commit to remedying, such breach
within thirty (30) days after receipt of such notice (it being
understood that for purposes of this Section 8.1(c) the Seller
and Smith Corona together constitute one party).
8.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 8.1, this Agreement, other than with respect
to the Seller's obligations under Section 3.21 hereof, the
Purchaser's obligations under Section 4.5 hereof and the
Purchaser's and the Seller's obligations under Sections 5.8 and
8.1 hereof, shall thereafter have no effect, except that
termination of this Agreement will not relieve either party of
any liability for breach of any agreements hereunder occurring
prior to such termination.
ARTICLE IX
Miscellaneous
9.1 Expenses. Except as otherwise specifically provided
herein, each party hereto shall bear its own expenses incurred in
connection with the preparation and execution of this Agreement
and the consummation of the Purchase.
9.2 Survival. The parties' respective representations and
warranties contained in this Agreement shall survive until two
(2) years after the Closing and thereafter neither party may
claim any damage for breach thereof, except for the
representations and warranties in Sections 3.1, 3.2, 3.15, 3.19,
4.1 and 4.2 hereof which shall survive until the termination of
the applicable statute of limitations.
9.3 Public Communications. Except as may be required by
applicable law or the rules of any applicable stock exchange,
neither the Seller or Smith Corona nor the Purchaser nor any of
their respective affiliates shall issue any press release or
other public communications relating to this Agreement or the
Purchase without the prior written consent of the other party
hereto. In the event that any such press release or other public
communication shall be required, the party required to issue such
release or communication shall consult in good faith with the
other party hereto with respect to the form and substance of such
release or communication prior to the public dissemination
thereof.
9.4 Knowledge. Whenever any representation or warranty of
the Seller or Smith Corona contained herein or in any other
document executed and delivered pursuant hereto is based upon the
knowledge of the Seller or Smith Corona, such knowledge shall be
deemed to be the best knowledge, information and belief of each
of the management personnel of the Seller listed on Schedule
5.7(f) as entitled to MRB bonuses and the employees of Smith
Corona holding the offices listed on Schedule 9.4 as of the
Closing Date, after due inquiry.
9.5 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in
writing and shall be delivered personally or sent by telecopier
or by a nationally recognized overnight courier, postage prepaid,
and shall be deemed to have been duly given when so delivered
personally or sent by telecopier, with receipt confirmed, or one
(1) business day after the date of deposit with such nationally
recognized overnight courier. All such notices, requests,
demands and other communications shall be addressed to the
respective parties at the addresses set forth below, or to such
other address or person as any party may designate by notice to
the other parties in accordance herewith:
If to the Seller: Histacount Corporation
c/o Smith Corona Corporations
65 Locust Avenue
New Canaan, CT 06840
Attn.: Mr. Thomas C. DeFazio
Telecopier No.: (203) 972-4226
If to Smith Corona: Smith Corona Corporation
65 Locust Avenue
New Canaan, CT 06840
Attn.: Mr. Thomas C. DeFazio
Telecopier No.: (203) 972-4226
In either case, Winthrop, Stimson, Putnam &
with a copy to: 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
If to the Rapidforms, Inc.
Purchaser or 301 Grove Road
Rapidforms: Thorofare, NJ 08086
Attn: James H. Bromley
Telecopier No.: (609) 384-1797
In either case, CSS Industries, Inc.
with a copy to: 1845 Walnut Street
Philadelphia, PA 19103
Attn: Stephen V. Dubin, Esq.
Telecopier No.: (215) 569-9979
and: Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103
Attn: David R. King
Steven M. Cohen
Telecopier No.: (215) 963-5299
9.6 Amendments; Waivers. This Agreement may not be changed
orally and no waiver of compliance with any provision or
condition hereof and no consent provided for herein shall be
effective unless evidenced by an instrument in writing duly
executed by the proper party. Any party may at any time waive
compliance by the other party with any covenant or condition
contained in this Agreement only by written instrument executed
by the party waiving such compliance. No such waiver, however,
shall be deemed to constitute the waiver of any such covenant or
condition in any other circumstance or the waiver of any other
covenant or condition.
9.7 Section Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of this
Agreement.
9.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument. It shall not be necessary in making proof of
this Agreement or any counterpart hereof to produce or account
for any other counterpart.
9.9 Assignment. Except as provided in the following
sentence, this Agreement may not be assigned prior to the
Closing, by operation of law or otherwise, and any attempt to do
so shall be void. This Agreement shall be binding upon and inure
to the benefit of successors and assigns of the parties hereto.
9.10 Bulk Sales. The parties hereto agree to waive
compliance with any bulk sales laws adopted by each of the
jurisdictions in which Purchased Assets are located to the
extent, if any, that such laws are applicable to the Purchase.
The Seller and Smith Corona shall indemnify the Purchaser from
and hold it harmless against, any liabilities, damages, costs and
expenses resulting from or arising out of (a) the parties'
failure to comply with any such laws in respect of the
transactions contemplated by this Agreement or (b) any action
brought or levy made as a result thereof, other than those
liabilities which have been expressly assumed by the Purchaser
pursuant to this Agreement.
9.11 Governing Law. This Agreement shall be governed by,
and construed and enforced in accordance with, the internal laws
of the State of New York.
9.12 Arbitration.
(a) Any dispute, claim or controversy arising out of
or relating to this Agreement, the agreements, instruments and
other documents delivered in connection herewith, or the
transactions contemplated hereby or thereby, shall be referred to
arbitration under the Expedited Procedures of the Commercial
Arbitration Rules of the American Arbitration Association, to the
extent such rules are not inconsistent with this Section 9.12.
Judgment upon the award of the arbitrator may be entered in any
court having jurisdiction thereof or such court may be asked to
judicially confirm the award and order its enforcement, as the
case may be. The demand for arbitration shall be made within a
reasonable time after the claim, dispute or other matter in
question has arisen, and in any event shall not be made after the
date when institution of legal or equitable proceedings, based on
such claim, dispute or other question, would be barred by the
applicable statute of limitations.
(b) Any arbitration award shall include interest
thereon at eight percent (8.0%) per annum from the date the
disputed claim was asserted to the date such arbitration award is
paid.
(c) The place of arbitration shall be New York, New
York.
9.13 Entire Agreement. This Agreement (including the
Schedules and Exhibits hereto) (a) constitutes the entire
agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof; provided, however, that the
Confidentiality Agreement shall remain in full force and effect
except as provided in Section 5.8 hereof; and (b) is not intended
to confer upon any other persons any rights or remedies
hereunder.
9.14 Severability. In case any provision in this Agreement
shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
HC DELAWARE ACQUISITION CORP.
By /s/James H. Bromley
_______________________________
Name: James H. Bromley
Title: Chairman and Chief Executive
Officer
RAPIDFORMS, INC.
By /s/James H. Bromley
_______________________________
Name: James H. Bromley
Title: President and Chief Executive
Officer
HISTACOUNT CORPORATION
By /s/Thomas C. DeFazio
_______________________________
Name: Thomas C. DeFazio
Title: Vice President
SMITH CORONA CORPORATION
By /s/Thomas C. DeFazio
_______________________________
Name: Thomas C. DeFazio
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
LIST OF SCHEDULES
1.2(e) Closing Statement Principles
3.1 Foreign Qualification
3.3 Unrelated Assets
3.4(a) Financial Statements
3.4(b) Financial Statement Exceptions
3.6 Certain Changes
3.10 Litigation
3.11 Compliance with Laws
3.12 Approvals and Consents
3.13 Intellectual Property
3.14 Material Agreements
3.15 Employee Benefit Plans
3.15(k) Preexisting Health Conditions
3.16 Labor Matters
3.18 Insurance
3.19 Environmental Matters
3.20 Governmental Licenses
3.23 Affiliated Transactions
5.7(a) Hired Employees
5.7(c) Vacation Benefits
5.7(f) MRB Agreements
5.7(g) Severance Obligations
9.4 Smith Corona Knowledge Parties
LIST OF EXHIBITS
6.1(c) Lease Amendment
6.1(d) Sublease
SCHEDULES TO ASSET PURCHASE AGREEMENT
Pursuant to Item 601(b)2 of Regulation S-K, the Schedules to
the preceding Asset Purchase Agreement have not been filed herewith.
Registrant agrees to furnish supplementally a copy of any omitted
schedule to the Commission upon request.
The following Schedules have been omitted (capitalized terms
used herein are defined in the Asset Purchase Agreement):
Schedule 1.2(e) Closing Statement Principles principles used by
the Purchaser in calculating the statement of the
net controllable assets of the Seller as of the
Closing Date.
Schedule 3.1 Foreign Qualifications nothing listed.
Schedule 3.3 Unrelated Assets all rights, properties and
assets which are not Related to the Business.
Schedule 3.4(a) Financial Statements financial statements of
Histacount Corporation for the periods ended June
30, 1992, 1993 and 1994.
Schedule 3.4(b) Financial Statement Exceptions non-GAAP
disclosures and recent accounting changes of
Histacount Corporation.
Schedule 3.6 Certain Changes nothing listed.
Schedule 3.9 Condition of Tangible Purchased Assets exception
to Seller's representation as to condition of
tangible purchased assets.
Schedule 3.10 Litigation actions, suits, proceedings, orders,
investigations or claims affecting Seller or the
Business.
Schedule 3.11 Compliance with Laws exceptions to Seller's
representation regarding compliance with laws.
Schedule 3.12 Approvals and Consents consents required by the
Seller to consummate the transactions contemplated
by the Asset Purchase Agreement.
Schedule 3.13 Intellectual Property intellectual property used
in connection with the Business.
Schedule 3.14 Material Agreements certain material contracts to
which the Seller was a party.
Schedule 3.15 Employee Benefit Plans all employee plans
sponsored or maintained by Seller on behalf of the
Seller's employees at the time of the closing of
the Asset Purchase Agreement.
Schedule 3.15(k) Pre-Existing Health Conditions Pre-existing
conditions of all Hired Employees and their
qualified Beneficiaries.
Schedule 3.16 Labor Matters exceptions to Seller's
representations regarding labor matters.
Schedule 3.18 Insurance list of current insurance policies of
Seller.
Schedule 3.19 Environmental Matters certain environmental
matters.
Schedule 3.20 Government Licenses governmental permits,
licenses, registrations and other authorizations
held by the Seller.
Schedule 3.23 Affiliated Transactions 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.
Schedule 5.7(a) Hired Employees employee status matters.
Schedule 5.7(c) Vacation Benefits all employee vacation benefit
plans maintained or contributed to on behalf of the
Seller's employees at the time of the closing of
the Asset Purchase Agreement.
Schedule 5.7(f) Management Retention Agreements list of all
management retention incentive bonus agreements
with Employees.
Schedule 5.7(g) Severance Obligations severance due each employee
if employee were terminated on the Closing Date.
Schedule 9.4 Smith Corona Knowledge Parties list of certain
officers of the Seller.
EXHIBIT 6.1(c)
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (the "Amendment") dated as of
November 4, 1994 by and between HM HOLDINGS, INC., a Delaware
corporation ("Landlord"), and HISTACOUNT CORPORATION, a New York
corporation ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into that certain lease
dated as of June 1, 1989 (the "Lease") for certain premises
located at 965 Walt Whitman Road, Melville, New York (the
"Demised Premises"); and
WHEREAS, Landlord and Tenant extended the term of the Lease
until September 30, 1993, as evidenced by a memorandum (the
"Memorandum of Extension") from G.L. Thompson to J. Raos dated
August 20, 1992; and
WHEREAS, Landlord and Tenant further extended the term of
the Lease until September 30, 1995 as evidenced by a letter (the
"Letter of Extension") from Thomas C. DeFazio to John Raos dated
August 11, 1994; and
WHEREAS, Landlord and Tenant desire to ratify and confirm
the extensions evidenced by the Memorandum of Extension and the
Letter of Extension and amend certain of the terms and conditions
of the Lease pursuant to the terms of this Amendment; and
WHEREAS, Tenant desires to sublet substantially all of the
Demised Premises to HC Delaware Acquisition Corp. (the
"Subtenant") and Landlord has agreed to consent to such
subletting.
NOW, THEREFORE, in consideration of One Dollar and the
premises and agreements hereinafter set forth and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. Each term which is capitalized in this Amendment
but not defined herein shall have the meaning given to such term
in the Lease.
2. Landlord and Tenant hereby ratify and confirm the
extensions of the Lease evidenced by the Memorandum of Extension
and the Letter of Extension and hereby further extend the term of
the Lease such that the Expiration Date of the Lease is November
16, 1995.
3. The Fixed Rent payable under the Lease is (a) until
September 30, 1995, $75,000.00 per annum, and (b) from October 1,
1995 until the Expiration Date the fair market rental value of
the Demised Premises.
4. In Section 2.1 (b) of the Lease delete the phrase
"six (6) months" and insert the phrase "ninety (90) days" in its
place.
5. Landlord hereby consents to the sublease of the
Demised Premises from Tenant to Subtenant on the terms set forth
in the Sublease dated the 4th day of November, 1994 between
Tenant and Subtenant executed contemporaneously herewith.
6. (a) Tenant agrees to indemnify, defend (with
counsel reasonably acceptable to Landlord and at Tenant's sole
cost), and hold Landlord free and harmless from and against all
losses, liabilities, obligations, penalties, claims, litigation,
demands, defenses, costs, judgments, suits, proceedings, damages
(including consequential damages), disbursements, or expenses of
any kind (including attorneys' and experts' fees and expenses and
fees and expenses incurred in investigating, defending, or
prosecuting any litigation, claim, or proceeding) that may at any
time be imposed upon, incurred by, or asserted or awarded against
Landlord in connection with or arising from or out of:
(i) any hazardous material on, in, under, or
affecting all or any portion of the Demised Premises which
relates to Tenant's or Subtenant's use and occupancy of the
Demised Premises;
(ii) any violation or claim of violation by Tenant
or Subtenant of any Environmental Law; or
(iii) the imposition of any lien for the recovery
of any costs for environmental cleanup or other response costs
relating to the release or threatened release by Tenant or
Subtenant of hazardous material.
(b) For purposes of this Amendment, "hazardous material"
means:
(i) "hazardous substances" or "toxic substances"
as those terms are defined by the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. #
9601, et seq., or the Hazardous Materials Transportation Act, 49
U.S.C. # 1802, and the applicable provisions of New York law, all
as amended to this date and as amended after this date;
(ii) "hazardous wastes," as that term is defined
by the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. #
6902, et seq., as amended to this date and as amended after this
date;
(iv) any pollutant, contaminant, or hazardous,
dangerous, or toxic chemical, material, or substance within the
meaning of any other applicable federal, state, or local law,
regulation, ordinance, or requirement (including consent decrees
and administrative orders) relating to or imposing liability or
standards of conduct concerning any hazardous, toxic, or
dangerous waste substance or material, all as amended to this
date or as amended after this date;
(v) crude oil or any fraction of it that is liquid
at standard conditions of temperature and pressure (60 degrees
Fahrenheit and 14.7 pounds per square inch absolute);
(vi) any radioactive material, including any
source, special nuclear, or by-product material as defined at 42
U.S.C. # 2011, et seq., as amended to this date or as amended
after this date;
(vii) asbestos in any form or condition; and
(viii) polychlorinated biphenyls (PCB's) or
substances or compounds containing PCB's.
(c) As used above, Environmental Laws means the laws,
codes, ordinances, regulations and statutes referred to in
Section 6 (b) above.
7. Except as modified by this Amendment, all of the
other terms, covenants and conditions of the Lease remain
unmodified and in full force and effect.
8. This Amendment shall be governed by and construed
in accordance with the laws of the State of New York.
9. This Amendment may be executed in any number of
counterparts. Each counterpart shall be deemed an original and
together all such counterparts shall be deemed one original.
IN WITNESS WHEREOF, the parties hereto have hereunto
set their hand to this Amendment on the date first written above.
LANDLORD:
HM HOLDINGS, INC.
By /s/ George H. MacLean
___________________________
Name: George H. MacLean
Title:
TENANT:
HISTACOUNT CORPORATION
By /s/ Thomas C. DeFazio
___________________________
Name: Thomas C. DeFazio
Title: Vice President, Histacount
Corporation
EXHIBIT 6.1(d)
SUBLEASE
BETWEEN
HISTACOUNT CORPORATION,
Landlord
AND
HC DELAWARE ACQUISITION CORP.,
Tenant
Dated: November 4, 1994
Premises: 965 Walt Whitman Road
Melville, New York
___________________________________________________________________
<PAGE>
TABLE OF CONTENTS
ARTICLE HEADING PAGE
ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 Demise, Term and Rent . . . . . . . . . . . . . . . . 3
ARTICLE 3 Use . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 4 Subordination . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 5 Assignment and Subletting . . . . . . . . . . . . . . 5
ARTICLE 6 Estoppel Certificate. . . . . . . . . . . . . . . . . 6
ARTICLE 7 Requirements of Law . . . . . . . . . . . . . . . . . 6
ARTICLE 8 Property Loss and Indemnification . . . . . . . . . . 10
ARTICLE 9 Destruction - Fire and Other Casualty . . . . . . . . 11
ARTICLE 10 Insurance . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 11 Condemnation. . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 12 Repairs . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 13 Alterations . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 14 Utilities . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 15 Broker. . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 16 Default -- Conditions of Limitation . . . . . . . . . 15
ARTICLE 17 Re-Entry by Landlord. . . . . . . . . . . . . . . . . 16
ARTICLE 18 Damages . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 19 Surrender . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 20 Access to Demised Premises. . . . . . . . . . . . . . 21
ARTICLE 21 Miscellaneous . . . . . . . . . . . . . . . . . . . . 21
EXHIBITS
Exhibit 2.5 Master Lease
SUBLEASE
SUBLEASE (this "Sublease") dated the 4th day of November, 1994
between HISTACOUNT CORPORATION, having an address at c/o Smith Corona
Corporation, 65 Locust Avenue, New Canaan, Connecticut 06840 (herein called
"Landlord"), and HC DELAWARE ACQUISITION CORP., a Delaware corporation having
an address at c/o Rapidforms, Inc., 301 Grove Road, Thorofare, New Jersey
08086 (herein called "Tenant").
W I T N E S S E T H :
WHEREAS, Landlord is the lessee under a certain lease by and
between HM Holdings, Inc., as lessor (the "Master Landlord"), and Landlord
dated as of June 1, 1989, as amended by a certain Amendment to Lease dated as
of November 4, 1994 (the "Master Lease"), for a certain tract or parcel of
land situated in the City of Melville, Suffolk County, New York, containing
approximately 7.2 acres and known as 965 Walt Whitman Road, together with an
approximately 100,000 square foot one story industrial building (with a
partial second floor) and certain other improvements located thereon (the
"Master Lease Premises"); and
WHEREAS, Landlord, as Seller, and Tenant, as Purchaser, are
parties to a certain Asset Purchase Agreement of even date herewith (the
"Asset Purchase Agreement") with respect to certain assets of Landlord used in
connection with Landlord's production and direct marketing of customized, high
quality stationary, printed promotional materials, office forms and office
personal use products.
WHEREAS, Landlord desires to sublet a portion of the Master Lease
Premises to Tenant and Tenant desires to hire such portion of the Master Lease
Premises from Landlord pursuant to the terms, covenants and conditions of this
Sublease.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
ARTICLE 1
Definitions
1.1 As used in this Sublease, the following terms have the
meanings set forth below:
Applicable Law: All laws, statutes and ordinances (including
building codes and zoning ordinances) and the orders, rules, regulations,
directives and requirements of all federal, state, county, and city
departments, bureaus, boards, agencies, offices, commissions and other
subdivisions thereof, or of any official thereof, or of any other
governmental, public or quasi-public authority, whether now or hereafter in
force, which are or become applicable to the Demised Premises or any part
thereof or the sidewalks, curbs or areas adjacent thereto.
Asset Purchase Agreement: shall mean that certain Asset Purchase
Agreement of even date herewith by and among Tenant, Rapidforms, Inc.,
Landlord and Smith Corona Corporation.
Commencement Date: As defined in Section 2.2.
Demised Premises: Shall mean the Master Lease Premises, excepting
and excluding thereout and therefrom (a) all underground storage tanks located
on, in or under the Master Lease Premises, including, without limitation, a
1,050 gallon diesel fuel underground storage tank located outside of the
northeastern corner of the building, (b) all storm water collection and
management systems located in or on the Master Lease Premises, including,
without limitation, two drainage sumps located along the eastern and western
boundaries of the Master Lease Premises, and (c) the on-site industrial waste
leaching system consisting of leaching pools located along the eastern and
western sides of the Master Lease Premises (collectively, "Excluded
Facilities"). Any other provision of this Sublease to the contrary
notwithstanding, Landlord, and not Tenant, shall be solely responsible for
ownership and operation of the Excluded Facilities.
Environmental Condition: As defined in Section 1.2(h) of the
Asset Purchase Agreement.
Environmental Law(s): As defined in Section 1.2(i) of the Asset
Purchase Agreement.
Expiration Date: As defined in Section 2.2.
Force Majeure: Shall mean any and all causes beyond the
reasonable control of Landlord or Tenant, as the case may be, including delays
caused by the other party hereto, governmental restrictions, regulations or
controls (including energy and water conservation measures), labor disputes,
accidents, mechanical breakdown, shortages or inability to obtain labor, fuel,
steam, water, electricity or materials, acts of God, enemy action, civil
commotion, fire or other casualty or the process of settling insurance claims,
but shall not include lack of funds or financial inability to perform.
Hazardous Substance: As defined in Section 1.2(m) of the Asset
Purchase Agreement.
Insurance Requirements: All present and future requirements of
any insurance policy covering or applicable to all or any part of the Demised
Premises or the use thereof, all requirements of any administrative body
governing the underwriting standards of insurance companies issuing policies
within the State of New York and having jurisdiction over all or any portion
of the Demised Premises.
Landlord's Agents: The officers, employees, servants,
contractors, licensees, invitees and agents of Landlord.
Material Adverse Effect: As defined in Section 3.1 of the Asset
Purchase Agreement.
Person: The term "person" shall mean any natural person or
persons, a partnership, a corporation, and any other form of business or legal
association or entity.
Rent: As defined in Section 2.3.
Tenant: The Tenant herein named or any assignee or successor in
interest (immediate or remote) of the Tenant herein named, which at the time
in question is the owner of the Tenant's estate and interest granted by this
Sublease; but the foregoing shall not be construed to permit any assignment of
this Sublease or to relieve the Tenant herein named or any assignee or other
successor in interest (whether immediate or remote) of the Tenant herein named
from the full and prompt payment, performance, and observance of the
covenants, obligations and conditions to be paid, performed and observed by
Tenant under this Sublease.
Tenant's Agents: The officers, employees, servants, contractors,
licensees, concessionaires, invitees and agents of Tenant.
Tenant's Property: The furniture and furnishings of Tenant and
the following which are furnished and installed by or for Tenant without
expense to Landlord and without any allowance or credit to Tenant: movable
partitions, chandeliers and other hanging, standing or projecting special
lighting fixtures, special cabinet work, other business and trade fixtures,
business machines, business equipment and communications equipment, whether or
not attached to or built into the Demised Premises and which can be removed
without permanent structural damage to, or permanent defacement of, the
Demised Premises.
Term: As defined in Section 2.2.
ARTICLE 2
Demise, Term and Rent
2.1 Demise. Landlord hereby subleases to Tenant, and Tenant
hereby hires from Landlord, upon and subject to the terms, covenants,
provisions and conditions of this Sublease, the Demised Premises.
2.2 Term. (i) The term of this Sublease (the "Term") (a) shall
commence on the date hereof (the "Commencement Date") and (b) shall terminate
(the "Expiration Date") at midnight on November 15, 1995.
(ii) Notwithstanding the foregoing, Tenant shall have
the right to terminate this Sublease by giving written notice
thereof to Landlord, such termination to be effective on the
ninetieth (90th) day following the date on which Tenant's notice
of termination is deemed to have been given pursuant to Section
21.2 hereof.
2.3 Rent. The rent (the "Rent") reserved under this Sublease,
shall be payable throughout the Term commencing on the Commencement Date and
shall be in the amount of Eighteen Thousand and 00/100 Dollars ($18,000.00)
per month. Rent shall be payable in equal monthly installments in the amount
set forth above, in advance, on the first day of each and every calendar month
during the Term. Rent shall be paid in lawful money of the United States to
Landlord at the address first set forth above, or to such other person and/or
at such other place as Landlord may designate by notice to Tenant. Rent for
partial months during the Term shall be pro rated on a daily basis at the rate
of Five Hundred Ninety-One and 78/100 Dollars ($591.78) per day.
2.4 No Setoff. Tenant shall pay Rent promptly when due without
notice or demand therefor and without any abatement, deduction or setoff for
any reason whatsoever, except as may be expressly provided in this Sublease.
2.5 Landlord Covenants Regarding Master Lease. Landlord
represents and warrants to Tenant that: (a) a true, correct and complete copy
of the Master Lease, as amended, is attached as Exhibit 2.5 hereto, (b) the
Master Lease constitutes and comprises the entire understanding and agreement
of Master Landlord and Landlord with respect to the Demised Premises, and (c)
Landlord is not in default for failure to pay any monetary obligation under
the Master Lease or any nonmonetary obligation under the Master Lease which
would have a Material Adverse Effect, and, to the knowledge of Landlord,
Master Landlord is not in default under the Master Lease. Landlord shall pay
to Master Landlord promptly when due all Fixed Rent and Additional Rent under
the Master Lease and, to the extent not an obligation of Tenant hereunder,
perform when due all of the obligations of "Tenant" under the Master Lease,
and, provided Tenant has promptly paid the Rent to Landlord in accordance with
its obligations under this Sublease, any failure by Landlord to pay to Master
Landlord promptly when due all Fixed Rent and Additional Rent and to perform
all such obligations of "Tenant" under the Master Lease (and the continuation
of such failure beyond any applicable notice and cure periods expressed in the
Master Lease) shall constitute a material default by Landlord of its
obligations under this Sublease. Where in the Master Lease there are duties
and obligations owed by Master Landlord to Landlord that are necessary for the
proper use and enjoyment of the Demised Premises by Tenant under this
Sublease, Landlord shall use commercially reasonable efforts to obtain the
performance of such duties and obligations by the Master Landlord in favor of
Tenant.
<PAGE>
ARTICLE 3
Use
3.1 Tenant's Business. Tenant shall use and occupy the Demised
Premises for the conduct of Tenant's business and related purposes only and
for no other purpose.
3.2 Permits. If any governmental license or permit, other than a
Certificate of Occupancy, shall be required for the proper and lawful conduct
of Tenant's business in the Demised Premises, or any part thereof, Tenant, at
its expense, shall maintain such license or permit. Tenant shall at all times
comply with the terms and conditions of each such license or permit.
3.3 Restrictions. Tenant shall not at any time use or occupy, or
suffer or permit anyone to use or occupy, the Demised Premises, or do anything
to be done in the Demised Premises, in any manner (a) which violates the
Certificate of Occupancy for the Demised Premises; or (b) which constitutes a
violation of Applicable Law, provided that Tenant shall not be in default of
its obligations expressed in this Section 3.3 unless and until Tenant has
received notice of a violation and shall have failed to remedy such violation
within thirty (30) days thereafter or, in the case of a violation that cannot
with due diligence be remedied within a period of thirty (30) days and the
continuance of which for the period required for cure will not subject
Landlord to criminal penalty or to prosecution for a crime or foreclosure of
any superior mortgage, such longer time (not to exceed ninety (90) days in the
aggregate) reasonably required to remedy such violation.
ARTICLE 4
Subordination
4.1 Superior Master Lease. Tenant agrees that this Sublease is
subordinate to the Master Lease, subject, nevertheless, to the terms and
conditions of that certain Non-Disturbance and Attornment Agreement of even
date herewith between Master Landlord and Tenant.
4.2 No Prior Mortgages. Landlord represents and warrants to
Tenant that there are no existing mortgages, deeds of trust or similar liens
(collectively, "Mortgages") presently encumbering the Demised Premises or any
portion thereof and there are no Mortgages encumbering the estates and
interests of Master Landlord or Landlord therein.
ARTICLE 5
Assignment and Subletting
5.1 Consent Required. Tenant covenants and agrees that neither
this Sublease, nor the estate hereby granted, shall be assigned, mortgaged,
pledged, encumbered or otherwise transferred by Tenant, the Tenant's legal
representatives, or successors in interest by operation of law or otherwise,
and that neither the Demised Premises nor any part thereof shall be sublet, or
offered or advertised for subletting, without the prior written consent of
Landlord and Master Landlord, which consent shall not be unreasonably withheld
or delayed.
ARTICLE 6
Estoppel Certificate
6.1 Delivery of Certificate. Tenant shall, without charge at any
time and from time to time, within ten (10) days after request by Landlord or
Master Landlord, certify by written instrument duly acknowledged and delivered
to any proposed or actual mortgagee, assignee of any mortgage or purchaser, or
any other person, firm or corporation specified by Landlord or Master
Landlord:
(a) That this Sublease is unmodified and in full force and effect
(or, if there has been any modification or termination of this Sublease, the
nature thereof);
(b) Whether or not, to the best of Tenant's knowledge, there are
then existing any set-offs, or defenses against the enforcement of any of the
agreements, terms, covenants or conditions hereof upon the part of Tenant to
be performed or complied with (and, if so specifying the same); and
(c) The dates, if any, to which the Rent has been paid in
advance.
ARTICLE 7
Requirements of Law
7.1 Compliance. Tenant, at Tenant's sole cost and expense, shall
at all times promptly comply with all Applicable Laws, including, but not
limited to, Environmental Laws, and Insurance Requirements (collectively,
"Regulations") with respect to Tenant's use or occupancy of the Demised
Premises, except that (a) nothing herein shall require Tenant to make any
repairs or alterations to the Demised Premises (structural or non-structural)
unless Tenant has by its change in manner of use of the Demised Premises or
change in method of operation therein from that of Landlord (as prior operator
of the Demised Premises) caused to exist a violation of a Regulation,
including, but not limited to, Environmental Laws, that was not a violation of
such Regulation, including, but not limited to, Environmental Laws, when
Landlord was the operator of the Demised Premises, and (b) Landlord, and not
Tenant, shall in all events remain liable for (i) the Excluded Facilities
(except to the extent caused by the unlawful acts or omissions of Tenant),
(ii) Environmental Conditions existing on the Commencement Date of this
Sublease and (iii) any other events, conditions, circumstances, activities,
practices, incidents or actions to the extent the same exists on the
Commencement Date of this Sublease that impede or prevent compliance by Tenant
with any Regulation, including, but not limited to, Environmental Laws, or
which would give rise to any criminal or civil liability, including strict
liability, under any Regulation, including, but not limited to, Environmental
Laws.
7.2 Environmental Provisions. (a) Subject to the limitations
expressed in Section 7.1, throughout the Term, Tenant shall comply with and
shall maintain the Demised Premises in compliance with all applicable
Environmental Laws, except that nothing herein shall require Tenant to comply
with Environmental Laws arising out of or resulting from either (i) Landlord's
act, omission, fault or neglect or (ii) Landlord's liability arising under
Environmental Laws.
(b) Subject to the limitations expressed in Section 7.1, Tenant
will not permit to occur any release, generation, manufacture, storage,
treatment, transportation, or disposal of Hazardous Substance on, in, under,
or from the Demised Premises, except in accordance with all Environmental
Laws. Tenant shall not, and shall not cause either by its affirmative acts or
its omissions, the release of any Hazardous Substance on, in, under or from
the Excluded Facilities, except in accordance with all Environmental Laws.
(c) Tenant will promptly notify Landlord and Master Landlord and
provide copies promptly following receipt of all written complaints, claims,
citations, demands, inquiries, reports, or notices relating to the condition
of the Demised Premises or compliance with Environmental Laws. Subject to the
limitations expressed in Section 7.1, Tenant will promptly cure any of those
actions and proceedings relating to Tenant's use and occupancy of the Demised
Premises to the satisfaction of any regulatory authorities or court of
competent jurisdiction. Subject to the limitations expressed in Section 7.1,
Tenant will keep the Demised Premises free of any lien imposed pursuant to any
Environmental Laws relating to Tenant's use and occupancy of the Demised
Premises.
(d) Landlord will have the right, at Landlord's cost and
expense, at all reasonable times and from time to time to conduct
environmental audits of the Demised Premises, and Tenant will cooperate in the
conduct of those audits. The audits will be conducted by a consultant of
Landlord's choosing, and if any Hazardous Substance to the extent not present
on the date hereof is detected, except to the extent such Hazardous Substance
is present in accordance with all Environmental Laws, or if a violation by
Tenant of any of the warranties, representations or covenants contained in
this Section 7.2 is discovered, the fees and expenses of such consultant will
be borne by Tenant and will be paid as additional rent under this Sublease on
demand by Landlord to the extent such fees and expenses relate to a violation
by Tenant of this Section 7.2.
(e) Subject to the limitations expressed in Section 7.1, if
Tenant fails (after receipt of notice and a reasonable opportunity to cure) to
comply with any of the foregoing warranties, representations, and covenants,
Landlord or Master Landlord may cause the removal (or other cleanup acceptable
to Landlord) of any Hazardous Substance from the Demised Premises, except to
the extent such Hazardous Substance is present in accordance with all
Environmental Laws. Subject to the limitations expressed in Section 7.1, the
costs of Hazardous Substance removal and any other cleanup (including
transportation and storage costs) will be additional rent under this Sublease,
whether or not a court has ordered the cleanup, and those costs will become
due and payable on demand by Landlord. Tenant will give Master Landlord,
Landlord and Landlord's Agents access to the Demised Premises to remove or
otherwise clean up any Hazardous Substance, except to the extent such
Hazardous Substance is present in accordance with all Environmental Laws.
Except as to any Hazardous Substance not relating to Tenant's use and
occupancy of the Demised Premises, Landlord, however, has no affirmative
obligation to remove or otherwise clean up any Hazardous Substance, and this
Sublease will not be construed as creating any such obligation.
(f) Tenant agrees to indemnify, defend (with counsel reasonably
acceptable to Landlord and at Tenant's sole cost), and hold Master Landlord,
Landlord and Landlord's Agents free and harmless from and against all losses,
liabilities, obligations, penalties, claims, litigation, demands, defenses,
costs, judgments, suits, proceedings, damages (including consequential
damages), disbursements, or expenses of any kind (including attorneys' and
experts' fees and expenses and fees and expenses incurred in investigating,
defending, or prosecuting any litigation, claim, or proceeding) that may at
any time be imposed upon, incurred by, or asserted or awarded against Landlord
or any of them to the extent caused by a violation by Tenant of any of the
warranties, representations, or covenants contained in this Section 7.2.
This indemnification is the personal obligation of Tenant and will survive
termination of this Sublease.
(g) For purposes of this Sublease, "Hazardous Substance" shall
include, without limitation, the following:
(1) "hazardous substances" or "toxic substances" as those
terms are defined by the Comprehensive Environmental Response, Compensation,
and Liability Act (CERCLA), 42 U.S.C. # 9601, et seq., or the Hazardous
Materials Transportation Act, 49 U.S.C. # 1802, and the applicable provisions
of New York law, all as amended to this date and as amended after this date;
(2) "hazardous wastes," as that term is defined by the
Resource Conservation and Recovery Act (RCRA), 42 U.S.C. # 6902, et seq., as
amended to this date and as amended after this date;
(3) any pollutant, contaminant, or hazardous, dangerous,
or toxic chemical, material, or substance within the meaning of any other
applicable federal, state, or local law, regulation, ordinance, or requirement
(including consent decrees and administrative orders) relating to or imposing
liability or standards of conduct concerning any hazardous, toxic, or
dangerous waste substance or material, all as amended to this date or as
amended after this date;
(4) crude oil or any fraction of it that is liquid at
standard conditions of temperature and pressure (60 degrees Fahrenheit and
14.7 pounds per square inch absolute);
(5) any radioactive material, including any source,
special nuclear, or by-product material as defined at 42 U.S.C. # 2011, et
seq., as amended to this date or as amended after this date;
(6) asbestos in any form or condition; and
(7) polychlorinated biphenyls (PCB's) or substances or
compounds containing PCB's.
7.3 Landlord's Representations. (a) Landlord hereby
represents and warrants to Tenant that the representations and warranties
contained in Section 3.19 of the Asset Purchase Agreement, to the extent they
relate to the Demised Premises, are true and correct as of the date hereof and
are incorporated herein by reference.
(b) Landlord agrees to indemnify, defend (with counsel
reasonably acceptable to Tenant and at Landlord's sole cost), and hold Tenant
and Tenant's Agents free and harmless from and against all losses,
liabilities, obligations, penalties, claims, litigation, demands, defenses,
costs, judgments, suits, proceedings, damages (including consequential
damages), disbursements, or expenses of any kind (including attorneys' and
experts' fees and expenses and fees and expenses incurred in investigating,
defending, or prosecuting any litigation, claim, or proceeding) that may at
any time be imposed upon, incurred by, or asserted or awarded against Tenant
or any of them resulting from:
(1) any misrepresentation, inaccuracy, or breach of any
warranty, covenant, or agreement contained or referred to in this Section 7.3
(without consideration of any materiality standard set forth therein);
(2) any violation or claim of violation by Landlord of any
Environmental Law or any other events, conditions, circumstances, activities,
practices, incidents or actions existing on the Commencement Date of this
Sublease that violates, or may during the term of the Sublease violate, any
Regulation, including, without limitation, Environmental Laws, that give rise
to any criminal or civil liability, including strict liability, thereunder;
(3) any liability or obligation in respect of any claim,
regardless of when made or asserted, arising out of the handling, storage,
disposal or treatment, or arranging with a transporter for handling, storage,
disposal or treatment, prior to the Commencement Date of Hazardous Substances;
(4) any liability or obligation in respect of any claim,
regardless when made or asserted, arising out of any Environmental Condition
on the Demised Premises prior to or on the Commencement Date including without
limitation the following: (i) any and all transformers on the Demised
Premises which are regulated under EPA's PCB Regulations, 40 CFR, Part 761;
(ii) any and all asbestos or asbestos-containing materials present on the
Demised Premises; (iii) any and all underground storage tanks present on the
Demised Premises; (iv) any discharges of non-sanitary waste to the on-site
septic system present on the Demised Premises; (v) any and all pools or ponds
used or formerly used for the storage or disposal of wastewaters including
without limitation leaching ponds or pools on the Demised Premises; and (vi)
any and all Environmental Conditions disclosed on Schedule 3.19 to the Asset
Purchase Agreement;
(5) the Excluded Facilities, except to the extent caused
by the unlawful acts or omissions of Tenant; or
(6) the imposition of any lien for the recovery of any
costs for environmental cleanup or other response costs relating to the
release by Landlord of Hazardous Substance.
This indemnification is the personal obligation of Landlord and will survive
termination of this Sublease.
7.4 Claims for Indemnification. Any claim or demand for
indemnification by Landlord or Tenant under this Lease shall be asserted and
resolved in the manner expressed in Section 7.3 of the Asset Purchase
Agreement.
ARTICLE 8
Property Loss and Indemnification
8.1 Limitation of Liability. Except as otherwise provided
herein, Landlord or Landlord's Agents shall not be liable for any damage to
property of Tenant, nor for loss of or damage to any property of Tenant by
theft or otherwise, nor for injury or damage to persons or property resulting
from any cause of whatsoever nature, unless caused by Landlord or Landlord's
Agents, nor shall Landlord or Landlord's Agents be liable for any such damage
caused by other tenants or persons in, upon or about the Demised Premises or
caused by operations in construction of any private, public or quasi-public
work.
8.2 Tenant's Indemnification. Subject to the limitations
expressed in Section 7.1, Tenant shall indemnify and hold harmless Master
Landlord, Landlord and Landlord's Agents from and against any and all claims
arising from or in connection with (a) the conduct or management by Tenant of
the Demised Premises or of any business therein, or any work or thing
whatsoever done, or any condition created by Tenant in or about the Demised
Premises during the Term; (b) any act, omission or negligence of Tenant,
Tenant's Agents or any subtenants or licensees or their partners, officers,
agents, employees or contractors; and (c) any breach or default by Tenant in
the full and prompt payment and performance of Tenant's obligations under this
Sublease; together with all costs, expenses and liabilities incurred in or in
connection with each such claim or action or proceeding brought thereon,
including, without limitation, all attorneys' fees and expenses; provided that
nothing herein shall impose on Tenant an indemnity obligation with respect to
any act, omission or negligence of Master Landlord, Landlord or Landlord's
Agents or with respect to any matter for which Landlord has agreed to
indemnify Tenant pursuant to Section 7.3. In case any action or proceeding be
brought against Landlord or Landlord's Agents by reason of any such claim,
Tenant, upon notice from Landlord, shall defend such action or proceeding (by
counsel reasonably satisfactory to Landlord).
ARTICLE 9
Destruction - Fire and Other Casualty
9.1 Repairs. If the Demised Premises or any part thereof shall
be damaged by fire or other casualty, Tenant, promptly after Tenant learns of
such casualty, shall give notice thereof to Landlord and this Sublease shall
continue in full force and effect except as hereinafter set forth. If the
Demised Premises are totally damaged or rendered wholly unusable by fire or
other casualty then this Sublease shall cease and terminate as of the date of
such casualty and the Rent due under this Sublease shall be apportioned up to
the date of such casualty. If the Demised Premises are partially damaged by
fire or other casualty and, as a result thereof, (a) Tenant shall be deprived
of the use and occupancy of any material portion of the Demised Premises, (b)
Tenant shall be prevented from conducting its business in the Demised Premises
for more than three (3) consecutive days or (c) the damage shall have a
Material Adverse Effect, in the reasonable judgment of Tenant, on the business
operations of Tenant at the Demised Premises, Tenant shall have the right to
terminate this Sublease by written notice to Landlord given not later than the
twentieth (20th) day following the date of the casualty. If this Sublease is
not so terminated, Landlord expeditiously shall repair and restore the Demised
Premises (but not Tenant's Property or any other property or effects of
Tenant) as nearly as possible to the same condition as existed immediately
prior to the occurrence of the casualty, except that Landlord shall have the
right not to restore the Demised Premises and to terminate this Sublease by
written notice to Tenant given not later than the thirtieth (30th) day
following the occurrence of the casualty if (a) Landlord is prohibited under
the terms of the Master Lease from repairing and restoring the Demised
Premises or (b) in the reasonable judgment of Landlord repairing and restoring
the Demised Premises would take more than sixty (60) days after commencement
thereof. In any event, Rent shall abate in proportion to the area of the
Demised Premises that Tenant is not able to occupy and utilize for Tenant's
normal business operations from the date of the casualty to the date of
restoration of such area of the Demised Premises or, if such restoration is
not made, the date of termination of this Sublease
9.2 Tenant's Property. Tenant acknowledges that Landlord will
not carry insurance on Tenant's Property or on Tenant's business records or
other property of Tenant or Tenant's Agents, and Tenant agrees that Landlord
will not be obligated to repair any damage thereto or to replace the same.
ARTICLE 10
Insurance
10.1 Liability Insurance. Tenant (i) shall provide after taking
possession of the Demised Premises, and (ii) shall keep in force during the
Term, a comprehensive general liability policy insuring Tenant, as named
insured, and Landlord and Master Landlord, as additional insureds, against
liability occasioned by accident on or about the Demised Premises, or
appurtenances thereof. Such policy is to be written by good and solvent
insurance companies authorized to transact business in the State of New York
reasonably satisfactory to Landlord, and the limits of liability thereunder
shall not be less than One Million and 00/100 Dollars ($1,000,000.00) in
respect of any one person and One Million and 00/100 Dollars ($1,000,000.00)
in respect of any one accident and in respect of property damage in an amount
equal to One Million and 00/100 Dollars ($1,000,000.00). Upon the request of
Landlord, Tenant shall deliver a certificate of such insurance to Landlord.
10.2 Fire and Casualty Insurance. Landlord, at Landlord's sole
cost and expense, shall keep in force during the Term a fire and extended risk
casualty insurance policy insuring the Demised Premises (but excluding
Tenant's Property) in the amount of the full replacement value thereof (as
defined in the Master Lease).
10.3 Tenant's Property. Tenant, at Tenant's sole cost and
expense, shall keep in force during the Term with respect to Tenant's Property
such insurance against loss or damage by fire and such other risks and hazards
as Tenant deems necessary.
10.4 Waiver of Subrogation. Landlord and Tenant hereby waive all
rights of recovery and causes of action that either of them now or hereafter
may have against the other for any damage to the Demised Premises, Tenant's
Property and any other property of Landlord and Tenant to the extent caused by
the perils insured against or required to be insured against pursuant to this
Sublease, whether or not such damage was caused, in whole or in part, by the
negligence or wilful misconduct of the Landlord or Tenant or by persons for
whom they are legally responsible.
ARTICLE 11
Condemnation
11.1 Total Taking. If all or substantially all of the Demised
Premises shall be lawfully condemned or taken in any manner for any public or
quasi-public use, this Sublease shall cease and terminate as of the date of
the vesting of title in the condemnor.
11.2 Partial Taking. If less than all of the Demised Premises
shall be so condemned or taken, but if such taking shall substantially
adversely affect in Tenant's reasonable judgment Tenant's use of the Demised
Premises or the means of access thereto, then Tenant shall have the right to
terminate this Sublease and the term and estate hereby granted by the delivery
of written notice to Landlord within thirty (30) days following the date of
actual vesting of title in the condemnor. Such termination shall take effect
as of the date of actual vesting of title in the condemnor or thirty (30) days
after the giving of such notice of termination, whichever is later. If Tenant
shall not so elect to terminate, this Sublease shall be and remain unaffected
by such condemnation or taking.
11.3 Award. In the event of the termination of this Sublease in
accordance with this Article 11, Rent shall be prorated and paid to the
effective date of the termination. Tenant, whether this Sublease be canceled
pursuant to this Article 11, shall not be entitled to claim or receive any
part of any award or compensation which may be issued or rendered in any such
condemnation proceeding or as a result of such condemnation or taking, and
shall not be entitled to claim or receive any damages against Landlord,
whether the same be for the value of the unexpired term of this Sublease or
otherwise.
ARTICLE 12
Repairs
12.1 Landlord's Repairs. Subject to the limitations expressed in
Section 12.2, Landlord shall keep the Demised Premises in good condition and
repair and make all repairs (including, without limitation, all leaks in the
roof on the Demised Premises and all other structural repairs) and
replacements and perform all maintenance necessary to maintain the Demised
Premises in good condition and repair as required by the Master Lease, except
that Landlord shall not be required to make, or to reimburse Tenant for,
ordinary maintenance obligations which do not exceed $500 for any such
obligation. If Landlord fails after thirty (30) days' notice to proceed with
due diligence to make repairs required to be made by Landlord, the same may be
made by Tenant at the expense of Landlord and Landlord shall promptly
reimburse Tenant for the reasonable, out-of-pocket expenses thereof incurred
by Tenant and evidenced by a receipt or invoice therefor, or, if not
reimbursed within ten (10) days of submission, collectible by setoff against
Rent otherwise payable by Tenant to Landlord.
12.2 Tenant's Repairs. Tenant shall take good care of the
Demised Premises and the fixtures and appurtenances therein (including,
without limitation, all snow removal, garbage collection and landscaping
maintenance) and, at Tenant's sole cost and expense, repair all damage or
injury to the Demised Premises to the extent caused by the following:
(a) the installation, use or operation of Tenant's Property in
the Demised Premises;
(b) the moving of Tenant's Property in or out of the Demised
Premises; or
(c) the act, omission, misuse or neglect of Tenant, Tenant's
Agents or any subtenant.
All the aforesaid repairs shall be of good quality or class and workmanship.
If Tenant fails after thirty (30) days' notice to proceed with due diligence
to make repairs required to be made by Tenant, the same may be made by
Landlord at the expense of Tenant and the reasonable, out-of-pocket expenses
thereof incurred by Landlord shall be collectible as additional rent after
rendition of a bill or statement therefor.
12.3 Abatement. Neither (i) the making by Landlord, Tenant or
others of any decorations, repairs, alterations, additions or improvements in
or to the Demised Premises, nor (ii) the failure of Landlord or others to make
any such decorations, repairs, alterations, additions or improvements, nor
(iii) any damage to the Demised Premises or to the property of Tenant, nor any
injury to any persons, caused by other tenants or persons in the Demised
Premises, or by operations in the construction of any private, public or
quasi-public work, or by any other cause, nor (iv) any latent defect in the
Demised Premises, nor (v) any inconvenience or annoyance to Tenant or injury
to or interruption of Tenant's business by reason of any of the events or
occurrences referred to in the foregoing subdivisions (i) through (iv), shall
constitute an actual or constructive eviction, in whole or in part, or, except
as provided in Section 12.2, entitle Tenant to any abatement or diminution of
rent, or relieve Tenant from any of its obligations under this Sublease, or
impose any liability upon Mater Landlord, Landlord, other than such liability
as may be imposed upon Landlord by law for Landlord's negligence or the
negligence of Landlord's Agents or for the breach by Landlord of any express
covenant of this Sublease on Landlord's part to be performed.
The provisions of this Article 12 with respect to the making of
repairs shall not apply in the case of fire or other casualty which are dealt
with in Article 9.
ARTICLE 13
Alterations
13.1 Requirements. Tenant shall not make any structural
alterations to the Demised Premises without the prior written consent of
Landlord, which consent may be granted or withheld in Landlord's sole
discretion. All improvements installed by Tenant which are affixed to the
Demised Premises, including, without limitation, partitions, tile floors, hung
ceilings, power lines, heating and air-conditioning ducts, plumbing fixtures,
water pipes and gas lines shall become upon their installation the property of
Landlord and shall not be removed at the end of the Term by Tenant. The
location of any such improvement shall be approved by Landlord, which approval
shall not be unreasonably withheld or delayed.
Tenant may install such other machinery, equipment and other
property as it may need to carry out its operation in the Demised Premises
and, except as above provided, shall remove the same upon the termination of
this Sublease. All such machinery equipment and other property, except as
herein otherwise specifically provided, shall be and remain the sole property
of Tenant, whether or not the same is attached to or appurtenant to the
Demised Premises. In the event that the installation or removal of any such
machinery or equipment damages the Demised Premises, Tenant shall, at its sole
cost and expense, immediately repair the same.
ARTICLE 14
Utilities
14.1 Utilities. Tenant shall pay the appropriate suppliers for
all water, gas, electricity, light, heat, telephone, power, and other
utilities and communications services used by Tenant on the Demised Premises
during the Term, whether or not the services are billed directly to Tenant.
14.2 Landlord shall have no liability to Tenant for any loss,
damage or expense which Tenant may sustain or incur by reason of any change,
failure, inadequacy or defect in the supply or character of the utility
furnished to the Demised Premises or if the quantity or character of the
utility is no longer available or suitable for Tenant's requirements, except
for any actual damage suffered by Tenant by reason of any such failure,
inadequacy or defect cause by the negligence or Landlord or Landlord's Agents,
and then only after actual notice to Landlord by Tenant pursuant to this
Sublease and, in such event, Tenant, and those claiming by or through Tenant,
waive, to the fullest extent permitted by Applicable Law any consequential
damages resulting therefrom.
ARTICLE 15
Broker
15.1. Tenant covenants, warrants and represents that no broker
negotiated and brought about the consummation of this Sublease. Tenant agrees
to indemnify, defend and hold Landlord harmless from and against any claim for
a brokerage commission or other compensation arising out of any discussions or
negotiations had by Tenant with any broker.
ARTICLE 16
Default -- Conditions of Limitation
16.1 If at any time during the Term of this Sublease there is
filed against Tenant in any court pursuant to any statute, either of the
United States of America or any state, a petition in bankruptcy or insolvency,
or for reorganization, or for the appointment of a receiver or trustee of all
or a portion of Tenant's property, or for other relief of debtors, and, within
ninety (90) days after such filing, Tenant fails to secure a dismissal
thereof; or if Tenant shall make a voluntary application for any of the
foregoing relief, or an assignment for the benefit of creditors or petition
for or enter into an arrangement for the benefit of creditors, or admit in
writing the inability to pay its debts; then, in any such event, this
Sublease, at the option of Landlord, may be terminated by written notice to
Tenant (but if any of such events occurs prior to the Commencement Date, this
Sublease shall, without any obligation on the part of the Landlord to give
such notice, thereupon be terminated), and, whether such termination occurs
prior to or during the Term hereof, neither Tenant nor any person claiming
through or under Tenant by virtue of any statute or any order of any court
shall be entitled to possession or to remain in possession of the Demised
Premises, but shall forthwith quit and surrender the same.
16.2 Events of Default. This Sublease and the Term and estate
hereby granted are subject to the further limitations that (the following
events to be sometimes referred to as "Event(s) of Default"):
(a) if Tenant shall default in the payment of any Rent and such
default shall continue for more than ten (10) days following written notice of
such default to Tenant, except that Landlord shall not be obligated to give
Tenant more than two (2) notices of default in any twelve (12) month period,
or
(b) if Tenant shall, whether by action or inaction, be in default
of any of its obligations under this Sublease (other than a default in the
payment of Rent) and such default shall continue and not be remedied within
thirty (30) days after Landlord shall have given to Tenant a notice specifying
the same, or, in the case of a default which cannot with due diligence be
cured within a period of thirty (30) days and the continuance of which for the
period required for cure will not subject Landlord to criminal penalty or to
prosecution for a crime or foreclosure of any superior mortgage, if Tenant
shall not, (i) within said thirty (30) day period advise Landlord of Tenant's
intention to take all steps necessary to remedy such default, (ii) duly
commence within said thirty (30) day period, and thereafter diligently
prosecute to completion, all steps necessary to remedy the default and (iii)
complete such remedy within a reasonable time after the date of said notice of
Landlord (not to exceed ninety (90) days in the aggregate);
then this Sublease and the Term hereof shall, at Landlord's option exercisable
upon ten (10) days' prior written notice to Tenant, terminate and expire, and
Tenant shall then quit and surrender the Demised Premises to Landlord.
ARTICLE 17
Re-Entry by Landlord
17.1 Summary Dispossess. If an Event of Default occurs and is
continuing as expressed in Article 16, Landlord or Landlord's Agents and
employees may, upon one (1) day's prior written notice to Tenant, or at any
time thereafter, re-enter the Demised Premises, or any part thereof, either by
summary dispossess proceedings or by any suitable action or proceeding at law,
and may repossess the same, and may remove any person therefrom, to the end
that Landlord may have, hold and enjoy the Demised Premises. The word
"re-enter", as used herein, is not restricted to its technical meaning. If
this Sublease is terminated under the provisions of Article 16, or if Landlord
shall re-enter the Demised Premises under the provisions of this Article 17,
or in the event of the termination of this Sublease, or of re-entry, by or
under any summary dispossess or other proceeding or action or any provision of
law by reason of default hereunder of the part of Tenant, Tenant shall
thereupon pay to Landlord the Rent payable up to the time of such termination
of this Sublease, or of such recovery of possession of the Demised Premises by
Landlord, as the case may be, and shall also pay to Landlord damages as
provided in Article 18.
17.2 Injunctive Relief. If an Event of Default occurs and is
continuing as expressed in Article 16, Landlord shall also have the right of
injunction. The special remedies to which Landlord may resort hereunder are
cumulative and are not intended to be exclusive of any other remedies to which
Landlord may lawfully be entitled at any time and Landlord may invoke any
remedy allowed at law or in equity as if specific remedies were not provided
for herein.
17.3 Retention of Monies. If this Sublease is terminated under
the provisions of Article 16, or if Landlord shall re-enter the Demised
Premises under the provisions of this Article 17, or in the event of the
termination of this Sublease, or of re-entry, by or under any summary
dispossess or other proceeding or action or any provision of law by reason of
default hereunder on the part of Tenant, Landlord shall be entitled to retain
all monies, if any, paid by Tenant to Landlord, whether as advance rent,
security or otherwise, but such monies shall be credited by Landlord against
Rent due from Tenant at the time of such termination or re-entry or, at
Landlord's option, against any damages payable by Tenant under Article 18 or
pursuant to law.
ARTICLE 18
Damages
18.1 Acceleration, Reletting. Subject to the limitations
expressed in Section 18.4, if this Sublease is terminated under the provisions
of Article 16, or if Landlord shall re-enter the Demised Premises under the
provisions of Article 17, or in the event of the termination of this Sublease,
or of re-entry, by or under any summary dispossess or other proceeding or
action or any provision of law by reason of default hereunder on the part of
Tenant, in addition to any and all rights or remedies which Landlord may have
at law or in equity, Tenant shall pay to Landlord as damages, at the election
of Landlord, either:
(a) a sum which at the time of such termination of this Sublease
or at the time of any such re-entry by Landlord, as the case may be,
represents the then value of the excess, if any, of (i) the aggregate amount
of the Rent under this Sublease which would have been payable by Tenant for
the period (not to exceed ninety (90) days) commencing with such earlier
termination of this Sublease or the date of any such re-entry, as the case may
be, and ending with the date contemplated as the expiration date hereof if
this Sublease had not so terminated or if Landlord had not so re-entered the
Demised Premises, over (ii) the aggregate rental value of the Demised Premises
for the same period, or
(b) sums equal to the Rent which would have been payable by
Tenant had this Sublease not so terminated, or had Landlord not so re-entered
the Demised Premises, payable upon the due dates therefor specified herein
following such termination or such re-entry and until the earlier to occur of
(i) the date contemplated as the Expiration Date hereof if this Sublease had
not so terminated or if Landlord had not so re-entered the Demised Premises or
(ii) a period of ninety (90) days, provided, however, that if Landlord shall
relet the Demised Premises during said period, Landlord shall credit Tenant
with the net rents received by Landlord from such reletting, such net rents to
be determined by first deducting from the gross rents as and when received by
Landlord from such reletting the expenses incurred or paid by Landlord in
terminating this Sublease or in re-entering the Demised Premises and in
securing possession thereof, as well as the expenses of reletting, including,
without limitation, altering and preparing the Demised Premises for new
tenants, brokers' commissions, legal fees, and all other expenses properly
chargeable against the Demised Premises and the rental therefrom, it being
understood that any such reletting may be for a period shorter or longer than
the remaining Term, but in no event shall Tenant be entitled to receive any
excess of such net rents over the sums payable by Tenant to Landlord hereunder
nor shall Tenant be entitled in any suit for the collection of damages
pursuant to this subdivision to a credit in respect of any net rents from
reletting, except to the extent that such net rents are actually received by
Landlord. If the Demised Premises or any part thereof should be relet in
combination with other space, then proper apportionment on a square foot basis
shall be made of the rent received from such reletting and of the expenses of
reletting.
If the Demised Premises or any part thereof be relet by Landlord for the
unexpired portion of the Term, or any part thereof, before presentation of
proof of such damages to any court, commission or tribunal, the amount of rent
reserved upon such reletting shall, prima facie, be the fair and reasonable
rental value for the Demised Premises, or part thereof, so relet during the
term of the reletting. Landlord shall not be liable in any way whatsoever for
its failure or refusal to relet the Demised Premises or any part thereof, or
if the Demised Premises or any part thereof are relet, for its failure to
collect the rent under such reletting, and no such refusal or failure to relet
or failure to collect rent shall release or affect Tenant's liability for
damages or otherwise under this Sublease.
18.2 Successive Suits, etc. Suit or suits for the recovery of
such damages, or any installments thereof, may be brought by Landlord from
time to time at its election, and nothing contained herein shall be deemed to
require Landlord to postpone suit until the date when the Term of this
Sublease would have expired if it had not been so terminated under the
provisions of Article 16, or under any provision of law, or had Landlord not
re-entered the Demised Premises. Subject to the limitations expressed in
Section 18.4, nothing herein contained shall be construed to limit or preclude
recovery by Landlord against Tenant of any sums or damages to which, in
addition to the damages particularly provided above, Landlord may lawfully be
entitled by reason of any default hereunder on the part of Tenant. Subject to
the limitations expressed in Section 18.4, nothing herein contained shall be
construed to limit or prejudice the right of Landlord to prove for and obtain
as damages by reason of the termination of this Sublease or re-entry on the
Demised Premises for the default of Tenant under this Sublease an amount equal
to the maximum allowed by any statute or rule of law in effect at the time
when, and governing the proceedings in which, such damages are to be proved
whether or not such amount be greater, equal to, or less than any of the sums
referred to in Section 18.1.
18.3 Interest. In addition to any other remedies Landlord may
have under this Sublease, and without reducing or adversely affecting any of
Landlord's rights and remedies under Article 18, if any Rent or damages
payable hereunder by Tenant to Landlord is not paid within thirty (30) days
after demand therefor, the same shall bear interest at the rate of one percent
(1%) per month or the maximum rate permitted by law, whichever is less, from
the due date thereof until paid, and the amount of such interest shall be
additional rent hereunder.
18.4 Limitation of Damages. Any provision of Sections 18.1 and
18.2 to the contrary notwithstanding, in no event shall the damages
recoverable by Landlord in any action or actions brought against Tenant for
the recovery of Rent payable from and after the date of termination of this
Sublease under the provisions of Article 16 or from and after the date of
Landlord's re-enter of the Demised Premises under the provisions of Article 17
exceed the sum of Fifty Four Thousand and 00/100 Dollars ($54,000.00).
ARTICLE 19
Surrender
19.1 Condition of Demised Premises. (a) On the last day of the
Term or upon any earlier termination of this Sublease, or upon any re-entry by
Landlord upon the Demised Premises, Tenant shall, at its own expense, quit and
surrender the Demised Premises to Landlord broom clean, in good order and
condition, except for ordinary wear and tear and damage or destruction by fire
or other casualty. Tenant shall remove from the Demised Premises all of
Tenant's Property and all personal property and, subject to the limitations
expressed in Section 19.4, all personal effects of all persons claiming
through of under Tenant, and shall pay the cost of repairing all damage to the
Demised Premises occasioned by such removal.
(b) Notwithstanding the foregoing, Tenant shall not be obligated,
at or before quitting and surrendering the Demised Premises, to restore the
Demised Premises, or any part thereof, to the state or condition of the
Demised Premises, or such part, existing at any time prior to the Commencement
Date, but at the option of Landlord, Tenant shall be obligated at or before
quitting or surrendering the Demised Premises to restore the same to their
state or condition existing prior to the making of alterations by Tenant. If
Tenant does not perform the restoration Tenant is obligated to perform
pursuant to this Section 19.1, Landlord may (but shall not be obligated to)
perform such restoration at the expense of Tenant and Tenant shall pay
Landlord the restoration expense upon rendition of Landlord's bill.
19.2 Tenant's Property. Subject to the limitations expressed in
Section 19.4, any Tenant's Property or other personal property (other than
money, securities, documents, or other valuables) which shall remain in the
Demised Premises after the termination of this Sublease shall be deemed to
have been abandoned and either may be retained by Landlord as its property or
may be disposed of in such manner as Landlord may see fit; provided, however,
that, notwithstanding the foregoing, Tenant will, upon request of Landlord
made not later than thirty (30) days after the date of termination of this
Sublease, promptly remove from the Demised Premises any Tenant's Property or
other personal property at Tenant's own expense. If such Tenant's Property or
other personal property or any part thereof shall be sold, Landlord may
receive and retain the proceeds of such sale and apply the same, at its
option, against the expenses of the sale, cost of moving and storage, any
arrears of Rent and damages to which landlord may be entitled hereunder or
pursuant to law. Any excess proceeds shall be the property of Landlord. Any
expense incurred by Landlord in removing or disposing of such Tenant's
Property or other personal property shall be reimbursed to Landlord by Tenant
on demand.
19.3 Survival. Tenant's obligations under this Article 19 shall
survive the termination of this Sublease.
19.4 Leased Equipment. In the event that persons owning and
leasing items of equipment and other personal property to Tenant fail to
remove the same from the Demised Premises prior to the termination of this
Sublease, Tenant shall so notify Landlord (which notice shall include a
general description of the item or items of equipment and the name and address
of the person or persons owning such equipment) or conspicuously label the
equipment as being owned by a person other than Tenant. Upon request of
Tenant or the person owning any such item of equipment, for a period of thirty
(30) days after the expiration or termination of this Sublease, Landlord shall
grant reasonable access to the Demised Premises for the purpose of removal of
same. Any provision of this Article 19 to the contrary notwithstanding, no
item or items of equipment so identified to Landlord shall be deemed to have
been abandoned by Tenant or retained by Landlord as its property or disposed
of by Landlord without notice to Tenant and the person owning such equipment
and without granting Tenant and the person owning such equipment a reasonable
opportunity (not to exceed thirty (30) days after such expiration or
termination) to remove such equipment from the Demised Premises.
ARTICLE 20
Access to Demised Premises
20.1 Landlord's Rights. Master Landlord, Landlord and Landlord's
Agents shall have the following rights in and about the Demised Premises: (i)
to enter the Demised Premises upon prior notice (except in the case of
emergency) to Tenant at all reasonable times to examine the Demised Premises
or for any of the purposes set forth in this Article 20 or for the purpose of
performing any obligation of Landlord under this Sublease or exercising any
right or remedy reserved to Landlord in this Sublease; (ii) to exhibit the
Demised Premises to others; and (iii) in connection with any of Landlord's
obligations under this Sublease.
20.2 No Eviction. The exercise by Landlord or Landlord's Agents
of any right reserved to Landlord in this Article 20 shall not constitute an
actual or construction eviction, in whole or in part, or entitle Tenant to any
abatement or diminution of rent, or relieve Tenant from any of its obligations
under this Sublease, or impose any liability upon Landlord, or Landlord's
Agents, or upon any Superior Lessor or Superior Mortgagee by reason of
inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's
business, or otherwise.
ARTICLE 21
Miscellaneous
21.1 Order of Payment. If Tenant is in arrears in payment of
Rent, Tenant waives Tenant's right, if any, to designate the items which any
payments made by Tenant are to be credited, and Tenant agrees that Landlord
may apply any payments made by Tenant to such items as Landlord sees fit,
irrespective of and notwithstanding any designation or request by Tenant as to
the items which any such payments shall be credited.
21.2. Notices. Any notice, statement, request, demand, consent,
approval or other communication required or permitted to be given, rendered or
made by either party to the other, pursuant to this Sublease or pursuant to
any applicable law or requirement of public authority, shall be in writing
(whether or not so stated elsewhere in this Sublease) and shall be deemed to
have been properly given, rendered or made only if (i) delivered by hand; or
(ii) sent by reputable overnight delivery service addressed to the other party
at the address set forth above; or (iii) sent by registered or certified mail,
return receipt requested, posted in a United States post office station or
letter box in the continental United States, addressed to the other party at
the address hereinabove set forth, with a copy to Master Landlord at 99 Wood
Avenue South, Iselin, NJ 08830 and in the event notice is given pursuant to
(iii) above shall be deemed to have been given, rendered or made on the second
business day after the day so mailed, unless mailed outside of the State of
New York, in which case it shall be deemed to have been given, rendered or
made on the third business day after the day so mailed. Either party may, by
notice as aforesaid, designate a different address or addresses for notices,
statements, demands, consents, approvals or other communications intended for
it.
21.3 No Representations, Entire Agreement. Tenant expressly
acknowledges and agrees that Landlord has not made and is not making, and
Tenant, in executing and delivering this Sublease, is not relying upon, any
warranties, representations, promises or statements, except to the extent that
the same are expressly set forth in this Sublease, the Asset Purchase
Agreement or in any other written agreement which may be made between the
parties concurrently with the execution and delivery of this Sublease and
shall expressly refer to this Sublease and Tenant agrees that it is accepting
the Demised Premises in "AS IS" condition. All understandings and agreements
heretofore had between the parties are merged in this Sublease and any other
written agreement(s) made concurrently herewith, which alone fully and
completely express the agreement of the parties and which are entered into
after full investigation, neither party relying upon any statement or
representation not embodied in this Sublease or any other written agreement(s)
made concurrently herewith.
21.4 Changes and Modifications. No agreement shall be effective
to change, modify, waive, release, discharge, terminate or effect an
abandonment of this Sublease, in whole or in part, unless such agreement is in
writing, refers expressly to this Sublease and is signed by the party against
whom enforcement of the change, modification, waiver, release, discharge,
termination or effectuation of the abandonment is sought.
21.5 Successors and Assigns. Except as otherwise expressly
provided in this Sublease, the obligations of this Sublease shall bind and
benefit the successors and assigns of the parties hereto with the same effect
as if mentioned in each instance where a party is named or referred to;
provided, however, that (a) no violation of the provisions of Article 5 shall
operate to vest any rights in any successor or assignee of Tenant and (b) the
provisions of this Article 21 shall not be construed as modifying the
conditions of limitation contained in Article 5.
21.6 Inability to Perform. Landlord and Tenant shall be excused
for the period of any delay in the performance of their obligations under this
Sublease (other than the obligation of Tenant to pay Rent) when prevented from
doing so by reason of Force Majeure.
21.7 Notice of Accidents. Tenant shall give notice to Landlord,
promptly after Tenant learns thereof, of (a) any accident in or about the
Demised Premises for which Landlord might be liable, (b) any fire in the
Demised Premises, (c) all damage to or defects in the Demised Premises
including the fixtures, equipment and appurtenances thereof for the repair of
which Landlord might be responsible, and (d) all damage to or defects in any
parts or appurtenances of the air-conditioning, elevator, plumbing,
electrical, sanitary, mechanical or other service or utility systems located
in or passing through the Demised Premises.
21.8 Quiet Enjoyment. If and so long as Tenant pays the Rent and
performs and observes all the terms, covenants and conditions hereof on the
part of Tenant to be performed and observed, Tenant shall quietly enjoy the
Demised Premises during the Term without hindrance or molestation by any one
claiming by, through or under Landlord, subject, however, to the Master Lease
and the terms of this Sublease.
21.9 Governing Law, Severability, Captions. Irrespective of the
place of execution or performance, this Sublease shall be governed by and
construed in accordance with the Laws of the State of New York. If any
provision of this Sublease or the application thereof to any person or
circumstances shall, for any reason and to any extent, be invalid or
unenforceable, the remainder of this Sublease and the application of that
provision to other persons or circumstances shall not be affected but rather
shall be enforced to the extent permitted by law. The table of contents,
captions, headings and titles in this Sublease are solely for convenience of
reference and shall not affect its interpretation. This Sublease shall be
construed without regard to any presumption or other rule requiring
construction against the party causing this Sublease to be drafted. Each
covenant, agreement, obligation or other provision of this Sublease on
Tenant's part to be performed shall be deemed and construed as a separate and
independent covenant of Tenant, not dependent on any other provision of this
Sublease. All terms and words used in this Sublease, regardless of the number
or gender in which they are used, shall be deemed to include any other number
and any other gender as the context may require.
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Sublease as of the day and year first above written.
LANDLORD:
HISTACOUNT CORPORATION
By /s/ Thomas C. DeFazio
Name: Thomas C. DeFazio
Title: Vice President, Histacount Corporation
TENANT:
HC DELAWARE ACQUISITION CORP.
By /s/ James H. Bromley
Name: James H. Bromley
Title: Chairman and Chief Executive Officer
<PAGE>
EXHIBIT 2.5
COPY OF MASTER LEASE
Previously filed as Exhibit 10.1q to the Company's Registration Statement
on file with the Commission (Registration No. 33-29101).
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SMITH
CORONA CORPORATION CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO OF
THIS FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
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<RECEIVABLES> 57470
<ALLOWANCES> 1386
<INVENTORY> 63095
<CURRENT-ASSETS> 140772
<PP&E> 76035
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0
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<TOTAL-LIABILITY-AND-EQUITY> 186824
<SALES> 123465
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